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Hawaii Tax

FULL List to Hawaii Tax Forms

Individual Income Tax Forms

Form N-11 Individual Income Tax Return Resident

Form N-13 Individual Income Tax Return Resident 

Form N-15 Individual Income Tax Return Non Resident

Corporate Income Tax Forms

Form N-30 Corporation Income Tax Return

Sales Tax Forms

Exemption Form

Form G45 General Excise – Use Tax Return

Property Tax Forms

Form N-288 Withholding Tax Return for Disposition by Non Resident

There are a number of taxes applicable to the state of Hawaii, which includes a state sales tax, income tax, and other taxes.

Hawaii state sales tax – Hawaii does not have a sales tax at the point of sale, but rather has an excise tax, paid by sellers, which are passed on to consumers in the price of goods.  This tax applies to almost all transactions, including rent, medical services, and food.

Hawaii personal income tax 

Hawaii uses a graduated tax system, where income which is as follows:

Income range between $0 and $2,400    1.4%.

Income range between $2,401 and $4,800   3.2%.

Income range between $4,801 and $9,600   5.5%.

Income range between $9,601 and $14,400  6.4%.

Income range between $14,401 and $19,200  6.8%.

Income range between $19,201 and $24,000   7.2%.

Income range between $24,001 and $36,000   7.6%.

Income range between $36,001 and $48,000    7.9%.

Income range $48,001 and over   8.25%.

Hawaii property taxes

– Fund local governments but approved by state

– Property tax rates vary depending on the island the property is on and the type of property.

– The rate can range anywhere between 3.42% for residential property to 12.40% for commercial and hotel properties.

Hawaii special excise taxes

Taxes assessed on vehicles, alcohol, tobacco, gasoline and are in addition to federal excise taxes.

– Funds health programs and other related activities

– $3.00 tax on every pack of cigarettes

– $5.98 tax per gallon of liquor

Hawaii inheritance tax 

Hawaii has just instituted a new inheritance tax, which went into effect on April 30, 2010.  The inheritance tax only affects estates with a value of over $3.6 Million.  Any amounts over $3.6 Million are taxed at a graduated rate, which begins at .8% and can be as high as 16% for estates over $10.1 Million.

Hawaii payroll taxes

State Disability Insurance – .50% withheld with a maximum of $4.42

State Unemployment Insurance – 1.22% – 5.42%

Exemptions

Certain exemptions for

– Military personnel and veterans

– Persons age 65 and older

– Low income tax credits

– Qualified child tax credits

Taxable income

Gross income is defined as all income from whatever source derived, including but not limited to:

– Wages

– Salaries

– Commissions

– Stock Gains

– Dividends

– Royalties income

– Rental income

– Business income

– Inheritance

– Pensions

– Annuities

– Partnership/shareholder income

– Gain from sale of property

Corporate income tax

Hawaii has different levels of corporate income tax rates ranging from 4.4% to 6.4%.

Misc

Hawaii has the highest income tax rates in the nation, with the highest pay rates paying 11% for income over $200,000.

Hawaii is one of the very few states that does not have a point of sale tax, but instead has a gross receipts tax, which taxes everything before reaching the consumer.  Many claim that this form of taxation makes for a much higher actual tax rate, as items may be taxed multiple times through the stream of commerce.  All items may be subject to the gross receipt tax, even necessities such as medical services and housing.

In relation to Hawaii state taxes, one may be surprised to learn that this state does not actually impose anything referenced as a sales tax. In Hawaii, what seems to be overriding their legislature is something called a “general excise tax.” In contrast to a sales tax, a general excise tax i placed only upon the business as opposed to the consumer or customer.

In such a case, businesses no longer maintain the role as the collector on behalf of the state, but rather, must now have their own income and profits taxed. The general excise tax, then, becomes an addition to the other bills the company or retailer must be prepared for, if they wish to set up shop there, as well as adhere to Hawaii state taxes.

This tax does not discriminate against any business transactions either as it encompasses “wholesale, retail, contracting, commissions, services, interest, lease/rental, etc.” Accompanying the variety of areas by which taxation may occur is that of equally differing rates of taxation. Hawaii state taxes set forth such taxes upon businesses, which only lead them to add on fees to the products they sell to their customers.

For instance, a customer may be thrown off by seeing an addition to the price of whatever they may be purchasing, but this may easily be explain as the retailer having you contribute the excise tax they are responsible for according to Hawaii state tax law. Though they are not legally required to pass such a tax onto the consumers, they may do so of their own volition.

Hawaii state tax law also sets forth a fuel tax that applies to all motorists in within the state. Its fuel tax is placed upon the fuel companies who disseminate it to others. It is imposed upon each gallon of “liquid fuel,” which include gasoline and benzol, for instance. Hawaii state tax on fuel is divided into 3 sections, that of the “state component,” “county component,” and the “environmental response tax.”

The state component specifies 1 cent per gallon for taxation of “aviation fuel and “off-highway diesel oil,” and 11 cents for “on-highway.” The county component depends upon each municipality, ranging from 8.8 to 16.5 cents per gallon. The environmental response tax is set at a price per barrel of 5 cents, that which is to be sold to distributors for retail.

