Hawaii now ranks among the states with the highest income tax rates for top earners.
A new tax bracket that took effect this year raises Hawaii's top marginal state income tax rate to 11% for the state's highest-income residents. The new rate applies to taxable income above $5 million for single filers and $10 million for married couples filing jointly.
That move places Hawaii alongside states like California and New York as one of the nation's highest-tax states for millionaires, although California's top state rate remains higher at 13.3%.
Supporters say the new tax will generate additional revenue for priorities such as education, affordable housing and climate resilience while affecting only a small number of taxpayers.
Critics argue the higher rate could make Hawaii less competitive for attracting and retaining high-income residents, investors and business owners, especially as remote work gives some taxpayers more flexibility over where they live.
The new bracket comes as Hawaii continues to wrestle with high housing costs, one of the nation's highest costs of living and ongoing concerns about retaining residents and growing the state's economy.
Most Hawaii taxpayers won't see any change to their income tax bill. But for the state's highest earners, Hawaii is now among a small group of states with double-digit top marginal income tax rates, adding another chapter to the ongoing debate over how to balance public investment with economic competitiveness.