This Hawaii tax guide covers the rules in force from 1 January 2026. Hawaii layers a 12-bracket state income tax of 1.4%–11% on top of the full federal system, charges no retail sales tax but a 4.5% General Excise Tax on almost all gross receipts including services and rent, caps long-term capital gains at 7.25%, and levies no inheritance tax. Combined with federal tax, top earners pay close to 48% on ordinary income but only 31.05% on long-term gains. Act 24, signed on 21 May 2026, adds a 13% top bracket from tax year 2027.
Introduction
Hawaii is the most geographically isolated populated place on earth: an eight-island archipelago in the central Pacific, some 2,400 miles from California, admitted as the 50th US state in 1959. It is a full US jurisdiction — US federal law, US courts, the US dollar and the US treaty network apply, and there is no separate residency or immigration route. Governance is stable and Democratic-dominated, the legal system is common law, English and Hawaiian are official. The climate is tropical, the standard of living high, and the price level runs about 10% above the US average on the Bureau of Economic Analysis’s regional price parity, with housing far above that.
This Hawaii tax guide matters because Hawaii is the mirror image of the jurisdictions usually covered here: a high-tax, high-cost place inside a worldwide-taxing country, where the question is not how to arrive but what it costs to stay. Three forces drive the 2026 arithmetic. Middle-income households are mid-way through a real tax cut — Act 46 of 2024 doubles the standard deduction in 2026 and widens brackets again in 2027 and 2029. High earners are moving the other way, into a 13% bracket from 2027. And the General Excise Tax, Hawaii’s signature levy, taxes business activity a normal sales tax never touches.
Direct Taxes
Hawaii taxes residents on worldwide income and non-residents on Hawaii-source income. You are resident if domiciled in Hawaii, or if present for other than a temporary or transitory purpose; presence exceeding 200 days in the tax year raises a rebuttable presumption of residency from the date of arrival. Rates are progressive across twelve brackets. Corporations are taxable on income from doing business in the state, apportioned for multistate operations. The key concept for investors is not the income tax but the General Excise Tax, levied on gross receipts rather than retail sales or profit — covered under Indirect Taxes below.
Personal income tax (2026 bands)
Figures are for single filers and married filing separately; married-filing-jointly thresholds are exactly double.
| Chargeable income (single, USD) | Rate |
|---|---|
| Up to $9,600 | 1.4% |
| $9,601 – $14,400 | 3.2% |
| $14,401 – $19,200 | 5.5% |
| $19,201 – $24,000 | 6.4% |
| $24,001 – $36,000 | 6.8% |
| $36,001 – $48,000 | 7.2% |
| $48,001 – $125,000 | 7.6% |
| $125,001 – $175,000 | 7.9% |
| $175,001 – $225,000 | 8.25% |
| $225,001 – $275,000 | 9% |
| $275,001 – $325,000 | 10% |
| Over $325,000 | 11% |
Act 46, SLH 2024 holds these brackets flat from 2025 into 2026 while doubling the standard deduction to $8,000 (single), $12,000 (head of household) and $16,000 (joint), from $4,400 / $6,424 / $8,800. The personal exemption is $1,144 per person, doubled at 65. Social Security benefits and employer-funded pension distributions are exempt; employee elective deferrals, IRA withdrawals and government deferred compensation are not. From tax year 2027, Act 24, SLH 2026 adds a 13% bracket above $500,000 (single), $750,000 (head of household) and $1,000,000 (joint), while the scheduled widening of the lower brackets proceeds. The Department of Taxation expects it to touch about 2,300 returns — 0.4% of filers — and raise $53 million.
Hawaii computes taxable income from federal adjusted gross income and then applies its own deduction and exemption, so federal below-the-line deductions do not automatically flow through.
