Tax in Hawaii: a complete guide
Whether you’re considering moving to Hawaii for retirement, a job opportunity, or your inability to resist the allure of those beautiful beaches a second longer, doing your research is a must.
A big part of that research is the financial side of things, as Hawaii's cost of living is high compared to mainland states.
Once you know your tax burden, you’ll be better placed to decide whether moving to this amazing archipelago could work for you.
Hawaii income tax
Every US resident must pay federal income tax in one of seven brackets, regardless of where in the country they reside. In most places, US residents must also account for state-level income tax. In Hawaii, state income tax applies to residents and non-residents who get their income from a Hawaiian source.
The tax is progressive, like federal taxes, with rates ranging from 1.4 percent up to 11 percent:
A single person OR a registered domestic partner/married person filing separately:
| Taxable income | State income tax amount |
|---|---|
| Taxable income | State income tax amount |
| $0–$2,400 | 1.4 percent of your income |
| $2,401–$4,800 | $34, and 3.2 percent over $2,400 |
| $4,801–$9,600 | $110, and 5.5 percent over $4,800 |
| $9,601–$14,400 | $374, and 6.4 percent over $9,600 |
| $14,401–$19,200 | $682, and 6.8 percent over $14,400 |
| $19,201–$24,000 | $1,008, and 7.2 percent over $19,200 |
| $24,001–$36,000 | $1,354, and 7.6 percent over $24,000 |
| $36,001–$48,000 | $2,266, and 7.9 percent over $36,000 |
| $48,001–$150,000 | $3,214, and 8.25 percent over $48,000 |
| $150,001–$175,000 | $11,629, and nine percent over $150,000 |
| $175,001–$200,000 | $13,879, and ten percent over £175,000 |
| $200,000 upwards | $16,379, and 11 percent over $200,000 |
A registered domestic partner/married person filing jointly OR a qualifying widower:
| Taxable income | State income tax amount |
|---|---|
| Taxable income | State income tax amount |
| $0–$4,800 | 1.4 percent of your income |
| $4,800–$9,600 | $67, and 3.2 percent over $4,800 |
| $9,600–$19,200 | $221, and 5.5 percent over $9,600 |
| $19,200–$28,800 | $749, and 6.4 percent over $19,200 |
| $28,800–$38,400 | $1,363, and 6.8 percent fo the excess of $28,800 |
| $38,400–$48,000 | $2,016, and 7.2 percent over $38,400 |
| $48,000–$72,000 | $2,707, and 7.6 percent over $48,000 |
| $72,000–$96,000 | $4,531, and 7.9 percent over $72,000 |
| $96,000–$300,000 | $6,427, and 8.25 percent over $96,000 |
| $300,000–$350,000 | $23,257, and nine percent over $300,000 |
| $350,000–$400,000 | $27,757, and ten percent over $350,000 |
| $400,000 upwards | $32,757, and 11 percent over $400,000 |
A head of household:
| Taxable income | State income tax amount |
|---|---|
| Taxable income | State income tax amount |
| $0–$3,600 | 1.4 percent of your income |
| $3,600–$7,200 | $50, and 3.2 percent over $3,600 |
| $7,200–$14,400 | $166, and 5.5 percent over $7,200 |
| $14,400–$21,600 | $562, and 6.4 percent over $14,400 |
| $21,600–$28,800 | $1,022, and 6.8 percent over $21,600 |
| $28,800–$36,000 | $1,512, and 7.2 percent over $28,800 |
| $36,000–$54,000 | $2,030, and 7.6 percent over $36,000 |
| $54,000–$72,000 | $3,398, and 7.9 percent over $54,000 |
| $72,000–$225,000 | $4,820, and 8.25 percent over $72,000 |
| $255,000–$262,500 | $17,443, and nine percent over $225,000 |
| $262,500–$300,000 | $20,818, and ten percent over $266,500 |
| $300,000 upwards | $24,568, and 11 percent over $300,000 |
There is also a corporate income tax in Hawaii, which will be charged at one of three rates:
4.4 percent for income up to $25,000
5.4 percent minus $250 for income between $25,001 and $100,000
6.4 percent minus $1,250 for income over $100,000
Hawaii sales tax
Sales tax in Hawaii, which applies to most products and certain services, is four percent statewide. Local areas and districts can also charge sales tax up to a maximum of 0.5 percent, for a possible total of 4.5 percent. On average, you’ll find that the combined sales tax rate is around 4.44 percent.
Some items are exempt from sales tax in the island state, including prescription drugs, certain medical supplies, and purchases made with food stamps. Many areas in Hawaii also have lowered tax rates for goods like clothing, groceries, and medicines that aren’t already exempt.
Restricted items are subject to a higher-than-usual “sin tax,” common in most US states:
| Product | Cost |
|---|---|
| Product | Cost |
| Any tobacco products other than cigarettes and large cigars | 70 percent of the manufacturer’s price |
| Beer | $0.93 per gallon |
| Cigarettes | $3.20 per pack |
| Large cigars | 50 percent of the manufacturer’s price |
| Liquor | $5.98 per gallon |
| Wine | $1.38 per gallon |
| Wine (sparkling) | $2.12 per gallon |
Hawaii property tax
If you buy a home in Hawaii, you’ll be responsible for paying the according property tax. Hawaii has the lowest property tax rate in the nation at 0.27 percent.
Homes in Hawaii have the highest average value of any place in the US. To contextualize: California, another US state with a high cost of living and many tourist-filled beaches, has an average home value of $741,789. This is almost $100,000 lower than Hawaii’s average home value of $836,677.
There is some area-by-area variation that you can account for if you’d like to save money. For example, the average list price in Kailua is $1,595,000, compared to $680,500 in Honolulu.
Hawaii motor tax
Vehicle purchases in Hawaii are covered by sales tax but have a specific rate of 4.712 percent. Additional fees will apply if you’re buying a car or another vehicle on any Hawaiian islands, including registration, titling, plates and fuel.
Regarding fuel, Hawaii has the second lowest tax rate for gasoline, partly because navigating the archipelago in a vehicle isn’t always easy. Gasoline is taxed at $0.16 per gallon, with undyed diesel slightly higher at $0.17 per gallon.
Hawaii estate tax
It’s essential to consider the possible impact of estate and inheritance taxes, ensuring you align with federal requirements and those that apply in your state. If it can’t be avoided, estate tax will reduce your assets' final value. Inheritance tax, similarly, will reduce the amount your loved ones get to retain.
Hawaii is one of around a dozen US states in which you will need to account for estate tax at the state level, and that’s important to know if you’re considering making the Aloha State your home. The Hawaii estate tax is progressive, with rates ranging from 10 to 20 percent, and, as of 2023, it will only apply if the estate in question is worth more than $5.49 million.
As for inheritance tax? You’ll have more luck. Hawaii does not levy inheritance tax. Laws in other states may still apply to you, however, especially if you’re receiving from someone who lives in a state with very different requirements.
Hawaii retirement tax
Many people dream of retiring to Hawaii. But is it a retirement-friendly state?
In Hawaii, Social Security and military and government benefits are tax-exempt, as are private pensions and Tier 1 Railroad Retirement benefits.
However, other retirement plan distributions or contributions may be taxed in Hawaii. Be sure to complete further research or speak with a finance professional to see whether you will be affected. You can also check out the complete guide to retirement in Hawaii here.
For further tax guidance and to ensure you’re not paying more tax than you need to, it’s wise to speak to an expert. A financial advisor can help you handle all your tax queries and ensure you’re not paying more tax than needed.
Senior Content Writer
Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.