Hawaii Income Tax Calculator
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Hawaii State Tax Calculator
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Ever dreamt of living in paradise? What if we told you that, on average, Hawaiians pay some of the lowest property taxes in the nation? Skipping across the pond to live the island life might be possible thanks to surprisingly cheap land, but be prepared to pay some of the most expensive income tax rates in the U.S.

If you’re already a proud resident of the Aloha State, you’re probably well aware of the steep taxes you face in order to call the place home. Check out our Hawaii state income tax calculator to get a sense of the burden residents face living in the Paradise of the Pacific.

Overview of Hawaii State Taxes

There are three major categories of expenses that most states impose on their residents. The federal government collects taxes from U.S. citizens, but they also give individual states the power to do the same.

Those beaches don’t keep themselves pristine, so Hawaii imposes taxes and collects revenue to fund environmental efforts, local schools, and state government agencies, just to name a few categories in the spending budget.

Each state sets its own tax laws and determines what taxes to charge, at what rate, and on which entities. Let’s take a look at the three biggest types of state taxes to see how Hawaii compares across the rest of the country.

Hawaii Taxes: Quick Facts
Income tax: 1.4 - 11.0%
Sales tax: 0%
Property tax: 0.19 - 0.29%

Income tax in Hawaii is progressive, with a marginal tax rate starting as low as 1.4% and reaching as high as 11% for top earners. Technically, Hawaii doesn’t have a sales tax in a traditional sense, but it does apply a General Excise Tax (GET) on all business activities that is passed onto consumers. As noted, property taxes in Hawaii are incredibly low as a percentage of annual income, but depending on what county you live in, you’ll have to pay an additional GET surcharge that increases the cost of living.

We’re going to comb through all these different types of taxes in Hawaii so that you’re fully aware of the financial burden you might encounter by calling the island home. We’ll explain the brackets and rates, and provide you with a Hawaii income tax calculator so you can get a quick snapshot of what your annual liability would look like living in HI. Then, we’ll cover the various taxes you might incur on a day-to-day basis so you’ll be able to stack your take-home pay against the price of being an islander.

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Hawaii State Tax Brackets

The state of Hawaii has an impressively high number of income tax brackets; taxpayers’ income is broken into 12 marginal brackets compared to the seven brackets set at the federal level. The system is progressive, so the more you earn, the more you pay. Alternatively, some states assess a flat income tax rate that does not consider how much or how little a taxpayer makes.

Take a look at the table below, which applies to single filers, to understand how the tax rates in Hawaii are structured by income.

As of 2019, Hawaiians will only pay the top 11% marginal tax rate on earnings over $200,000. In a marginal tax system, the rate applies to the amount of income within a certain bracket; once you earn one dollar past that bracket and are sent into the next, the higher tax rate will come into effect on all future earnings in addition to the previously taxed income.

For example, earnings up to $2,400 are taxed at 1.4% (2,400 x 0.014). Anything you earn over that amount, up until you hit $4,800, is taxed at 3.2% but the first half of income has already been taxed at the initial rate, meaning that only the untaxed $2,400 will be taxed in this bracket. Let’s say you made $7,000 working your first part-time job and are filing a single return under your parents; your Hawaii income tax calculation would look like this:

[2,400 x 0.014] + [(4,800 - 2,400) x 0.032] + [(7,000 - 4,800) x 0.055]

Married couples filing jointly have wider tax brackets to account for two possible earners. The household can, therefore, report a higher income before they have to pay the higher tax rate. The tax rates are scaled at the same increments but the applicable income within each marginal bracket is much higher. Only those who earn over $400,000 will pay the top 11.0% rate.

Bracket
Rate
$0.00+
1.4%
$4,800.00+
3.2%
$9,600.00+
5.5%
$19,200.00+
6.4%
$28,800.00+
6.8%
$38,400.00+
7.2%
$48,000.00+
7.6%
$72,000.00+
7.9%
$96,000.00+
8.25%
$300,000.00+
9%
$350,000.00+
10%
$400,000.00+
11%

If you need help calculating income tax in Hawaii, take advantage of our online calculator or speak to one of our tax professionals for assistance.

Hawaii Personal Income Tax

Whereas the taxing body of the Federal Government is the Internal Revenue System (IRS), personal income tax in Hawaii is regulated by the Hawaii Department of Taxation. The marginal tax rate of your applicable bracket will be applied to your entire taxable income based on your adjusted gross income (AGI) in Hawaii.

Note: Some sources of income that contribute to your federal AGI, such as Social Security benefits and many types of pensions, are not considered taxable in the Aloha State. When you calculate Hawaii income tax, be sure to subtract these from your federal AGI.

In most cases, your personal income tax in Hawaii is deducted from your paycheck by your employer based on your filing status and the number of allowances you claim on your Form W-4. This document is used to determine how much tax to withhold from your pay; the more allowances you claim, the more money you take home because fewer taxes are withheld.

While it’s tempting to minimize the income tax you pay throughout the year, if you don’t withhold enough, you may face an expensive bill come tax season to settle your liability. This can sometimes lead to back tax debt, interest, and fees in the event that you can’t afford to pay your federal or Hawaii state taxes.