Combined federal and Hawaii rates
Federal and Hawaii brackets cannot be added row by row, because they are computed on different taxable income figures: the 2026 federal standard deduction is $16,100 against Hawaii’s $8,000 plus a $1,144 exemption. The table below is therefore keyed to gross wage income for a single filer taking the standard deduction. Federal rates run 10%, 12%, 22%, 24%, 32% and 35% before reaching 37% at $640,600 of federal taxable income ($768,700 joint).
| Wage income (single) | Federal marginal | Hawaii marginal | Combined |
|---|---|---|---|
| $50,000 | 12% | 7.2% | 19.2% |
| $75,000 | 22% | 7.6% | 29.6% |
| $100,000 | 22% | 7.6% | 29.6% |
| $150,000 | 24% | 7.9% | 31.9% |
| $200,000 | 24% | 8.25% | 32.25% |
| $250,000 | 32% | 9% | 41% |
| $300,000 | 35% | 10% | 45% |
| $400,000 | 35% | 11% | 46% |
| $700,000 | 37% | 11% | 48% |
The rate that actually applies depends on the type of income, not only its size:
| Income type (top of scale) | Federal | Hawaii | Combined 2026 | Combined 2027 |
|---|---|---|---|---|
| Wages and other ordinary income | 37% | 11% → 13% | 48% | 50% |
| Interest | 37% + 3.8% NIIT | 11% → 13% | 51.8% | 53.8% |
| Qualified dividends | 20% + 3.8% NIIT | 11% → 13% | 34.8% | 36.8% |
| Long-term capital gains | 20% + 3.8% NIIT | 7.25% cap | 31.05% | 31.05% |
Two points matter more than the headline rate. Add employee payroll tax — 6.2% Social Security to $184,500, 1.45% Medicare uncapped and 0.9% additional Medicare above $200,000 — and a mid-career professional in Honolulu clears 40% on the marginal dollar well before reaching the top brackets. And because the 7.25% cap survives Act 24, the combined top rate on long-term capital gains stays at 31.05% even in 2027, when ordinary income reaches 50%: a gap of almost 19 points that is the whole planning story in Hawaii. These figures ignore the federal deduction for state tax, capped at $40,400 for 2026 and phased down above $500,000 of modified AGI, so the highest earners recover almost nothing through it.
Corporate income tax
| Item | Rate |
|---|---|
| Corporate income tax — first $25,000 | 4.4% |
| Corporate income tax — $25,001 to $100,000 | 5.4% |
| Corporate income tax — over $100,000 | 6.4% |
| Corporate net capital gains — alternative rate | 4.0% |
| Banks and financial institutions — franchise tax | 7.92% |
These rates sit on top of the 21% federal corporate rate. There is no participation exemption, no IP box and no holding-company regime — Hawaii offers nothing structurally comparable to the regimes covered elsewhere on this site. Conformity to the Internal Revenue Code is selective and refreshed annually: Act 35, SLH 2026 conforms Hawaii to the Code as amended to 31 December 2025, but bonus depreciation under IRC §168(k) is not operative and §179 expensing is capped at $25,000. Banks pay the 7.92% franchise tax in lieu of both corporate income tax and GET. Act 24 sunsets the capital goods excise and technology infrastructure renovation credits after 31 December 2027, and the high technology business investment, renewable fuels production and research activities credits after 31 December 2028.
Social security and health contributions
| Contribution | Employee | Employer | Self-employed |
|---|---|---|---|
| Social Security (federal, first $184,500) | 6.2% | 6.2% | 12.4% |
| Medicare (federal, no cap) | 1.45% | 1.45% | 2.9% |
| Additional Medicare (over $200,000 / $250,000 joint) | 0.9% | — | 0.9% |
| Hawaii unemployment insurance (first $64,500) | — | 2.4% new employer, max 5.6% | n/a |
| Employment & Training assessment | — | 0.01% | n/a |
| Temporary Disability Insurance | max 0.5% of weekly wage, capped at $7.50/week | balance of premium | n/a |
| Prepaid Health Care | max 1.5% of wages | balance of premium | n/a |
The federal Social Security wage base rises to $184,500 for 2026; Hawaii’s unemployment system runs on contribution Schedule C with a $64,500 wage base and a maximum weekly benefit of $868. Two Hawaii-specific employer burdens matter. Temporary Disability Insurance is mandatory, with the employee share capped at $7.50 a week against a $1,500.21 weekly wage base. More significantly, the Prepaid Health Care Act obliges employers to provide health coverage to anyone earning $1,387 a month or more and working 20 hours a week, with the employee’s share capped at 1.5% of wages. Hawaii is the only US state with such a mandate.
Indirect Taxes
Hawaii has no retail sales tax. In its place sits the General Excise Tax, a gross-receipts tax on the business rather than a transaction tax on the consumer — the single most misunderstood feature of the system.
