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Hawaii Taxes: What You Need to Know
Hawaii’s tax system includes a progressive income tax, a General Excise Tax (GET) on businesses instead of a sales tax, and the lowest property tax rate in the U.S. Visitors contribute through a Transient Accommodations Tax on hotels and rentals. Fuel, alcohol, and tobacco are taxed, along with an estate tax for significant assets. This diverse structure supports Hawaii’s unique economy and lifestyle.
Source: tax.hawaii.gov
Federal Tax in Hawaii 2025
In 2025, Hawaii residents are subject to the same federal tax brackets and rates as all U.S. citizens. Federal tax rates are progressive, meaning higher portions of income are taxed at increasing rates. The 2025 federal income tax brackets retain the same seven rates — 10% to 37% — with income thresholds adjusted upward for inflation. For single filers, rates start at 10% for income up to $11,925, then rise incrementally, reaching 37% for income over $626,350. For married couples filing jointly, rates start at 10% for income up to $23,850 and rise to 37% for income over $751,600. These brackets were made permanent under the One Big Beautiful Bill Act (OBBB) signed in 2025, meaning the rates will no longer sunset, though income thresholds will continue to be adjusted annually for inflation.
Source: https://www.irs.gov/
Social Security and Medicare Tax
In addition to federal income tax, Hawaii residents also pay federal Social Security and Medicare taxes, which are separate from income tax. The Social Security tax rate is 6.2% on wages up to $176,100 (up from $160,200), and the Medicare tax rate is 1.45% on all wages, with an additional 0.9% Medicare surtax applied to income over $200,000 for single filers or $250,000 for married couples filing jointly. These federal taxes are uniform across the U.S., so Hawaii residents face the same federal tax obligations as residents of other states, despite any differences in state tax structures.
State and Local Taxes in Hawaii
- Income Tax: Hawaii has a progressive income tax system with rates ranging from 1.4% to 11%. Hawaii is currently in a multi-year tax relief program under Act 46 that is gradually widening tax brackets to reduce the burden on low- and middle-income households.
- General Excise Tax (GET): This is a tax on the gross income of businesses for the privilege of doing business in the state. The standard rate is 4%, but certain activities like wholesaling are taxed at 0.5%. The GET is a privilege tax imposed on business activity in the State of Hawaii.
- Sales Tax: Hawaii does not have a traditional sales tax. Instead, GET serves a similar purpose.
- Property Tax: Hawaii has the lowest average property tax rate in the U.S. at 0.26%, though property values are typically high.
- Transient Accommodations Tax (TAT): This tax is imposed on the gross rental proceeds from transient accommodations, such as hotels and vacation rentals.
- Rental Vehicle Surcharge Tax: This tax is applied to rental vehicles.
- Fuel Tax: The state imposes a tax on gasoline and diesel.
- Alcohol and Tobacco Taxes: These are relatively high, with specific rates for products like cigarettes and liquor.
- Estate Tax: Hawaii has an estate tax that affects residents with significant assets.
Source: https://tax.hawaii.gov/
Among Hawaii’s graduated state income taxes are:
- Individual Income Tax: Graduated rates from 1.40% to 11.00%
- Corporate Income Tax: Graduated rates from 4.4% to 6.4%
- State Sales Tax Rate: 4.00%
- Combined State and Local Sales Tax Rate: Average of 4.50%
- Effective Property Tax Rate: 0.26% on owner-occupied housing value
- Estate Tax: Yes, Hawaii has an estate tax
- Gas Tax Rate: 18.5 cents per gallon
- Cigarette Excise Tax Rate: $3.20 per pack
- State and Local Tax Collections per Capita: $7,778
- State and Local Debt per Capita: $13,654
- Funded Ratio of Public Pension Plans: 65%
Hawaii’s tax system can be a little complex. Both employees and employers need to be aware of various withholdings and deductions. Here’s a table to simplify the tax categories:
| Category | Details |
|---|---|
| Federal Tax Withholding | Federal income tax is withheld based on IRS guidelines and employee W-4 forms. |
| State Tax Withholding | Hawaii state income tax is withheld based on state guidelines and employee HW-4 forms. |
| Local Tax Withholding | Hawaii does not have local income taxes. |
| FICA Taxes | Social Security tax: 6.2% of wages (matched by employer). Medicare tax: 1.45% of wages (matched by employer). |
| State Insurance Taxes | Includes State Disability Insurance, State Unemployment Insurance, and State Family Leave Insurance. |
| Pre-Tax Deductions | Includes contributions to retirement plans (e.g., 401(k), 403(b)), health insurance premiums, and transportation benefits. |
Median Household Income in Hawaii
According to the U.S. Census Bureau, the median household income in Hawaii in 2024 was $100,389, up from $98,240 in the prior year — reflecting continued growth in household earnings across the state.
