An Overview of Hawaii State Taxes
Hawaii has a progressive income tax, a general excise tax (instead of a sales tax), and property taxes that vary by county. Filing your taxes correctly and on time is essential because you might be able to take advantage of tax credits, exemptions, and deductions offered by the state. These breaks could lower your tax obligations and, in some cases, lead to a tax refund.
Table of Contents
Hawaii Income Tax
Hawaii has a progressive income tax system. With this arrangement, residents pay income taxes at a different rate depending on how much they earn. In Hawaii, the rate can range from 1.4% to 11%.
Tax rates depend on income and also on filing status. Those who are married and filing jointly can earn twice as much as single filers in the same tax bracket. Heads of household can earn 1.5 times more than single filers and still remain in the same tax bracket. A complete current tax rate schedule is available from the Hawaii Department of Taxation.
|Income Tax Rate||Single, and Married, Filing Separately||Married, Filing Jointly||Head of Household|
|1.40%||$0 to $2,400||$0 to $4,800||$0 to $3,600|
|3.20%||$2,401 to $4,800||$4,801 to $9,600||$3,601 to $7,200|
|5.50%||$4,801 to $9,600||$9,601 to $19,200||$7,201 to $14,400|
|6.40%||$9,601 to $14,400||$19,201 to $28,800||$14,401 to $21,600|
|6.80%||14,401 to $19,200||$28,801 to $38,400||$21,601 to $28,000|
|7.20%||$19,201 to $24,000||$38,401 to $48,000||$28,001 to $36,000|
|7.60%||$24,001 to $36,000||$48,001 to $72,000||$36,001 to $54,000|
|7.90%||$36,001 to $48,000||$72,001 to $96,000||$54,001 to $72,000|
|8.25%||$48,001 to $150,000||$96,001 to $300,000||$72,001 to $225,000|
|9.00%||$150,001 to $175,000||$300,001 to $350,000||$225,001 to $262,500|
|10.00%||$175,001 to $200,000||$250,001 to $400,000||$262,501 to $300,000|
|11.00%||$200,000 plus||$400,000 plus||$300,000 plus|
These rates apply to taxable income. To get the taxable income, you start with the federal AGI (adjusted gross income) and then make subtractions from there. There are a few differences between taxable income in Hawaii and federal taxable income. For example, you need to list Social Security benefits and some pensions on your federal returns, but they are tax exempt in Hawaii.
Also, if you make payments to an individual housing account to make a down payment on your first home, you can deduct $5,000 per year if you’re a single filer, and $10,000 per year if you’re married and filing jointly.
You also get a standard state deduction of $2,200 if you’re a single filer or married and filing separately. The standard deduction is $4,400 if you’re married and filing jointly. You’re allowed to claim itemized deductions if their total is larger than the standard deduction.
There are also tax credits that you can claim to reduce the amount that you have to pay. If you don’t owe taxes, these credits become refundable tax credits.
- Some examples include a refundable food excise tax credit for taxpayers with an adjusted gross income lower than $50,000.
- You can also earn a credit if you are a low-income renter with an AGI lower than $30,000.
- Parents and guardians can claim a child and dependent care expenses credit for some child care expenses.
- State income tax returns are due on April 20 in Hawaii. If April 20 is on the weekend, returns are due the following Monday.
The State Department of Taxation website has additional information about tax responsibilities, filing, and other issues and requirements.
Hawaii Sales Taxes
Officially, Hawaii does not have a sales tax. However, there’s a general excise tax (GET) that is very similar to a sales tax. Businesses are responsible for this tax, but they pass the cost on to consumers. The GET means that Hawaiians and visitors pay at least 4% extra for their goods and services.
Hawaii’s general excise tax is lower than sales taxes in most states. However, the tariff applies to more products and services than most other states.
For example, the GET applies to things like legal services and care services. This arrangement can lead to some unusual taxes. For example, you have to pay an excise tax on a wedding in Hawaii if the state determines it to be a nonreligious “tourist wedding.”
Businesses are allowed to pass on a higher rate than the general excise tax to cover the cost of administering this tax. In Honolulu, for example, companies can pass up to 4.712% on to the consumer. The maximum rate is 4.166% in other counties. Currently, the only items that are exempt from the GET are prosthetic devices and prescription drugs.
Local authorities can also add surcharges to the excise tax. Honolulu County, for example, levies a 0.5% surcharge on goods, bringing the total general excise tax for Honolulu residents to 4.50%. Kauai County also has a 0.5% GET surcharge, while Hawaii County has a 0.25% surcharge.
Maui County, on the other hand, does not levy a surcharge, so there the GET is only 4% total.
Hawaii Property Taxes
For tax purposes, there are two kinds of property in Hawaii: personal property and real property. Personal property is any asset that isn’t attached to the land and is used for non-business purposes. Personal property includes items such as furniture, appliances, household equipment, and so on. Real property, or real estate, refers to land and the structures on it.
Hawaii does not impose a property tax on personal property, but it does tax real property.
Property taxes get managed at the county level, and each county has different rates.
|County||Class||*Tax Rate per $1,000 Net Taxable Property|
For the Maui and Hawaii counties, “Net Taxable Property” is split into buildings and land, and the same rates apply to both.
To get the total amount in taxes that you will pay on real property, you divide the Net Taxable Value of your property by $1,000. You then multiply the result by the tax rate for your county and property type.
Each county has its own property tax arrangements. You can find information at the county property tax websites.
Exemptions for Owner-Occupied Homes
Hawaii offers exemptions for owner-occupied homes. Your home qualifies if you live there for more than 200 days during the calendar year.
The exemption depends on the age of the homeowner. Owners under 60 can get up to $40,000 in exemptions. For owners aged 60 to 69, the maximum exemption is $80,000. Meanwhile, those over 70 get a $100,000 exemption.
In 2005, Hawaii enacted an additional exemption of 20% of the assessed value up to $80,000.
Hawaii Estate Taxes
Hawaii does not impose an inheritance tax. The state does have an estate tax, but it does not affect most estates. The exemption for the 2019 tax year is $5.49 million. Estates with a value less than this will not owe any estate taxes. For estates with a higher value, tax rates start from 10% on the first $1 million of taxable wealth. The highest rate is 15.7%, which applies to estates valued at $10.49 million or more.
Estates valued at more than $11.58 million also have to pay federal estate taxes. Hawaii had initially planned to change its estate tax exemption to match the federal estate tax exemption. However, when Washington D.C. raised the estate tax exemption to properties valued below $11.58 million, Hawaii decided not to follow suit.
In some cases, an estate can make deductions to bring the total taxable estate value below the exemption threshold. For example, property left to a surviving spouse is not taxable.
Tips for Filing Taxes in Hawaii
The due date for filing income tax returns in Hawaii is April 20, which is slightly later than the April 15 federal tax due date.
Most state taxpayers are eligible to file their taxes online. For taxpayers who want to file via the internet, the state has an eServices page. This page allows you to submit your returns electronically. You can also use the site to check the status of your tax refunds.
If you file by mail, you must have your returns postmarked by April 20. You can obtain tax forms from the State of Hawaii Department of Taxation tax form web page.
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This post was updated February 20, 2020. It was originally published February 20, 2020.