General Excise Tax (GET)
| Rate | Applies to (examples) |
|---|---|
| 4.5% (4.0% state + 0.5% county surcharge) | Retailing, services, professional fees, commissions, contracting, long-term and short-term rents — essentially all business gross income |
| 0.5% | Wholesaling, manufacturing, producing, intermediary services |
| 0.15% | Insurance commissions |
| 4.5% / 0.5% | Use tax on imported goods and services, mirroring the above |
All four counties levy the 0.5% surcharge, in force through 31 December 2030, so 4.5% applies statewide. Because GET is imposed on the seller, who may pass it on and then owes GET on the passed-on amount, the maximum visible rate a customer may be charged is 4.7120%. Three consequences matter: GET applies to gross receipts, not profit, so a loss-making business still owes it; it reaches services, professional fees and rents that a sales tax exempts; and because it applies at each stage it pyramids through the supply chain. A Honolulu landlord owes GET on gross rent; a consultant owes it on the fee.
Excise and other indirect taxes
| Tax | Notes |
|---|---|
| Transient accommodations tax (TAT) | 11% state from 1 January 2026, up from 10.25% — the “green fee” under Act 96, SLH 2025; also applies to cruise fares and timeshare occupancy |
| County TAT surcharge (OTAT / MCTAT) | 3% in all four counties, stacking for a 14% lodging tax before GET |
| Rental motor vehicle surcharge | $7.50 per day from 1 January 2026, up from $7.00 |
| Conveyance tax | 0.10% to 1.00% of value, rising to 0.15% to 1.25% where the buyer is not eligible for a county homeowner exemption; $1 minimum |
| Fuel, tobacco and liquor excises | Levied at state level under separate chapters |
Stacked, a Waikiki hotel bill carries 11% state TAT, 3% Oahu TAT and 4.712% GET — roughly 18.7% in tax. The conveyance tax matters to non-resident buyers: the higher scale applies precisely to condominiums and houses bought by someone who will not claim a homeowner exemption, so an investor paying $2 million for a Honolulu condo pays a materially higher rate than an owner-occupier at the same price.
Other Taxes Worth Knowing
| Tax | Hawaii treatment |
|---|---|
| Capital gains tax (individuals) | Ordinary rates, but an alternative computation caps net long-term gains at 7.25%; short-term gains at ordinary rates |
| Capital gains tax (corporations) | 4.0% alternative rate |
| Dividends (resident individual) | Ordinary income, 1.4%–11%; no preferential state rate |
| Interest (resident individual) | Ordinary income, 1.4%–11%; Hawaii state and municipal bond interest exempt |
| Rental income | Ordinary income, 1.4%–11%, plus 4.5% GET on gross rent |
| Wealth / net worth tax | None |
| Inheritance tax | None |
| Estate tax | Yes — $5,490,000 exemption, 10% rising to 20% above $10,000,000 of Hawaii net taxable estate; portability available |
| Gift tax | None at state level, though lifetime taxable gifts reduce the estate exemption |
| Immovable property tax (annual) | County-levied; among the lowest effective rates in the United States for owner-occupants |
The 7.25% cap is the most valuable feature of the system for investors, and it survived the 2026 session: Act 24 amended the rate schedules in HRS §235-51(a)–(c) but left the alternative capital-gains computation in §235-51(f) untouched, and HB1850 — which would have taxed individual gains as ordinary income — died in Senate Ways and Means. It is a recurring legislative target. The estate tax is the mirror-image problem: Hawaii’s $5.49 million exemption is roughly a third of the 2026 federal exclusion of $15 million, so an estate between the two pays nothing federally and a real amount to Hawaii.
Property tax is set by county per $1,000 of net taxable value, and the spread between owner-occupant and investor classes is the largest single lever in Hawaii real estate. For fiscal 2026 Honolulu charges $3.50 residential and $4.00 on the first $1 million of Residential A, but $11.40 above that and $9.00–$11.50 for transient vacation use; Maui charges $1.65–$5.75 owner-occupied against $12.50–$15.55 for short-term rentals; Hawaii County $5.95 for homeowners against $11.10–$13.60 for other residential; Kauai $2.59 owner-occupied against $5.45–$9.40 non-owner-occupied. Honolulu’s home exemption is $120,000 ($160,000 at 65+), rising to $140,000 and $180,000 from 1 July 2027.