This tax may also be passed to the consumer, but is originally meant for the distributor alone. Qualifications for a distributor include the following: parties who “refine, manufacture, or produce” fuel for sale, those who import fuel, and individuals who attain fuel from unlicensed distributors meant for eventual sale. According to Hawaii state tax law concerning fuel, all distributors must be both registered and licensed with the state. They are required to fill out a number of forms as well as attain proper certification for such retail rights to fuel within the state. Despite payment of fuel tax, one is still expected to pay environmental response taxes as well.


Introduction

Located in the Pacific Ocean, Hawaii is one of the most popular tourist destinations in the United States with a record high of over 9 million tourists visiting the islands through 2019. As a result, Hawaii is heavily reliant on tourism, which plays a significant role in the local economy. With a tax system in place, the state of Hawaii relies on collectible income, sales, and property taxes. Taxation is essential, as it provides the necessary revenue for government services that are necessary in maintaining Hawaii’s infrastructure and promoting economic growth.

This article will explore all the vital aspects of Hawaii’s tax system, including the collection of taxes, tax rates, revenue distribution, and tax policies. Additionally, this article will examine how taxes impact Hawaii’s economy and what the recent changes mean for residents, businesses, and tourists in the state.

Taxation System in Hawaii

When it comes to taxes, Hawaii operates on a tax system that’s pretty much standard to that of other states in the U.S. Hawaii imposes income taxes, sales taxes, and property taxes on people, businesses, and tourists visiting the state. These taxes represent a significant portion of the state’s revenue, making it easy for the Hawaiian government to provide essential services to its residents and promote economic growth.

Income Tax in Hawaii

Income tax is the most common type of tax levied on residents and non-residents who earn income within the state’s borders. In Hawaii, the income tax is progressive, with rates ranging from 1.4% to 11%. The income tax rate increases with higher income levels, and Hawaii has one of the highest income tax rates in the country. Hawaii also collects tax from non-residents who live outside the state but have active businesses or engage in activities within the state’s borders, such as rental properties and other sources of income.

Sales Tax in Hawaii

Hawaii also imposes a general excise tax (GET), which is applied at the state and county levels. The GET applies to the sale of goods, services, and tangible personal property, with rates varying depending on the county. Currently, the state tax rate stands at 4%, while the county tax rates stand at approximately 0.50%. As a result, the current combined sales tax rate in Hawaii stands at about 4.50%, which is currently one of the lowest in the country.

However, Hawaii’s GET is unique as it’s imposed on every business transaction within the state’s borders. As a result, businesses have to pay the GET when buying and selling goods and services to cater to Hawaii’s customers. This, therefore, makes it a more significant burden for businesses to remain financially sustainable, and many argue that the GET puts a significant burden on local businesses.

Property Tax in Hawaii

Like all states in the U.S, Hawaii imposes property tax on real estate in the state. The property tax rate is set by the county, which means that the tax rate can vary depending n the county residents live in. The rate is calculated based on the property’s assessed value, and adjustments can be made based on any renovations or improvements made to the property.

Revenue Distribution for Hawaii’s Taxes

The Hawaii state government collects a considerable amount of revenue through the taxes mentioned above, and these revenues go towards funding a variety of services that help provide residents with the necessary infrastructure and services to live and work in the state.

Income Tax Revenue Distribution

Income tax revenue collected by the Hawaii government is distributed among several state departments and agencies. One-third of the income tax collected annually goes into the State Department of Education, which serves to fund Hawaii’s school system. A similar portion of collected income tax goes to the University of Hawaii system, with another portion going to state programs that focus on crime prevention, public safety, and environmental preservation.

Sales Tax Revenue Distribution

The sales tax revenue is also heavily utilized towards the providing public services and maintaining the state’s infrastructure. The sales tax revenue in Hawaii goes into the general fund, which is utilized to fund various state programs and services, including education, healthcare, social services, and public safety through the provision of law enforcement services. A portion of the sales tax revenue collected helps cover the costs of providing the island’s key infrastructure services, such as transportation and communication systems.

Property Tax Revenue Distribution

Revenue raised through property tax goes into the respective counties, allowing the county to fund essential services. These services include local schools, fire and police departments, and administrative services that aim towards providing essential services to residents in the county.

Impact of Taxes on Hawaii’s Economy

Hawaii’s tax policies play a crucial role in the local economy. The state relies heavily on tax revenue collected to fund public services, a fact that could lead to a depressed economy. Hawaii’s unique dependency on tourism makes the economy vulnerable to unpredictable fluctuations, which could impact tax collection. In the long run, this could lead to reduced operator cash flow for businesses within the state, with a reduced capacity to engage in innovation or carry out capital budgeting.

However, for an economy with a unique tourism-based economy like Hawaii, taxes play a significant role in promoting economic growth. The tax revenue helps in developing the necessary infrastructure to attract more tourists, including the transportation.