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Hawaii State Tax

Hawaii State Tax

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.  Contact Hawaii lawyers for legal advice and assistance.

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 is 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.


Introduction

Hawaii is not just a beautiful tourist destination; it is also known for its unique tax system. The state has one of the highest income tax rates in the country, but it also offers some benefits that residents and businesses can take advantage of. In this article, we will look at Hawaii’s state tax system in detail, including income tax, property tax, sales tax, and other taxes imposed by the state.

Hawaii Income Tax

Hawaii has a progressive income tax system that ranges from 1.40% to 11% for individuals and 6.4% to 11% for corporations. The state’s income tax rates are among the highest in the country. The top marginal income tax rate of 11% applies to taxable income over $400,000 for individuals and $800,000 for married couples filing jointly.

Hawaii uses a standard deduction and personal exemption system for individual income tax. The standard deduction is $2,200 for single filers, $4,400 for married couples filing jointly, and $3,050 for heads of household. The personal exemption is $1,144 per taxpayer, spouse, and dependent.

The state also offers various credits and deductions to lower the overall tax liability. For example, taxpayers can claim a credit for contributions to a Hawaii college savings program, a credit for adopting a child, and a credit for high technology businesses.

Hawaii Property Tax

Hawaii’s property tax is based on the assessed value of the property. The county assessors determine the assessed value of the property, and the county council sets the property tax rates. The tax rate varies by the county, and it is generally lower in rural areas than in more densely populated areas like Honolulu.

The state has a homeowner’s exemption, which applies to the primary residence of the homeowner. The exemption amount varies by county but is generally around $50,000. The state also offers a few other exemptions, such as the disabled veteran’s exemption and the blind exemption.

Hawaii Sales Tax

Hawaii does not have a state-level sales tax system. However, it has a general excise tax (GET), which is a business tax that applies to the gross income of businesses. The GET is imposed on both the retail and wholesale sale of goods and services.

The general excise tax rate is 4% for most businesses and 0.5% for wholesale transactions. However, some businesses, such as those involved in the sale of alcohol, tobacco, and rental cars, are subject to higher rates.

Compared to a traditional sales tax, the GET can be more burdensome for businesses. It applies to all business income, regardless of the profitability or loss of the business. Moreover, the tax is levied at every stage of production and distribution, which can increase the overall cost of goods and services.

Other Taxes

In addition to income, property, and GET, Hawaii also imposes several other taxes and fees.

Transient Accommodations Tax: Hawaii’s transient accommodations tax (TAT) imposes a tax on the gross rental income of transient accommodations. The tax rate is 10.25%, and it applies to hotels, motels, vacation rentals, and other accommodations.

Fuel Tax: The state also imposes a fuel tax on gasoline and diesel. The tax is currently $0.16 per gallon of gasoline and $0.18 per gallon of diesel.

Cigarette Tax: Hawaii has the third-highest cigarette tax in the country, with a rate of $3.20 per pack of 20 cigarettes.

Alcohol Tax: Hawaii also imposes a tax on alcohol. The tax rate varies by type of alcohol, but it ranges from $0.54 per liter of beer to $5.98 per liter of distilled spirits.

Conclusion

Hawaii’s tax system is unique, and it can be complex for residents and businesses to navigate. The state imposes high income tax rates and has a general excise tax system that can be more burdensome for businesses than a traditional sales tax. However, the state also offers various credits and deductions to lower the overall tax liability.

The property tax rate varies by county, and the state has several exemptions to reduce the tax burden on homeowners. Hawaii’s transient accommodations tax, fuel tax, cigarette tax, and alcohol tax are also significant sources of revenue for the state.

When it comes to tax planning, individuals and businesses in Hawaii must take a holistic approach to optimize their tax liability. Working with a tax professional can help taxpayers navigate the state’s tax system and take advantage of all the available opportunities to minimize their tax obligation.