Hawaii has a number of tax brackets that are among the most favorable in the country.
But for some residents, it may not be so great.
Hawaii ranks at the bottom of a list of 30 states that are home to the highest percentage of Americans living in poverty, according to a new report from the Economic Policy Institute.
While Hawaii ranks near the bottom on many economic indicators, it’s far below the national average of 32 percent.
Hawaiian Income TaxHawaii has a property tax of just $3.35 per $1,000 of assessed value, a far cry from the national rate of 9.3 percent.
Residents who earn more than $125,000 annually pay no state income tax at all, which means they don’t have to pay property tax.
The state has no sales tax, meaning residents can’t buy a home, pay a mortgage or use an ATM.
In addition, residents of the state can’t deduct state income taxes paid from their state and local income tax refunds.
And, unlike most states, Hawaii doesn’t offer a state and federal sales tax.
While the state does have a small property tax on top of its state sales tax of 2.6 percent, that is only applied to residential property, not commercial property.
That means, like many states, most homeowners pay no sales or property tax in Hawaii.
The average income tax rate is only 3.4 percent in Hawaii, which is slightly higher than the national median rate of 3.1 percent.
Taxes and RebatesHawaii’s personal income tax rebates are among its best in the nation.
In addition to the $1.25 million rebate per person per year, residents can claim a $500 credit to offset state and private property taxes, as well as the state and county property tax rebate.
The rebate for the 2018 tax year is $2,500.
The top 10 percent of residents in Hawaii pay 10.6 times the federal personal income taxes of the poorest 20 percent of Americans, according the report.
In 2018, the top 5 percent of households paid 12.8 percent of their income in state and/or local income taxes.
Those who earn between $200,000 and $400,000, which includes those making $250,000 or more, pay just 3.6.
The report notes that the rebate does not apply to any other tax credits or deductions, like state and city and county income tax deductions, which the IRS requires states to include.
However, those that do file taxes may not get the full benefit of the rebate.
The report found that those who paid the full federal income tax were eligible for a refund of up to $1 million, but that the IRS denied those applications, citing the state’s low rate.
Tax Credits for High-Income ResidentsTax credits can be a great way to lower your overall tax bill.
However, the report notes, “the tax credits are not a substitute for income-based taxation, which requires paying a fair share of your taxes.”
For example, a family of four with an income of $150,000 paid 9.9 percent of its income in taxes in 2018, or 0.3% of their federal tax bill, according a report from Tax Foundation.
While a family earning between $50,000 to $100,000 pays 3.8% of its federal tax bills, a similar family earning less than $50.00 would pay less than 3.5% of federal income taxes due to the tax credit.
To calculate your tax refund, visit the IRS website, click on “Tax Credit Calculator,” and enter the tax amount you would like to claim.
You may also need to contact your state tax office for further information.
Tax Credit for Households with $100K in Adjusted Gross IncomeTax credits are typically for the low-income families who have an income in the low single digits, according Tax Foundation, which notes that for those in the top 0.1 to 0.2 percent of the income distribution, the amount of tax they would pay depends on their adjusted gross income.
The Tax Foundation report estimates that those with a household income of less than about $60,000 would receive a $1 refund.
The higher end of the spectrum, $100 to $300,000 income earners, could receive a refund up to nearly $7,000.
For households earning between the two figures, the average refund would be between $1 and $4,000 per person.
For low- and middle-income earners, the Tax Foundation also notes that tax credits can also help lower your taxes, though they are usually reserved for the wealthiest individuals in the state.
The Tax Foundation reports that the average tax refund for a family with a family income of at least $250 million is $7.2 million, while the average for a household earning between those two levels is $3 million.
Tax credits for the Most Tax-Harsh Tax Brackets