Taxes in Hawaii: Features and Advantages

Main Taxes in the State of Hawaii

Income Tax:

Hawaii applies a progressive personal income tax scale. Rates range from 1.4% to 11%, making Hawaii one of the states with the highest income taxes, especially for incomes over $200,000. The tax covers all major sources of income – wages, business income, rental income, and capital gains. The state offers standard deductions, child credits, and tax relief for retirees and low-income residents.

Sales Tax / General Excise Tax:

Instead of a standard sales tax, Hawaii uses the General Excise Tax (GET), which is levied on businesses rather than consumers when selling goods and providing services. The base GET rate is 4%, with most counties adding a local surcharge of 0.5%, bringing the total to 4.5%. The tax applies to nearly all types of commercial activity – from real estate rentals to professional and household services.

Property Tax:

Property tax in Hawaii is levied at the county level, with rates depending on the type of property (residential, investment, hotel, commercial). The average effective rate is about 0.28%, one of the lowest in the U.S. However, in popular tourist areas, the tax can be significantly higher for rental homes or properties owned by nonresidents.

Business Taxes:

C‑corporations are subject to corporate tax on a progressive scale from 4.4% to 6.4%, depending on profit levels. In addition, all companies must pay GET regardless of organizational form, requiring careful consideration when choosing structure and pricing. An Annual Report is mandatory for all companies registered in Hawaii (LLCs, corporations, nonprofits) – it must be filed annually by the end of the quarter in which the company was registered. Businesses must also file tangible personal property returns, especially for commercial real estate and equipment.

Excise Taxes:

Hawaii levies excise taxes on alcohol, tobacco, gasoline, as well as on car rentals, tourism services, and temporary accommodations (TAT – Transient Accommodations Tax). The TAT rate is 10.25% on short-term housing rentals (hotels, Airbnb, etc.), plus local surcharges.

Estate and Gift Tax:

Hawaii is one of the few states with an estate tax. The progressive rate is up to 20% and applies to estates exceeding $5.49 million (as of 2025, subject to adjustment).

Favorable Tax Conditions in Hawaii:

Despite high income tax rates and the complex nature of GET, Hawaii offers:
• One of the lowest property tax rates in the U.S.;
• Low corporate tax for smaller companies.

Taxes in Hawaii Compared to Other States:

• Income tax up to 11% — among the highest in the U.S.;
• GET replaces the classic sales tax and is difficult to calculate without professional support;
• One of the lowest property tax rates in the country;
• Corporate tax lower than in Connecticut, New Jersey, or California;
• Estate tax applies — as in Oregon or Massachusetts.