April 7, 2026, 2 p.m.
Hawaii State Capitol
Conference Room 308 and Videoconference
To: House Committee on Finance
Rep. Chris Todd, Chair
Rep. Jenna Takenouchi, Vice Chair
From: Grassroot Institute of Hawaii
Ted Kefalas, Director of Strategic Campaigns
RE: TESTIMONY WITH COMMENTS ON SB3125 SD1 — RELATING TO INCOME TAX
Aloha Chair, Vice Chair and other Committee Members,
The Grassroot Institute of Hawaii offers comments on SB3125 SD1, which would repeal all planned adjustments to individual income tax brackets over $350,000 for joint filers, over $262,500 for heads of household and over $175,000 for single filers starting Jan. 1, 2027.
The bill would also adjust the value of the dependent care services tax credit, change the sunset date of certain increases in the food and low-income household renters tax credits and repeal various other tax credits.
Grassroot would prefer that the income tax cut package the Legislature passed in 2024 not be diminished in any way; however, the SD1 draft of this bill is a compromise that preserves the majority of the tax cuts.
If the committee advances this legislation, Grassroot recommends approving it unamended.
Broad-based tax relief is preferable to giving various special interest groups large tax breaks in the form of tax credits, which are often opaque and challenging to claim.
The SD1 version of the bill would maintain adjustments to the tax brackets and the standard deductions that could prove critical to making Hawaii more affordable.
Grocery prices in Hawaii are the highest in the United States,[1] and Hawaii’s average rents are the second-highest nationwide.[2] Additionally, Hawaii’s per-kilowatt-hour electricity costs are routinely two to three times the national average.[3]
The state can and should take action to reduce regulations that increase the price of food, housing and electricity, but Hawaii taxpayers already face the fourth-highest per capita state and local tax burden in the country.[4] Tax relief is the most direct way the state can provide assistance to Hawaii families of all income levels.
Instead of harming families and businesses, the Legislature should eliminate wasteful or duplicative budget items without eliminating vital services. Grassroot has already publicized a list of ways in which this could be accomplished.[5]
Attached is a document outlining ten specific budget cuts that could be made as an alternative to pausing the planned cuts. I hope this information provides the committee with concrete options to achieve fiscal responsibility without halting these important tax cuts.
Thank you for the opportunity to testify.
Ted Kefalas
Director of Strategic Campaigns
Grassroot Institute of Hawaii
1050 Bishop St. #508 | Honolulu, HI 96813 | 808-864-1776 | info@grassrootinstitute.org
[1] Dorothy Neufeld, “Mapped: Average Weekly Grocery Bill Cost, by U.S. State,” Visual Capitalist, Jan. 14, 2026.
[2] Jonathan Jones, “U.S. Cities With the Highest Rent Prices,” Construction Coverage, Jan. 31, 2026.
[3] “Table 5.6.A. Average Price of Electricity to Ultimate Customers by End-Use Sector,” U.S. Energy Information Administration, data for December 2025 and December 2024.
[4] Joseph Johns, “State and Local Tax Collections Per Capita by State, 2025,” Tax Foundation, May 13, 2025.
[5] Jonathan Helton and Joe Kent, “With lawmaker will, there are ways to implement tax cuts,” Honolulu Star-Advertiser, Feb. 26, 2026.
