Hawaii has made the following changes to the tax law for the 2018 tax year:
- Hawaii has limited the nonrecognition of gain or loss to like-kind exchanges of real property that is not help primarily for sale for exchanges completes after 2017.
- Permits taxpayers to rollover amounts from qualified tuition programs to ABLE accounts without penalty for distributions made after 12/22, 2017 through 2025.
- Considers the Sinai Peninsula of Egypt to be a combat zone as of June 9, 2015 through 2025.
Deductions and Credits
- The medical expenses deduction floor has been reduced to 7.5% of adjusted gross income for tax years 2017 and 2018.
- The adjusted gross income limitation has been increased on cash contributions to 60% for contributions made in tax years 2018 through 2025.
- Repeals the 80% deduction for contributions made for university athletic seating rights for contributions made in tax years beginning after 2017.
- Amends the definition of losses from wagering transactions to include any otherwise allowable deduction incurred in carrying on wagering transactions (e.g., traveling to and from a casino) for tax years 2018 through 2025.
- Excludes from gross income, income resulting from the discharge of certain student debt on account of the death or total and permanent disability of the student for loans discharged after 2017.
- Eliminates the above-the-line deduction for alimony payments and does not require the payee receiving alimony payments to include alimony payments in income for divorce decrees, separation agreements, and certain modifications entered into after 2018.
- Limits the net operating loss (NOL) deduction to 80% of taxable income for NOLs arising in tax years beginning after 2017, and eliminates NOL carrybacks (except for farming NOLs which are permitted a two-year carryback), and allows unused NOLs to be carried forward indefinitely for NOLs arising in tax years ending after 2017.
- Hawaii has increased the contribution limit to ABLE accounts for tax years beginning after December 22, 2017 through 2025.
- You may exclude up to $6,564 of your military reserve or Hawaii National Guard duty pay from your income for tax years beginning after 2017.
- A qualifying individual taxpayer may claim a new nonrefundable Earned Income Tax Credit equal to 20 percent of the federal earned income credit claimed on the taxpayer’s federal income tax return for tax years 2018 through 2022.
- Three income tax rates and brackets for the highest-income taxpayers are reinstated for tax years beginning after 2017.
- The amount that a taxpayer may designate from their individual tax refund to the Hawaii Public Libraries Special Fund has been increased to $5 and $10.