Hawaii has one of the most progressive income tax systems in the United States, with rates ranging from 1.4% to 11%. The 11% top rate applies to income above $325,000 (single filers) — a threshold raised from $200,000 by Hawaii's 2024 tax cut (Act 46, SLH 2024) — making Hawaii’s top rate the second-highest among all US states, after California's 13.3%. Hawaii’s General Excise Tax (GET) is often misunderstood as a sales tax — it is actually a gross receipts tax levied on businesses at multiple stages of the supply chain, charged at 4% statewide plus a 0.5% county surcharge in every county (4.5% on most retail activity). Property taxes are relatively low by rate, but Hawaii’s extremely high home values mean dollar-denominated property tax bills are substantial.
At a glance
Key Facts
State Income Tax
Progressive: 1.4% to 11% (12 brackets); 11% top rate applies above $325,000 (single) / $650,000 (married) — raised from $200,000/$400,000 by 2024's Act 46; second-highest top rate in the USA after California
General Excise Tax (GET)
4% state rate; all four counties (Honolulu, Hawaii, Kauai, Maui) add a 0.5% surcharge through 12/31/2030, so most retail activity is taxed at 4.5%; applied at gross receipts level on businesses — effectively higher than a 4% sales tax due to pyramiding
Property Tax
Rates vary by county: Honolulu ~0.35% for owner-occupied residential; lower rate but high home values mean substantial dollar amounts
Estate and Inheritance Tax
Hawaii has its own estate tax ($5.49M exclusion, per Form M-6 instructions); the federal exemption is $15M per individual in 2026 (OBBBA — permanent)
Capital Gains
Net capital gains are taxed at a maximum of 7.25% (separate calculation, HRS 235-51(f)); other income is taxed at ordinary Hawaii rates
Pension and Retirement Income
Hawaii exempts pensions funded entirely by the employer (state/county government, federal CSRS/FERS, military, and qualifying private defined-benefit pensions); portions funded by employee contributions, and IRA/401(k) withdrawals, are taxable
Transient Accommodations Tax (TAT)
11% state TAT on short-term rentals and hotel stays, plus county surcharges; significant for vacation rental property owners
Introduction
Hawaii’s tax system is as distinctive as its geography. The state’s income tax structure — with 12 brackets and a top rate of 11% that kicks in at $325,000 for single filers (raised from $200,000 by Hawaii's 2024 tax cut, Act 46 SLH 2024) — represents the most bracket-dense progressive tax structure of any US state. Combined with the General Excise Tax, which functions differently from a traditional sales tax and results in cascading costs throughout the economy, Hawaii’s effective tax burden on high earners is substantial.
Yet Hawaii continues to attract wealthy transplants from the mainland, driven by its unparalleled natural environment, favorable weather, and the lifestyle benefits that no tax calculation can fully capture. For those considering Hawaii as a permanent residence, understanding the interplay between income taxes, the GET, property taxes, and the very high cost of living is essential to financial planning. This guide covers every aspect of Hawaii’s 2026 tax system for residents, investors, and those considering making Hawaii their permanent home.
Section 01
Hawaii Income Tax 2026: Rates, Brackets, and Who Pays the Most
Hawaii’s income tax is the most complex in the United States by number of brackets — the state uses 12 income tax brackets, compared to the federal government’s 7. The top rate of 11% is the second highest among all US states (behind California's 13.3%), and it applies to income above $325,000 for single filers — a threshold raised by Hawaii's 2024 tax cut (Act 46, SLH 2024) from the old $200,000 level that used to capture many middle-income professionals given Hawaii’s very high cost of living.
Hawaii 2026 Income Tax Brackets (Single Filers)
Taxable Income
Rate
$0 – $9,600
1.4%
$9,601 – $14,400
3.2%
$14,401 – $19,200
5.5%
$19,201 – $24,000
6.4%
$24,001 – $36,000
6.8%
$36,001 – $48,000
7.2%
$48,001 – $125,000
7.6%
$125,001 – $175,000
7.9%
$175,001 – $225,000
8.25%
$225,001 – $275,000
9%
$275,001 – $325,000
10%
Above $325,000
11%
Hawaii Income Tax vs Other High-Tax States
State
Top Rate
Income Threshold for Top Rate
Tax on $300K Income
Hawaii
11%
$325,000 (single)
~$22,550
California
13.3%
$1M+
~$23,670
New York (state only)
10.9%
$25M+
~$20,000
Oregon
9.9%
$125,000+
~$27,650
Minnesota
9.85%
$203,150+
~$22,500
Note: Hawaii's 2024 tax cut (Act 46) raised the top-bracket threshold from $200,000 to $325,000, so at $300K income Hawaii's burden now falls in the middle of this group — not the highest, as a pre-2024 comparison would have shown.