Source: https://www.census.gov/quickfacts/fact/table/HI/PST045224
Hawaii Tax Brackets 2025
Understanding Hawaii’s tax brackets is essential for managing your finances. Hawaii uses a progressive income tax system, meaning the tax rate increases as your income rises.
Hawaii is currently implementing a multi-year tax relief plan under Act 46, Session Laws of Hawaii 2024. As part of this plan, the income tax brackets were significantly restructured effective January 1, 2025, with wider brackets designed to reduce the tax burden on most households — especially those in low- to middle-income ranges.
The rates continue to range from 1.4% for the lowest income earners to 11% for the highest earners.
| Income Brackets (Single Filers & Married Individuals Filing Separately) | Tax Rate (Single & Married Individuals Filing Separately) | Income Brackets (Married Couples Filing Jointly) | Tax Rate (Married Couples Filing Jointly) |
|---|---|---|---|
| Up to $2,400 | 1.4% | Up to $4,800 | 1.4% |
| $2,401 – $4,800 | 3.2% | $4,801 – $9,600 | 3.2% |
| $4,801 – $9,600 | 5.5% | $9,601 – $19,200 | 5.5% |
| $9,601 – $14,400 | 6.4% | $19,201 – $28,800 | 6.4% |
| $14,401 – $19,200 | 6.8% | $28,801 – $38,400 | 6.8% |
| $19,201 – $24,000 | 7.2% | $38,401 – $48,000 | 7.2% |
| $24,001 – $36,000 | 7.6% | $48,001 – $72,000 | 7.6% |
| $36,001 – $48,000 | 7.9% | $72,001 – $96,000 | 7.9% |
| $48,001 – $150,000 | 8.25% | $96,001 – $300,000 | 8.25% |
| $150,001 – $175,000 | 9% | $300,001 – $350,000 | 9% |
| $175,001 – $200,000 | 10% | $350,001 – $400,000 | 10% |
| Over $200,000 | 11% | Over $400,000 | 11% |
Hawaii effectively doubles bracket widths for married couples filing jointly — a significant advantage for dual-income households.
Source: https://tax.hawaii.gov/forms/d_25table-on/d_25table-on_p13/
Standard Deduction Amounts for Tax Year 2025:
| Filing Status | Standard Deduction |
|---|---|
| Single or Married Filing Separately | $4,400 |
| Married Filing Jointly / Surviving Spouse | $8,800 |
| Head of Household | $6,424 |
Personal Exemption: $1,144 per exemption (taxpayer and dependents).
Hawaii’s tax system combines progressive income taxes, unique business taxes, and various other levies to support the state’s economy and public services.
With its low property tax rates and specific taxes on tourism and goods, Hawaii ensures a balanced approach to revenue generation.
Hawaii is in an active multi-year phase of tax relief (through 2031), so brackets and standard deductions are scheduled to continue expanding. Taxpayers should verify the latest rates each year or consult a tax professional. Understanding these taxes is crucial for residents and businesses to effectively navigate their financial responsibilities and benefit from the state’s offerings.
Wrapping Up
Hawaii has one of the more complex state tax systems, with progressive rates running from 1.4% all the way up to 11%, one of the highest top rates in the country. The good news is the state is actively working to ease that burden through a multi-year tax relief plan running through 2031, gradually widening brackets to help low and middle income earners. There are no local income taxes, and Hawaii swaps the traditional sales tax for a General Excise Tax on businesses instead.