Disadvantages & Risks
Hawaii is not a tax-efficient jurisdiction and nothing here should suggest otherwise. It is a high-rate, high-cost US state whose top marginal rate becomes the second-highest in the country in 2027, behind only California’s 13.3%. The combined federal and state burden on high ordinary income is 48% in 2026 and 50% from 2027, and there is no relief at the federal layer: US citizens and green-card holders are taxed on worldwide income wherever they live, so moving to Hawaii adds a state tax without removing anything. The GET pyramids, taxing services, fees, commissions and rents that a sales tax exempts, and taxing gross receipts rather than profit — structurally punitive for consultancies and low-margin businesses. The cost base compounds it: prices run about 10% above the national average and far more for housing, with Jones Act shipping restrictions raising the landed cost of nearly everything.
The fiscal outlook is the live risk. Hawaii entered the 2026 session facing a shortfall of nearly $3 billion, and the response was to preserve middle-income relief while raising the top rate and sunsetting five business credits — a pattern that points one way if the gap persists. Capital gains bills targeting the 7.25% cap were introduced in both 2025 and 2026 and will return. Beyond tax, the state carries concentration risk in a small economy dependent on tourism, defence spending and real estate; a thin professional labour market; and serious climate and insurance exposure after the 2023 Lahaina fire, with condominium insurance availability now constraining financing. UTC−10 with no daylight saving puts Honolulu six hours behind New York and eleven behind London, ruling it out for anyone working European hours. Hawaii appears on no EU or OECD list — it is part of a US state, not a listed jurisdiction — but it inherits full US reporting, FATCA, FBAR and CFC rules with none of the offsetting advantages.
Strategy & Ideal Profile
There is no clever Hawaii structure. The state offers no holding regime, no participation exemption, no IP box and no residency-by-investment route, so planning here is ordinary US planning applied to one state. Four levers work. First, the 7.25% capital gains cap taxes long-term gains at barely half the top ordinary rate, which makes Hawaii tolerable for someone whose income is realised gains rather than salary — and which the 2027 millionaire bracket does not, on its face, disturb. Second, timing and domicile: because residency turns on domicile and the 200-day presumption, sequencing a large realisation against a move in either direction is the highest-value decision most people make here. Third, property class arbitrage: the gap between owner-occupant rates of $1.65–$3.50 per $1,000 and short-term rental rates of $9.00–$15.55 dwarfs any income tax planning on a typical portfolio. Fourth, estate planning around the gap between Hawaii’s $5.49 million exemption and the federal $15 million, using portability and credit-shelter trusts.
Hawaii suits a narrow profile. Retirees fit best: Social Security and employer-funded pensions are exempt, there is no inheritance tax, and owner-occupant property tax is among the lowest in the country — a retired public-sector employee with a defined-benefit pension and a paid-off home pays remarkably little state tax. Long-term investors holding appreciating assets benefit from the 7.25% cap and cheap residential property tax. Middle-income households are in their best position in a generation, with the standard deduction doubling in 2026 and brackets widening in 2027 and 2029. Residency is easy to acquire and hard to shed: cross 200 days and you are presumed resident from arrival, and rebutting that requires a maintained permanent home elsewhere.
Hawaii does not suit high earners on ordinary income, facing 48% combined in 2026 and 50% from 2027. It does not suit service-business owners, who pay 4.5% GET on gross fees before any deduction. It does not suit short-term rental investors, stacking an 18.7% lodging tax on revenue with property tax three to nine times the owner-occupant class. And it does not suit anyone whose real alternative is Puerto Rico’s Act 60 or a no-income-tax state such as Texas, Florida or Nevada — against those, Hawaii is a lifestyle purchase with a tax bill attached, not a tax strategy. The reliefs also carry sunsets: five business credits expire in 2027 and 2028, and the renewable energy technologies credit is income-limited from 2027 above $350,000 of joint AGI.
FAQ
Is Hawaii a tax haven?
No — close to the opposite. Hawaii is a US state with a 12-bracket income tax topping out at 11% in 2026 and 13% from 2027, a 4.5% gross-receipts tax on nearly all business activity, and full exposure to US federal taxation on worldwide income. Combined with federal tax, the top rate on ordinary income is 48% in 2026 and 50% from 2027. Its only genuinely favourable features are the 7.25% cap on long-term capital gains — which holds the combined rate on those gains to 31.05% — the exemption of Social Security and employer-funded pensions, and very low owner-occupant property tax.
What are the Hawaii income tax rates in 2026?
