Tax Credits
Supporting Working Families
Tax credits put money back in the pockets of Hawaiʻi's working families, helping them afford basic necessities and invest in their children's futures.
Child Tax Credit
Helping local families with children afford the high cost of living.
The federal child tax credit helps offset the costs of raising kids and is worth up to $2,000 for each qualifying child.
Raising children is expensive—recent reports show that the cost of raising a child is over $200,000 throughout the child's lifetime. The American Rescue Plan Act of 2021 temporarily increased the federal credit to $3,600 for children under 6 and $3,000 for children under 18, bringing millions of families out of poverty.
Our proposal: A refundable state child tax credit of $650 for each child aged 0-18.
Why Hawaiʻi Needs a State Child Tax Credit
- The provisions of the American Rescue Plan that strengthened the child tax credit expired at the end of 2021, despite lifting millions of families and their children out of poverty.
- In the face of federal spending cuts, states have a responsibility to enact policies that assist working families with children.
- Twelve other states (and the District of Columbia) have their own, separate child tax credit.
Earned Income Tax Credit
Helping Hawaiʻi's working families keep more of what they earn.
The Earned Income Tax Credit (EITC) is a special tax credit for people that are employed. It allows families keep more of what they earn, helping them put food on the table.
The state EITC for Hawaiʻi mirrors the federal credit, and it's refundable. Most EITC recipients are raising children.
Hawaiʻi's EITC is worth 40% of the federal credit, and it was last expanded in 2023.
Benefits for Families
- The EITC is a lifeline for low-income people, giving them the financial security they need to stay employed while caring for their family.
- Children in families receiving the EITC experience financial, educational, and health benefits that strengthen their foundations for future success.
- Children whose families receive the EITC have higher test scores, graduation rates, and college enrollment.
- The EITC is linked to healthier mothers and infants, including increased birth weight for newborns.
Economic Impact
- For every dollar given as part of an EITC, up to two dollars is spent in the local economy.
- Workers who can pay for basic necessities are more dependable employees—as much as 36 cents of every EITC dollar ultimately flows to employers.
- A California study showed that for every $150,000 of tax credit claimed, an additional job was created.
- When workers keep more of what they earn, they put those dollars back into the economy, benefiting local businesses.
RxKids
Supporting mothers through direct cash payments.
It is extremely expensive for mothers in Hawaiʻi to have children. RxKids would provide direct cash payments to help families during the critical early months of a child's life.