Gov. David Ige on Wednesday signed a bill to raise Hawaii’s minimum wage for the first time in four years and to make the earned income tax credit permanent and refundable.

He also approved a measure that allows taxpayers making less than $100,000 a year to receive a $300 refund – something made possible by a large budget surplus fueled by a combination of increased tax revenues and federal Covid-19 relief money.

The wage hike was approved by the state House and Senate after they reconciled differences over the amount of the increase, its implementation and what to do with the tip credit for workers such as waiters and valets.

Each chamber aimed to increase the wage to $18 per hour, but the Senate’s version of the bill would’ve done so by 2026 while the House’s version – which ultimately prevailed – specified raising it by 2028. Defenders of the House’s bill cited wanting to ease the financial burden that business owners might face.

Per the bill, minimum wage will rise from its current level of $10.10 an hour to $12 in October and increase every year by $2 starting in 2024 until reaching $18 in 2028.

Ige called the measure “long overdue” for the state’s 190,000 minimum wage workers, adding, “I do believe that the measures that we’re signing today can make a significant impact.”

Gov. David Ige signed the minimum wage increase, the tax refund and the EITC bills into law at the Hawaii State Capitol's ceremonial room on Wednesday.
Gov. David Ige signs a bill raising the minimum wage to $18 by 2028. Kuʻu Kauanoe/Civil Beat/2022

Also included in the bill is a measure to solidify the earned income tax credit, which had been at risk of lapsing. Unlike the federal earned income tax credit, the state version had previously been nonrefundable.

The new EITC law permits qualified low- to moderate-income workers to be eligible for a refundable tax credit.

“This is a happy day for me,” said Sen. Brian Taniguchi, who introduced the Senate version of the minimum wage bill.

For the one-time tax refund, taxpayers will receive $300 if they earn less than $100,000 individually, or if they earn less than $200,000 as part of a couple. All other taxpayers will receive $100.

“Two years ago, the financial picture looked really grim,” said Rep. Sylvia Luke, chair of the House Finance Committee.

Now, with pandemic money from the federal government and the return of the state’s tourism industry, the state of Hawaii is in a much better position.

In a press release after the signing, the governor’s office said that the state Department of Taxation anticipates refunds will start going out at the end of August, and that more details will be released in the coming days.

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