Payroll tax credit should help some 500,000 Hawaii families


POSTED: Thursday, April 02, 2009

U.S. Sens. Daniel Inouye and Daniel Akaka are touting tax breaks that the recently enacted economic stimulus bill is expected to provide, saying Hawaii residents should see a total of $333 million in tax reductions.

Most workers will start seeing about a $10 bump in their weekly paychecks this week.

The “;Making Work Pay”; tax credit, which took effect yesterday, was enacted as part of the economic recovery package that Congress passed in February. It is the Main Street version of the Wall Street bailout, doled out in bite-size portions to workers in their paychecks.

The Hawaii Democrats say an estimated 500,000 working families in the islands will benefit from the tax credit of 6.2 percent of earned income, up to $400 for unmarried workers and $800 for married taxpayers.

Couples making less than $150,000 are eligible for the full credit. Couples making between $150,000 and $190,000 get reduced credits, while those making more than $190,000 are ineligible. Individuals making less than $75,000 are eligible for the full credit, while those making up to $95,000 get a reduced amount.

Workers will see the benefits in their paychecks during 2009 and 2010 because the Internal Revenue Service will soon issue new withholding rules to employers. But next year, when the credit is spread over the entire year, it will amount to about $8 a week.