It’s better to err on the side of caution and withhold more versus less, that way you can look forward to receiving a large income tax return at the end of the fiscal year.

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Hawaii Capital Gains Tax

Anyone in the world can purchase property in Hawaii without restriction, but out-of-state investors need to be aware of HARPTA and FIRPTA rules when it comes to selling the property.

The Hawaii Real Property Tax Act requires the withholding of 7.25% of the sales price, not the gains realized. This only applies to out-of-state residents; sellers who live in Hawaii may recoup some of the withholdings beyond the capital gains tax by filing the appropriate forms online.

Similarly, the Foreign Investment in Real Property Act (FIRPTA) requires that 15% of the sales price is withheld from sellers who live out-of-the-country. By default, someone who lives abroad also lives out-of-state, so both laws will apply to the transaction. Essentially, these laws enable Hawaii to collect capital gains taxes from absentee owners.

Hawaii State Sales Tax

In addition to personal income tax, many states collect revenue through sales tax. The state of Hawaii does not have a sales tax, however, it does impose a General Excise Tax (GET) on all goods and services sold within the state. The GET is different from sales tax because the GET is assessed on businesses, not customers. Businesses have the option to pass the GET onto their customers in order to offset some of their costs, but they aren’t required to.

There is a state-wide 4% GET in Hawaii on business activities such as:

  • Selling retail goods and services
  • Renting or leasing real property
  • Construction
  • Contracting
  • Earning Commission*

*Except for insurance premiums, which are taxed at 0.15%

A reduced 0.5% GET applies to taxable business activities such as:

  • Wholesaling goods
  • Manufacturing
  • Producing
  • Providing wholesale services

Hawaii State Legislature authorizes the state’s counties to impose a surcharge on the GET, which is added to the business activities taxed at the 4% rate; the surcharge doesn’t apply to activities taxed at the 0.5% or 0.15% rate.

The counties cannot adopt a surcharge greater than 0.5%. Businesses may choose to pass the GE tax and surcharge onto their customers, but they don’t have to. If they do choose to pass the tax to customers, they’re limited by a maximum pass-on rate. The table below shows each county in Hawaii, its surcharge rate, the effective date, and the max pass-on rate. Take a look to see how much additional tax you may have to pay depending on your location in Hawaii.

The highest Hawaii sales tax rate is in Honolulu, where consumers might have to pay an additional 4.1720% depending on the structure of the business they engage with. The lowest rate is in Maui (4.1666%), which does not impose a county surcharge.

Let’s say, for example, you’re making a $100 purchase in the capital of Hawaii. The business decides to pass the GET onto you, but the maximum it can charge is 4.1720% or $4.17. Your final sale price will be $104.17, part of which goes to the business and part of which goes to the state.

While it may seem frustrating to pay more in taxes on sales in Hawaii, the maximum price you’ll pay in the Aloha State is much friendlier than what you’ll find in other states across the country. Compare this rate to sales tax in New York, where people in the Big Apple have to pay over 18% just to park their car in Manhattan.

Hawaii Excise Taxes

Unfortunately, the dollar doesn’t stop there. Additional excise taxes are assessed on the sales of specific items, commonly referred to as “sin taxes” across the states because the goods are deemed harmful to individuals and societies at large. Common categories include alcohol and tobacco, but depending on the state you live in, you might pay an extra tax on soft drinks, fast food, candy, coffee, and gambling winnings.

Whereas sales tax is assessed as a percentage of the sale, excise taxes are typically imposed at a flat rate. Similar to the GET, businesses often pass these taxes onto consumers in order to recover some of their expenses. Let’s take a look at excise taxes in Hawaii compared to the rest of the country.

Hawaii Alcohol Tax

If you like sipping Pina Coladas on the sandy beaches of Hawaii, be prepared to pay more for your alcoholic beverage. The alcohol tax in Hawaii is broken up into three categories: beer ($0.93/gal), wine ($1.38/gal) and liquor ($5.98/gal).

Hawaii Tobacco Tax

In an effort to deter its residents from smoking, Hawaii charges an additional excise tax on tobacco products. At an extra $3.20 per pack of 20 cigarettes, Hawaii boasts some of the most expensive tobacco taxes in the country. The average cost of a pack of cigarettes is $8.99, which is the second-highest in the United States.

Hawaii Cannabis Tax

In February 2019, Hawaiian lawmakers approved a bill to legalize recreational marijuana for adults 21 and over. Following the example of other states, like the Colorado tax system, Hawaii will impose a cannabis excise tax in addition to a 15% surcharge once the law goes into effect.

Hawaii Fuel Tax

The Hawaiian islands are lush and green — and the state wants to keep them that way. In order to encourage drivers to minimize their carbon footprint and fuel consumption, they charge an excise tax on gasoline at $0.16/gal by the state and $0.165 - $0.23/gal by county for a total of $0.32.5 - $0.39/gal depending on where you fill up. Effective July 1, 2019, the Hawaii Dept. of Taxation announced an increase in the diesel tax rate, which now ranges by county from $0.32.5 - $0.39/gal.

