Hawaii high-income taxpayers need to pay attention State of Hawaii - Tax Department
In Hawaii, on May 8 2009, 3 new income tax brackets at the top were created by passing of a bill. The new law increases the highest level to 11% for singles with net taxable incomes of $200,000 or more, heads of household with net incomes of $300,000 or more, and married couples filing jointly with a taxable income of $400,000 and above. Previously the highest tax rate was 8.5% and that still holds for married couples filing jointly with taxable income between $96,000 - $300,000.
There is now also a 9% rate and a 10% rate, making Hawaii the state with the most tax brackets (12), and also the highest income tax rate. What a great distinction for our state! Is this the price of living in paradise?
What is a taxpayer to do? Since the withholding tables only go up to 8%, high-earners will need to take steps to ensure that enough money will be withheld, to avoid penalties later. Employees can voluntarily increase their withholdings at a higher rate, or take fewer exemptions. They can also make quarterly estimated payments, keeping in mind that this law is retroactive to January 1, 2009. The correct amount for the 2009 year must be paid in full by April 20, 2010.
On the brighter side, the new taxes will probably not affect as many this year as they would have a few years ago, due to lower pay, bonuses and commissions, and more layoffs due to the current economy.
Of course a high earner could buy a new home or condo on Maui and use the mortgage deduction to offset their income. There are certainly plenty of fine properties to choose from. I can help with the Maui property search.
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Through out history when the Democrats take office taxes go up and when the Republicans take office the gas goes up, so living in Hawaii - huh - either way it's the price of paradise. I really like this post you're so on it.
Georgina, We are going to have something similar here in tax hikes...and quite honestly, we don't live in paradise. It's going to affect a great many people here as well.
More and more children of Hawaii will continue to move to the mainland until the State of Hawaii begins on decreasing taxes. Sad because the tax structure is making the islands unavailable to many people.
Jeff - yup, the price of paradise!
Carole - you have a different kind of paradise - a cultural smorgasbord!
Leolinda - I think the plan is to make it for rich people only!
Don't you just love it when they makes laws retroactive, especially when the law involves money?