LINDA LINGLEKURT KAWAFUCHIGOVERNORDIRECTOR OF TAXATIONJAMES R. AIONA, JR.

SANDRA L. YAHIRO

LT. GOVERNOR

DEPUTY DIRECTOR

STATE OF HAWAII

DEPARTMENT OF TAXATIONP.O. BOX 259
HONOLULU, HAWAII 96809
PHONE NO: (808) 587-1510
FAX NO: (808) 587-1560

June 26, 2006

DEPARTMENT OF TAXATION ANNOUNCEMENT NO. 2006-10
RE: Act 110, Session Laws of Hawaii 2006, Relating to Taxation
On May 19, 2006, Governor Linda Lingle signed into law House Bill 957, HD1, SD 1, CD 1,as Act 110 of the Regular Session of 2006. Included in Act 110 are three components of tax relief,including:1) Increasing the individual income tax standard deduction to 40% of the current federal
standard deduction;2) Expanding the individual income tax brackets by 20%; and3) Providing an income tax credit equal to 10%, up to $10,000, of the unreimbursed
damage caused by the flooding that occurred in Manoa, Oahu during October 2004 andthe First Quarter of 2006. For more information on the flood tax credit, please see
Department of Taxation Announcement No. 2006-04, dated May 26, 2006.
INCREASED STANDARD DEDUCTIONAct 110 increases the individual income tax standard deduction to approximately 40% of thecurrent federal standard deduction. Hawaii law conforms to Internal Revenue Code § 63, except for
the amount of the standard deduction. The individual standard deduction is increased as follows:
Type of Return-Joint return or surviving spouse

New Standard Deduction$4,000

Old Standard Deduction$1,900-Head of household$2,920$1,650-Individual not married, not asurviving spouse or head ofhousehold$2,000$1,500-Married individual filing separate$2,000$950

Department of Taxation Announcement No. 2006-10
June 26, 2006
Page 2 of 4

INDIVIDUAL INCOME TAX BRACKETS
Act 110 substantially amended Hawaii's individual income tax brackets by expanding thebrackets by approximately 20%. Act 110 eliminated the unnecessary tax brackets that have beensuperceded, specifically the older brackets that applied to taxable years after December 31, 1998 andDecember 31, 2000 and before January 1, 2002.
Act 110 retained the current individual income tax brackets, which remain in effect until theend of the 2006 taxable year. Act 110 did not expand the income tax brackets for estates and trusts.
The individual income tax brackets have been expanded as follows:
Joint Return and Surviving Spouse Return
In the case of any taxable year beginning after December 31, 2006:
If the taxable income is:

The tax shall be:

Not over $4,800

1.40% of taxable income

Over $4,800 but$67.00 plus 3.20% of

not over $9,600
Over $9,600 but
not over $19,200
Over $19,200 but
not over $28,800
Over $28,800 but
not over $38,400
Over $38,400 but
not over $48,000
Over $48,000 but
not over $72,000
Over $72,000 but
not over $96,000
Over $96,000

excess over $4,800$221.00 plus 5.50% ofexcess over $9,600$749.00 plus 6.40% ofexcess over $19,200$1,363.00 plus 6.80% ofexcess over $28,800$2,016.00 plus 7.20% ofexcess over $38,400$2,707.00 plus 7.60% ofexcess over $48,000$4,531.00 plus 7.90% ofexcess over $72,000$6,427.00 plus 8.25% ofexcess over $96,000

Department of Taxation Announcement No. 2006-10
June 26, 2006
Page 3 of 4
Head of Household Return
In the case of any taxable year beginning after December 31, 2006:
If the taxable income is:

The tax shall be:

Not over $3,600

1.40% of taxable income

Over $3,600 but$50.00 plus 3.20% of

not over $7,200
Over $7,200 but
not over $14,400
Over $14,400 but
not over $21,600
Over $21,600 but
not over $28,800
Over $28,800 but
not over $36,000
Over $36,000 but
not over $54,000
Over $54,000 but
not over $72,000
Over $72,000

excess over $3,600$166.00 plus 5.50% ofexcess over $7,200$562.00 plus 6.40% ofexcess over $14,400$1,022.00 plus 6.80% ofexcess over $21,600$1,512.00 plus 7.20% ofexcess over $28,000∗$2,030.00 plus 7.60% ofexcess over $36,000$3,398.00 plus 7.90% ofexcess over $54,000$4,820.00 plus 8.25% ofexcess over $72,000.

Unmarried Individual Return (other than Surviving Spouse or Head of Household); Married
Individual Filing Separate Return
In the case of any taxable year beginning after December 31, 2006:
If the taxable income is:

The tax shall be:

Not over $2,400

1.40% of taxable income∗ The Department is aware that there is a manifest typographical error regarding this head of household bracket. The
Legislative Reference Bureau is also aware of this matter. The Revisor of Statutes is empowered to amend theprinted Hawaii Revised Statutes taking into account the correction. The Department's withholding tables will reflect
the correct number in anticipation of the Revisor's correction.

Department of Taxation Announcement No. 2006-10
June 26, 2006
Page 4 of 4
Over $2,400 but
not over $4,800
Over $4,800 but
not over $9,600
Over $9,600 but
not over $14,400
Over $14,400 but
not over $19,200
Over $19,200 but
not over $24,000
Over $24,000 but
not over $36,000
Over $36,000 but
not over $48,000
Over $48,000$34.00 plus 3.20% ofexcess over $2,400$110.00 plus 5.50% ofexcess over $4,800$374.00 plus 6.40% ofexcess over $9,600$682.00 plus 6.80% ofexcess over $14,400$1,008.00 plus 7.20% ofexcess over $19,200$1,354.00 plus 7.60% ofexcess over $24,000$2,266.00 plus 7.90% ofexcess over $36,000$3,214.00 plus 8.25% ofexcess over $48,000

EFFECTIVE DATE
The above-mentioned income tax relief provided by Act 110 applies to taxable years
beginning after December 31, 2006.
For more information regarding this announcement, please contact the Rules Office at
808-587-1577.

KURT KAWAFUCHI
Director of Taxation