A series of tax cuts previously planned for 2027 through 2030 will be suspended in order to maintain the state’s budget, Gov. Josh Green announced Monday.
The governor touted many successes of his term during his State of the State Address on Monday, but added that, with the cost of living crisis intensifying, a range of tax cuts previously planned for the next few years will “pause.”
Green claimed in his speech that the state is facing a $3 billion budgetary shortfall following “the federal government’s severe cuts and other actions.” By suspending the tax cuts planned between 2027 and 2030, Green said the state will have an additional $1.8 billion in revenue, of which about $600 million will be used for food security programs and other related services.
The cuts, which were approved in 2024, would increase the standard deduction in increments from 2024 through 2031, rising from $4,400 all the way to $24,000. Lawmakers had previously said the cuts would reduce a median-income Hawai‘i family’s tax burden by nearly $20,000 through 2030, and effectively eliminate all state income tax for roughly 40% of the taxpaying population.
Green told Aloha State Daily and other news outlets Monday that he has no intention to roll back the cuts that have already happened.
“In order to make sure people can plan for their lives, we make no changes in 2026,” Green said, adding the current tax deductions in 2026 will be retained through 2030.
While Green said that the tax cuts might be reinstated if the economy improves unexpectedly, he added that cumulative impacts from federal tariffs, the 2025 government shutdown, reductions in tourism, and more have left the budget in a state where keeping the tax cuts would leave the state operating at a deficit.
Green said he will also consider tapping into the state’s emergency budget reserve fund, or “Rainy Day Fund,” to balance the budget.
Meanwhile, Green touted work since 2022 to build affordable housing and reduce homelessness — during his speech, he said more than 62,000 new housing units are being tracked for completion in the next decade, while the “Kauhale” tiny home community program has reduced health care costs for homeless people by 76%. Green said the state will invest $50 million to expand the Kauhale program this year.
However, Green also said later that he expects an audit this year of the state’s homelessness initiatives to have “mixed reviews.”
“An audit will count how many people are there per night, but it will have a difficult time talking about how many people no longer went to the hospital,” Green said. “How many people died on the street. We were losing one person a day at one point, finding people deceased on the street. We’re not seeing that anymore.”
Green praised other policies he’s implemented over his term so far — his mention of the Green Fee, projected to generate more than $100 million per year for environmental conservation projects, drew loud cheers from the audience — and promised improvements in other sectors.
For example, the governor said he has included $16.5 million in a proposed budget bill to cover enhanced ACA tax credits that would otherwise be eliminated through federal cuts, in order to “keep coverage affordable for our families, seniors and children.” And in 2027, the state will receive $190 million through the federal government’s Rural Health Transformation Program to “modernize rural access to care.”
He also proposed an expansion of film tax credits, allowing large film productions to claim more credits if they hire local crew and talent. Green said he envisions “film tourism” to have potential as a major revenue stream for the state and that Hawai‘i shouldn’t give up so much of its potential film projects to New Zealand.
Green also began his speech with a moment of silence for “those who have lost their lives as a result of the domestic conflicts on the Mainland, especially those in Minnesota,” and he appeared audibly emotional afterward. He later said that Immigration and Customs Enforcement is in need of reform and that he has asked the Department of Homeland Security to de-escalate its actions.
Green added that he has proposed changes to immigration enforcement that would exempt some illegal immigrants from deportation following a probationary period without any violent crimes. But, while he said that it is possible for the state to reason with the current federal administration, he also said he is wary about rocking the boat.
“It’s my job to try to keep an even keel with the administration so that I don’t blow my stack and put a target on our back,” Green said, explaining that, so far, the state’s relationship with DHS has been mainly to assist with the apprehension of violent offenders.
“There’s no way on earth there should have been violence against those two individuals [in Minneapolis],” Green said. “It’s just completely not what America’s about.”
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