Hawaii Tax Rates

This post provides an overview of the primary taxes levied at the state level in Hawaii. The information contained here is intended for general reference. For individuals or businesses seeking comprehensive support with tax filings, compliance, or strategic planning, indinero offers expert services. We encourage all who utilize this summary to explore the tailored tax support available through indinero.

Individual Income Tax

Hawaii imposes a graduated individual income tax with a notably high number of tax brackets and one of the highest top marginal rates in the nation.

  • Tax Rates: There are 12 marginal tax brackets, with rates ranging from a low of 1.40% to a top marginal rate of 11.00%. The top rate applies to taxable income exceeding $200,000 for single filers ($400,000 for married couples filing jointly).
  • Retirement Income: Social Security benefits are not taxable in Hawaii. Additionally, distributions from certain qualifying employer-funded pension plans are exempt from state income tax.
  • Deductions and Credits: Taxpayers can claim either a standard deduction or itemize their deductions. Hawaii also offers a refundable Earned Income Tax Credit (EITC), which is 40% of the federal EITC.

General Excise Tax (GET)

Hawaii does not have a conventional sales tax. Instead, it utilizes the General Excise Tax (GET), which is imposed on businesses for the privilege of doing business in the state. This is one of Hawaii’s most significant and unique taxes.

  • Nature of the Tax: The GET is levied on a business’s gross income from almost all business activities, including retail sales, services, contracting, and rentals. Unlike a sales tax, which is imposed on the customer, the GET is legally imposed on the seller.
  • State Rate: The standard state GET rate for retail sales and services is 4.0%. Businesses are permitted to, and typically do, visibly pass this tax on to consumers.
  • Lower Rates: The GET has lower rates for certain activities, such as 0.5% for wholesaling and manufacturing.
  • County Surcharges: Counties may impose a surcharge on the 4.0% state GET rate. For example, the City and County of Honolulu currently imposes a 0.50% surcharge, resulting in a combined rate of 4.50% in those areas.

Property Tax

Property taxes in Hawaii are exclusively local taxes administered and collected by the four county governments; no statewide property tax is collected.

  • Effective Rate: Hawaii has the lowest effective property tax rate in the U.S. on owner-occupied housing value, despite having very high median home values. The low rate offsets the high home values.
  • Assessment: Property is assessed at its fair market value by the county government. The tax is calculated by applying the local millage rate to the assessed value.
  • Home Exemption: Each county offers a substantial Home Exemption for owner-occupied residences (e.g., $100,000 in Honolulu County), which significantly reduces the property’s taxable value and subsequent tax bill.

Corporate Income Tax

Hawaii imposes a tax on the net income of corporations that conduct business within the state.

  • Tax Rates: The tax is levied under a graduated rate structure, with rates ranging from 4.4% on the lowest bracket of income up to a top marginal rate of 6.4% on net income over $100,000.
  • Apportionment: For corporations doing business in multiple states, Hawaii uses the three-factor formula (property, payroll, and sales) to apportion income to the state, with sales typically given a greater weight than property and payroll.

Unique and Miscellaneous Taxes

  • Transient Accommodations Tax (TAT): This is a key tax on short-term rentals, such as hotel rooms, resorts, and vacation rentals. This state-level tax is levied at 10.25% of gross rental income, in addition to the General Excise Tax (GET) and any applicable county surcharges.
  • Estate Tax: Hawaii imposes a state estate tax on estates exceeding the federal exemption threshold, with progressive rates that can range from 10% to 20%.

R&D Offer Quiz

Step 1 of 3

Answer to find out if you're eligible for R&D tax credits.

Do the activities performed relate to a new or improved business component’s function, performance, reliability, quality, or composition?(Required)
For Example: A mid-sized packaging company develops a slightly modified cardboard box design to improve its stacking strength (reliability) for warehouse storage, involving minor adjustments to the corrugation pattern to reduce collapse under standard weight loads.
Is your company trying to discover information to eliminate uncertainty concerning the capability or method for developing or improving a business component?(Required)
For Example: A furniture manufacturer investigates whether a cheaper wood adhesive can hold joints as effectively as the current one during assembly, testing bond strength to resolve doubts about its capability in standard production lines.
Do the activities performed constitute a process of experimentation?(Required)
For Example: An auto parts supplier runs a series of bench tests on different lubricant formulations to find one that reduces friction in engine bearings more effectively, systematically comparing wear rates over simulated operating cycles.