Twelve brackets from 1.4% to 11%. The top 11% rate begins at $325,000 of taxable income for a single filer and $650,000 for a married couple filing jointly. The 2026 standard deduction is $8,000 single, $12,000 head of household and $16,000 joint, with a personal exemption of $1,144 per person.
What is Hawaii’s new 13% millionaire tax?
Act 24, SLH 2026 (Senate Bill 3125), signed 21 May 2026, creates a 13% top bracket for tax years beginning after 31 December 2026 — so tax year 2027. It applies above $500,000 for single filers, $750,000 for heads of household and $1,000,000 for joint filers. The Department of Taxation estimates it will affect about 2,300 returns and raise $53 million in 2027.
How is the General Excise Tax different from sales tax?
GET is levied on a business’s gross receipts, not on retail sales to consumers. It applies at 4.5% statewide to services, professional fees, commissions, contracting and rents as well as goods, it is owed whether or not the business is profitable, and because it applies at each stage of a supply chain it compounds. A business may pass it on, but only up to a maximum visible rate of 4.7120%.
Does Hawaii tax capital gains?
Yes, but favourably. An alternative computation caps the Hawaii rate on net long-term capital gains at 7.25%, against a top ordinary rate of 11%. Short-term gains are taxed at ordinary rates and corporations have their own 4.0% rate. Federal capital gains tax of 0%, 15% or 20% plus the 3.8% net investment income tax applies on top.
Is there inheritance or wealth tax in Hawaii?
There is no inheritance tax, no gift tax and no wealth tax. There is an estate tax, with a $5,490,000 exemption and rates from 10% to 20% on Hawaii net taxable estates above $10,000,000. Because the federal exclusion is $15,000,000 for 2026, an estate between $5.49 million and $15 million owes Hawaii estate tax while owing nothing federally.
How much tax does a non-resident investor pay on Hawaii rental property?
Three layers: Hawaii income tax of 1.4%–11% on Hawaii-source net rental profit, 4.5% GET on the gross rent, and county property tax at the non-owner-occupant rate — $11.40 per $1,000 above $1 million on Oahu, or $12.50–$15.55 for a Maui short-term rental. Short-term rentals additionally collect 11% state TAT plus 3% county surcharge. On sale, conveyance tax applies and HARPTA withholding of 7.25% of the amount realised is taken from a non-resident seller.
Sources
All figures should be checked against the primary government sources below. Only official government bodies are listed here.
- tax.hawaii.gov — Hawaii Department of Taxation: income tax, GET, TAT, conveyance and estate tax, forms and instructions
- files.hawaii.gov — Announcement 2024-03: Act 46 SLH 2024 bracket and standard deduction schedules by year
- tax.hawaii.gov — county surcharge on general excise and use tax
- files.hawaii.gov — Outline of the Hawaii Tax System
- files.hawaii.gov — TIR 96-5: pension and retirement income exclusion
- files.hawaii.gov — TIR 97-1: residency and the 200-day presumption
- files.hawaii.gov — Tax Facts 2010-1: HARPTA withholding on dispositions by non-residents
- capitol.hawaii.gov — Hawaii State Legislature: Act 24 SLH 2026 (SB3125, 13% bracket), Act 35 SLH 2026 (IRC conformity), Act 96 SLH 2025 (TAT green fee), HRS chapters 235, 236E, 237, 237D and 247
- governor.hawaii.gov — Office of the Governor: 2026 session bill signings
- labor.hawaii.gov — Department of Labor and Industrial Relations: unemployment insurance schedule and wage base, TDI and Prepaid Health Care figures
- realproperty.honolulu.gov — City and County of Honolulu: FY2026 real property tax rates for all four counties and the home exemption
- mauicounty.gov — County of Maui: Maui County transient accommodations tax
- irs.gov — Rev. Proc. 2025-32: 2026 federal brackets, standard deduction, capital gains breakpoints and estate exclusion
- irs.gov — One Big Beautiful Bill Act provisions, including the state and local tax deduction cap
- ssa.gov — Social Security Administration: 2026 contribution and benefit base
- bea.gov — Bureau of Economic Analysis: regional price parities by state
Hawaii uses the US dollar, so every figure in this guide is already stated in US dollars and no currency conversion applies.
Last verified: 5 September 2026.
This is general information, not personal tax or legal advice. Tax outcomes depend on your specific facts; consult a qualified Hawaii tax adviser before acting.
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