Working families in Hawaiʻi could end up paying more in taxes if President-elect Donald Trump implements some of his proposed policies, but analysts say there’s a way the state can help.
Some of the policies Trump floated before taking office for his second term include imposing heavy tariffs on imported goods from other countries, reducing corporate tax rates and repealing President Joe Biden’s tax credits on renewable energy.
They would outweigh some tax-saving policies he’s floated, such as exempting taxes on overtime pay, tips and Social Security benefits and extending some tax provisions he implemented in 2017.
An analysis by the nonprofit Institute on Taxation and Economic Policy shows that Trump’s tax proposals could lead to significant tax breaks for the richest 5% of Americans in 2026 — but a tax hike of up to about $1,800 for the bottom 95% of earners.
“There's some good provisions. … If he decides to pursue those, then that could be good for working class families," said Devin Thomas, senior policy analyst for Hawaiʻi Appleseed. “On the other hand, the corporate and income tax cuts for the very wealthy, which were implemented the last time around, for obvious reasons did not help low- to middle-income families.”
Trump is also interested in reducing federal funding, which could mean less support for low-income food and health care programs.
Thomas recently published a post on the potential impacts of Trump’s second term on local families.
There are some ways the state can prepare, such as by supporting low-income programs, and increasing taxes that would have a greater impact on the wealthy — including nonresidents who invest in Hawaiʻi homes.
Specifically, an increase in the conveyance tax on high-value homes could help local working families. Other steps could include a child tax credit, support for universal school meals, and closing loopholes in the capital gains tax that Thomas said currently benefit the wealthy.
On taxes for out-of-state investors who buy homes in Hawaiʻi, Thomas said there’s growing support for it.
“There is an appetite, I think, not just from legislators, but with the general public — and this crosses the political boundaries of the parties,” he said. “I've heard this from people who could care less about policy politics, that they see the cost of living go up, they see the cost of homes in their neighborhoods go up, because of people from out-of-state coming here, buying homes and, in most cases, not even living here.”
Changes in the capital gains tax and the conveyance tax could result in hundreds of millions of dollars for the state, which it can use to replace potentially lost federal funds.
