Major Tax Changes May Be Coming — Here's How Honolulu Families and Business Owners Can Prepare
- Keoni
- Jun 9
- 4 min read
There’s a buzz in Washington about a sweeping tax bill that could bring the biggest changes we’ve seen in years. While the bill still needs Senate approval and the President’s signature, residents of Honolulu and throughout Hawaiʻi should start paying attention now — especially those looking to preserve wealth and reduce taxes through proactive estate planning.
Let’s take a closer look at the proposed changes and what they could mean for you and your legacy in the islands.
1. Bonus Depreciation May Return — Great News for Local Businesses
Business owners across Hawaiʻi, especially those in real estate and hospitality, may see major benefits if bonus depreciation is fully restored. Under current law, only 40% of a new asset’s cost — like a delivery van or kitchen equipment — can be deducted upfront. The new bill would return that number to 100%, allowing businesses to write off the entire purchase cost in the first year.
For example, a Honolulu-based rental property owner who invests in new appliances or air conditioning units could deduct the full amount immediately. When combined with cost segregation strategies, this could significantly reduce taxable income — sometimes beyond the investor’s actual cash outlay.
2. R&D and Innovation: Domestic Projects Get a Boost
Hawaiʻi’s growing tech and startup scene may also benefit from the bill’s proposed changes to research and development (R&D) deductions. Since 2022, businesses have had to amortize domestic R&D over five years. The new bill would restore immediate deductions — but only for projects based in the U.S. Foreign research must still be amortized over 15 years, providing a strong incentive to keep innovation stateside.
For island entrepreneurs and businesses rooted in Honolulu, this could be the motivation to keep creative and scientific projects closer to home.
3. Potential Tax Relief for Individuals and Families in Hawaiʻi
The bill doesn’t stop at business incentives — it also offers potential relief for individuals and families across Hawaiʻi:
SALT Cap Increase: The state and local tax deduction cap would rise from $10,000 to $40,000. Given the cost of living in Hawaiʻi, this could bring welcome relief to many taxpayers.
Child Tax Credit Boost: The credit could increase from $2,000 to $2,500 per child — a direct reduction in your tax bill. For Hawaiʻi families with multiple keiki, this adds up fast.
Tax-Free Tips and Overtime: Workers in restaurants, salons, and other tip-heavy roles may no longer owe taxes on their tips. Plus, the extra portion of overtime pay could be tax-free — unless you're earning over $200,000.
Deductible Auto Loan Interest: Lower and middle-income earners may be able to deduct up to $10,000 in car loan interest. This could be especially meaningful for families in Honolulu where car ownership is essential but expensive.
Why Now Is the Time to Revisit Your Estate Plan in Hawaiʻi
While these potential changes sound promising, they also come with income thresholds and sunset provisions. Most of the proposed tax benefits are scheduled to expire in 2028.
That gives you a limited window to act strategically. For example, adjusting your income through gifting, trust strategies, or charitable contributions might help you qualify for new deductions and credits.
Estate planning isn’t just about what happens when you’re gone — it’s also about using the law to your advantage while you’re living. Whether you’re a business owner in Kakaʻako or a family in Kāneʻohe, an updated estate plan can help you:
Preserve wealth
Reduce taxes
Maximize new opportunities under the changing law
FAQs
Q: Should I wait until the law passes to make any moves?
A: No. Strategic planning now can help you qualify for benefits later. Many estate planning tools are time-sensitive and require setup in advance.
Q: I’m not wealthy. Do I really need an estate plan?
A: Absolutely. These tax changes could impact anyone with a home, children, or retirement savings. A personalized plan ensures you and your family benefit — no matter your net worth.
Q: Are trusts still useful if tax laws are changing?
A: Yes. In fact, trusts can help you navigate these changes by offering flexibility, asset protection, and strategic control over how and when assets are distributed — all of which can be shaped around current and future tax rules.
Final Thoughts: Hawaiʻi Families Shouldn’t Wait
If this legislation passes — and even if it doesn’t — it's a reminder of how quickly the financial landscape can change. The best way to protect yourself and your loved ones is through an estate plan built to adapt.
As a Honolulu-based estate planning attorney, I help families and professionals across Hawaiʻi secure their future. Let’s create a plan that works today and evolves with tomorrow’s laws.
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This article is brought to you by the Law Office of Keoni Souza, a boutique estate planning firm located in Honolulu, Hawaiʻi, proudly serving families on Oʻahu and across the Hawaiian Islands. At our firm, estate planning is about more than documents—it’s about creating lasting peace of mind for you and the people you love. Through our unique Life & Legacy Planning Process, we guide you to make informed, empowered decisions that protect your wealth, your wishes, and your family’s future. To get started, contact our Honolulu office today to schedule your Family Wealth Planning Session. Mention this article to learn how you can receive this $750 session at no charge.
Disclaimer: The information on this website is for informational purposes only and should not be considered legal advice. For guidance tailored to your specific situation, please consult an estate planning attorney licensed in the State of Hawaiʻi. Use of this website or communication through this site does not create an attorney-client relationship with the Law Office of Keoni Souza, LLC.