Key Hawaii Tax Deductions and Credits
Standard deduction: $8,000 for single filers; $16,000 for married filing jointly (2026, under Act 46 — increased sharply from the pre-2024 figure of $2,200/$4,400)
Personal exemption: $1,144 per person
Low-income tax credit: Refundable credit for lower-income filers
Capital gains: Partially preferential: Hawaii taxes net capital gains at a maximum 7.25% rate (rather than the full 11% ordinary income rate), providing modest preferential treatment for long-term investors
Employer-funded pension exemption: Hawaii exempts retirement benefits funded entirely by the employer, including state and county government, federal civil service (CSRS/FERS), military, and qualifying private defined-benefit pensions. Portions funded by employee contributions, and traditional IRA or 401(k) withdrawals, are fully taxable (Hawaii Department of Taxation, Tax Review Commission presentation, July 2026)
Section 02
Hawaii’s General Excise Tax (GET): Not a Sales Tax
The General Excise Tax is perhaps the most misunderstood element of Hawaii’s tax system. Unlike a sales tax, which is levied once at the point of sale to the final consumer, the GET is a gross receipts tax levied on businesses at each stage of production and distribution. This ‘pyramiding’ effect means the effective tax burden on consumers is higher than the nominal 4% rate.
How the GET Pyramiding Works
Consider a simple example of a retail product:
A wholesaler sells goods to a retailer for $1,000 — the wholesaler owes 0.5% GET on $1,000 = $5
The retailer sells the goods to a consumer for $1,500 — the retailer owes 4% GET on $1,500 = $60
Total GET collected: $65 on a $1,500 consumer purchase = 4.33% effective rate
In practice, because GET applies at each level of the supply chain, economists estimate the effective consumer burden is approximately 4.2–4.5% on most goods, higher than the nominal 4% rate would suggest.
GET Rates by Activity
Activity
Rate (Statewide)
County Surcharge (all four counties)
Retail sales
4%
+0.5% = 4.5% in every county
Wholesale sales
0.5%
None (surcharge applies only to activities taxed at 4%)
Hawaii’s GET has relatively few exemptions compared to most state sales taxes:
Prescription drugs are exempt
Certain medical and dental services are exempt or reduced
Wholesale transactions within certain inter-company structures
Grocery food: NOT exempt from GET in Hawaii (unlike most state sales taxes) — this is a significant cost for lower-income residents
The county surcharge is 0.5% in each of Honolulu, Hawaii, Kauai, and Maui counties through December 31, 2030 (Hawaii Department of Taxation), so there is no 4% county for most activity.
The lack of a grocery exemption means Hawaii’s GET effectively acts as a regressive tax on necessities. This has been a subject of ongoing policy debate in the Hawaii legislature.
Section 03
Hawaii Property Taxes, Real Estate Costs, and the Full Financial Picture
Hawaii Property Tax Rates
Hawaii property taxes are administered by counties (not the state). The nominal rates are relatively low, but Hawaii’s extraordinarily high home values mean the actual dollar amount of property taxes can be substantial. Honolulu County (Oahu) has a home exemption that provides significant relief to owner-occupants.
County
Owner-Occupied Rate (per $1,000, FY2025-26)
Annual Tax on $1M Home
Annual Tax on $2M Home
Honolulu (Oahu)
$3.50 (after $120,000 home exemption)
~$3,080
~$6,580
Maui
$1.65 (up to $1.3M; $1.80 above)
~$1,650
~$3,405
Hawaii County (Big Island)
$5.95
~$5,950
~$11,900
Kauai
$2.59
~$2,590
~$5,180
Honolulu’s owner-occupied homestead classification provides the lowest tax rate — essentially 0.35% on assessed value after the $120,000 home exemption (Maui and Kauai owner-occupied rates are lower still; county exemptions other than Honolulu’s are not reflected in the table). Non-owner-occupied residential properties (investment properties, vacation rentals) are taxed at substantially higher rates.
Transient Accommodations Tax (TAT) for Vacation Rental Owners
Hawaii has been aggressive about taxing short-term vacation rentals. Owners who rent their Hawaii property for less than 180 days must collect and remit:
11% Transient Accommodations Tax (TAT)
4.5% General Excise Tax (GET) on rental income (4% plus the 0.5% county surcharge)
County surcharges varying by island
Combined, the effective tax on gross vacation rental income can reach 15–16%+ before income taxes. This has led many mainland investors to reconsider Hawaii vacation rental properties as investment vehicles.
Total Hawaii Tax Burden for a High Earner
Tax Category
Hawaii
California
Florida
Income Tax ($300K salary)
~$22,550
~$23,670
$0
Consumption Tax ($60K spending)
~$2,700 (GET at 4.5%)
~$5,250 (8.75%)
~$4,200 (7%)
Property Tax ($1M home)
~$3,080 (owner-occ Oahu)
~$7,300
~$8,000
Estate Tax
Yes ($5.49M exclusion)
None (state)
None (state)
Hawaii Cost of Living Context
Any Hawaii tax analysis must account for cost of living. Hawaii is widely regarded as one of the most expensive states for housing, food, and energy. Honolulu Board of Realtors data, as reported by the Honolulu Star-Advertiser (October 2026), put the Oahu median resale price in September 2026 at $1,110,000 for single-family homes and $523,000 for condos (January–September 2026 medians: $1,180,000 and $515,000). Gas, groceries, and utilities also tend to cost more than on the mainland. For remote workers or retirees considering Hawaii, the combination of high income tax, GET on all purchases, and elevated cost of living means the total financial burden is substantially higher than tax rates alone suggest.
