Hawaii Tax Guide 2026

Personal income tax — 12 brackets

HRS §235-51 establishes a 12-bracket schedule for single filers (12 for MFJ, doubled brackets). 2026 illustrative single schedule: • 1.4% on first $2,400 • 3.2%, 5.5%, 6.4%, 6.8%, 7.2%, 7.6%, 7.9%, 8.25%, 9%, 10%, and • 11% on income above $200,000 single / $400,000 MFJ Standard deduction: $2,200 single / $4,400 MFJ (small). Personal exemption: $1,144 per person. No state QBI deduction. No AMT. Hawaii fully exempts Social Security benefits and most pension income (employer-funded pension excluded under HRS §235-7(a)(3); employee-funded portion taxable).

Capital gains — 7.25% alternative tax

HRS §235-51(f) allows individuals to ELECT to pay the lesser of: • Regular tax on capital gains at ordinary brackets, OR • 7.25% flat alternative tax on the net long-term capital gain For high-bracket filers (top 11% applies), the 7.25% election saves 3.75 percentage points on net LTCG. Election made via Schedule D-1 of Form N-15/N-11. Note: Hawaii has long debated raising the capital gains alternative rate; 2023 legislation proposed (but did not enact) raising it to 9%. Watch the 2026 legislature.

General Excise Tax (GET) — pyramiding, not pass-through

Hawaii's GET (HRS §237) is fundamentally different from a sales tax: • Imposed on the SELLER (not the buyer) • Applies to ALL business activity: retail, wholesale, services, rentals, royalties, leasing, manufacturing, contracting — even attorney's fees and rent payments • PYRAMIDS through the supply chain: each transaction is taxed, even B2B Rate structure: • Retail / services / contracting: 4.0% state + county surcharge (0.5% Oahu; 0.25% Hawaii Island portions; 0% Kauai/Maui) → 4.5% Oahu • Wholesale: 0.5% • Insurance commissions: 0.15% Gross-up: the seller can pass through the GET to the buyer at a 'gross-up' rate (4.712% for a 4.5% GET base) to make the seller whole after paying the tax on the gross including the pass-through. Economic effect: Hawaii's GET burden is estimated at ~7.5% of personal income (vs ~3.5% for a typical state sales tax) because it hits services, rent, and wholesale layers that retail sales tax misses. Groceries: NOT exempt. Hawaii is one of few states taxing food. Medical services: NOT exempt. Economic nexus (HRS §237-2.5): $100,000 in gross OR 200 transactions.

Property tax — lowest in the US

Statewide average effective ~0.27% — the lowest in the US by a wide margin. Honolulu County (Oahu): residential 0.35%; investor/non-occupant 0.45%–1.5% (tiered Residential A class for non-owner-occupied homes > $1M). Maui: 0.20% homestead, 0.55%–1.2% non-owner-occupied. Hawaii Island (Big Island): 0.21% homestead, varied non-owner. Kauai: 0.27% homestead, 0.50%–0.90% second home/short-term rental. Homestead/owner-occupant exemption: $100,000 (Honolulu) to $200,000 (Kauai) reduction from assessed value. The LOW rate masks high property VALUES — median Honolulu home ~$850k means actual dollar bill is moderate ($3,000–$5,000/yr typical).

Transient Accommodations and other taxes

Transient Accommodations Tax (TAT) under HRS §237D: 10.25% state + 3% county (all counties enacted) = 13.25% on hotel stays, vacation rentals, timeshare conversions. Combined TAT + GET on a Maui hotel room: 13.25% + 4% GET = 17.25% before service charges. One of the highest lodging tax loads in the US. Fuel tax: $0.16/gal state + variable county. County conveyance tax: 0.10%–1.25% of property transfer price (HRS §247). Estate tax (HRS §236E): 10%–20% on Hawaii estates > $5.49M (2023 base; indexed) — far below federal $15M exemption. No inheritance tax.

Worked example: Kai Nakamura, Honolulu-based art dealer (single, 2026)

Kai operates as a single-member LLC selling original art from a Kakaako studio. Gross sales $480,000; cost of goods $180,000; net profit (Schedule C) $220,000. Long-term capital gain on a personal investment: $150,000.

Federal: SE tax + federal income tax + QBI (services, but art dealing is sale of goods — QBI may apply non-SSTB) → mid-six-figure federal. Hawaii income tax: Ordinary income (after federal AGI flow-through): $220,000 LTCG: $150,000 Total: $370,000 Standard deduction: $2,200 Taxable: $367,800 Option A: Tax all at ordinary brackets, top 11% on portion above $200k = ~$36,500 total Option B (capital gains election): ordinary $220k taxed at brackets ~$19,500 + LTCG $150k × 7.25% = $10,875 → $30,375 total Choose Option B → saves $6,125 GET on gross $480,000 retail in Honolulu @ 4.5%: $480,000 × 4.5% = $21,600 (passed to customers at 4.712% gross-up where possible) Property tax on $900k Honolulu condo (homestead) ≈ ($900k − $100k exemption) × 0.35% = $2,800/yr. Hawaii state tax burden ~$54,775 + property (vs federal of similar magnitude).

Statute references

• Personal income tax (12 brackets, top 11%) — HRS §235-51
• Capital gains 7.25% alternative tax — HRS §235-51(f)
• Pension exclusion (employer-funded) — HRS §235-7(a)(3)
• General Excise Tax — HRS §237
• GET economic nexus — HRS §237-2.5
• Transient Accommodations Tax — HRS §237D
• Corporate income tax — HRS §235-71
• Conveyance tax — HRS §247
• Estate and Generation-Skipping Tax — HRS §236E

Related pages

• State Tax Comparison →
• Capital Gains Tax →
• Wayfair Nexus Tracker →