Hawaii State Property Tax

From the dense jungles to the clear blue shores, sky-high palm trees to tropical blooms, there are countless reasons why one would want to buy property in the Paradise of the Pacific — and the good news is that low property tax rates in Hawaii might encourage you to do so.

As we noted earlier, Hawaiian homeowners get to enjoy some of the lowest property rates in the country, which is shocking considering the beautiful state frequently sits atop destination wishlists and has a booming tourism industry. Those who live where most vacation will pay, on average, a 0.27% Hawaii property tax. The lowest property tax in the United States is located in Maui (0.19%). That’s more than five times lower than the national average of 1.08%.

Hawaii is one out of the 14 states that assess property tax on the county level, not the state level. Real property tax rates in Hawaii are classified by property type then applied to the assessed property value per every $1,000. For example, if you own a homestead on the Big Island worth $500,000, the real property rate in Kauai County is $3.05 per $1,000 (or 0.00305). That means your Hawaii property tax bill would amount to $1,525. However, if the same property were used as a vacation rental, the rate would then become $8.85 per $1,000 (0.00885) and the bill would increase to $4,425.

Clearly, homeowners receive the best property tax breaks in Hawaii while the state profits off the tourism industry. If you’re intrigued by low property taxes in Hawaii, you’re in luck — it’s the only state in the U.S. whose land area is increasing thanks to volcanic eruptions.

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Hawaii Inheritance and Estate Taxes

In 2019, Governor Ige signed a bill that raises the inheritance tax in Hawaii on the state’s wealthiest residents. Now, anyone who inherits an estate worth more than $10 million in money or property will be subject to paying nearly $1.4 million plus 20% of the net taxable estate.

Hawaii’s maximum 20% estate tax is tied for highest in the country. However, an inherited estate is only taxable if the amount (as calculated on IRS Form 706) is more than $5.49 million. The new estate tax rate in Hawaii — which is predicted to collect an additional $5 million per year in tax revenue — is meant to place a heavier tax burden on the wealthy to address the immediate needs of low-income residents.

Currently, the overall tax system in Hawaii is regressive. This means that low-income earners pay a higher percentage of their total earnings in taxes than the wealthiest residents pay. The graph reflects the total amount of taxes paid in Hawaii (including income, sales, and property taxes) categorized by income level according to recent data.

As you can see, the top 20% of earners pay the lowest effective tax rate in Hawaii while those who earn $20,000 or less wind up paying 15% of their total income to state and county taxes.

Hawaii State Tax Credits

Thankfully, there are a number of tax credits in Hawaii that offset this financial burden:

  • Credit for Low-Income Household Renters
  • Credit for Child and Dependent Care Expenses
  • Credit for Child Passenger Restraint System
  • Refundable Food/Excise Tax Credit
Hawaii State Tax Exemptions and Deductions

A personal exemption refers to the amount of money exempt from taxation on behalf of yourself and each of your qualified dependents on your tax return. The personal exemption amount in Hawaii is $1,144 per each exemption claimed, including an additional exemption for those age 65 or older.

If you are blind, deaf, or disabled and your impairment has been certified by the state, you can claim a disability exemption of $7,000 in lieu of the $1,144 amount.

Standard deductions, or the flat amount of income that you are able to deduct from your taxable income, also relieve taxpayers in the Aloha State. The standard deduction amounts in Hawaii are broken into five categories depending on filing status, ranging from $2,200 to $4,400.

Looking at the graph above, you can see that the married filing jointly and head of household filers receive the best tax breaks with the largest standard deduction. Additional deductions you may be able to claim include:

  • $5,000 (single filer) or $10,000 (married jointly) paid in cash toward a trust account established to save for a down payment on your first home
  • Student loan interest payments.
  • Qualified dental or medical expenses that exceed 7.5% of your AGI in Hawaii.
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Calculating Your Hawaii Tax Refund

To calculate Hawaii tax refunds, you need to first start with your AGI. Next, subtract your personal exemptions and standard deduction. You may only claim itemized deductions in Hawaii if they are larger than the standard amount. This number will tell you which tax bracket you fall into and what rate you will pay on Hawaii state taxes.

If you’ve paid more to the state than what you owe throughout the course of the tax year, then you will receive a refund of that amount. You can compare these numbers on your Form W-2 which shows an employee’s annual wages and the total amount of taxes withheld from paychecks.

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How to Pay Hawaii Taxes

File your taxes using the Hawaii Tax Online (HTO) portal or download the proper forms to mail them in by hand.

The filing deadline for individual tax returns is April 20th. If you need an extension, you may not use Federal Form 4868; taxpayers are required to use state-specific forms to request an extension to file state income taxes.

If you need to pay a Hawaii state tax bill, you can do so using the HTO portal, credit card payment, check, or money order.

Hawaii Tax Facts
Summary of Federal Taxes

Remember, your Hawaii state tax liability is separate from your federal income tax, which is filed using Form 1040.

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Tax Considerations

This information is accurate as of 2019. Special circumstances that can affect your tax return may apply..

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