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Hawaii’s top income tax rate is 11%, the second highest in the United States after California's 13.3%. The 11% rate applies to taxable income above $325,000 for single filers and above $650,000 for married filing jointly — a threshold raised by Hawaii's 2024 tax cut (Act 46, SLH 2024), which raised it from $200,000/$400,000. Hawaii has 12 income tax brackets, starting at 1.4% on the first $9,600 of income. The 2024 increase means far fewer upper-middle-income professionals now reach the 11% top rate than before the reform.
Q
What is Hawaii’s General Excise Tax (GET) and how does it differ from a sales tax?
Hawaii’s General Excise Tax is a gross receipts tax levied on businesses, not a consumer sales tax. While a sales tax is collected once at the point of final sale, the GET is collected at every stage of the supply chain — from manufacturer to wholesaler to retailer. This ‘pyramiding’ means the effective cost to consumers is higher than the nominal 4% rate. In every county (Honolulu, Hawaii, Kauai, and Maui) the total rate on most retail activity is 4.5% (state 4% plus a 0.5% county surcharge through 2030). Unlike most state sales taxes, Hawaii’s GET applies to groceries, making it more regressive than traditional sales taxes.
Q
What are property taxes like in Hawaii?
Hawaii property taxes are administered by counties and vary by island. Honolulu County (Oahu) has one of the lowest nominal rates in the country for owner-occupied homes — approximately $3.50 per $1,000 of assessed value (0.35%), with a $120,000 homeowner exemption. However, Hawaii’s very high home values mean annual tax bills are still significant. On a $1 million Oahu home with the homeowner exemption, annual property taxes would be approximately $3,080. Investment properties and vacation rentals are taxed at higher rates.
Q
Does Hawaii have an estate tax?
Yes — Hawaii has its own estate tax. Hawaii’s exclusion amount is fixed at $5.49 million (per the Form M-6 instructions), far below the 2026 federal exemption of $15 million per individual (OBBBA — raised from $13.61M and made permanent), so an estate between those amounts can owe Hawaii estate tax even when no federal estate tax is due.
Q
Is retirement income taxed in Hawaii?
Hawaii’s treatment of retirement income is split by income type, but very favorable for pensions specifically. Hawaii exempts pensions funded entirely by the employer: state and county government pensions, military retirement pay, and federal civil service pensions (CSRS/FERS) are exempt, as are private-sector defined-benefit pensions provided the employer funded them and the employee made no contributions. Portions of a pension funded by employee contributions are taxable. Social Security benefits are not taxed by Hawaii. However, IRA distributions and 401(k) withdrawals (defined-contribution accounts, not pensions) are generally subject to Hawaii income tax at the regular rates (up to 11%), meaning retirees relying primarily on 401(k)/IRA savings rather than traditional pensions see less benefit from Hawaii's exemption rules.
Q
How does Hawaii tax vacation rental income?
Vacation rental income in Hawaii is subject to multiple layers of taxation. Property owners must collect and remit the 11% Transient Accommodations Tax (TAT) on gross rental receipts, plus the General Excise Tax at 4.5% (4% plus the 0.5% county surcharge). County surcharges apply on top of these rates. The combined TAT and GET can reach 15–16% of gross rental income before income taxes are considered. Additionally, rental income is subject to Hawaii income tax at regular rates. Hawaii counties have also been tightening regulations on short-term vacation rentals, with Maui and Kauai imposing significant restrictions.
Q
Is Hawaii worth it financially compared to California?
For high earners, Hawaii is no longer clearly more expensive than California on income tax — Hawaii's 2024 tax cut (Act 46, SLH 2024) raised the top-bracket threshold to $325,000 (single), well above the old $200,000 level. At $300,000 income, Hawaii's effective state income tax (~$22,550) is now slightly below California's (~$23,670), even though California's headline top rate (13.3%) is higher than Hawaii's (11%) — California's top rate only applies above $1 million, while Hawaii's bracket structure taxes more income at moderate-to-high rates along the way. Hawaii’s property taxes on owner-occupied homes are lower, but the overall cost of living in Hawaii — groceries, energy, housing — is substantially higher than even California. Most financial analyses suggest Hawaii makes sense for lifestyle reasons rather than tax efficiency.
Disclaimer:This guide provides general tax information for educational purposes only. Hawaii GET rates, income tax brackets, and county property tax rates are subject to change. Vacation rental tax regulations vary by county and are subject to ongoing legislative changes. Always consult a Hawaii-licensed tax professional before making investment or residency decisions.