Hawaii State Tax

Hawaii Tax

Hawaii Income Tax

Hawaii is the only US state not located in North America. Like 42 other states, Hawaii collects income tax from its residents. The Hawaii State income tax structure is similar to the progressive federal income tax system. The median state tax rates in Hawaii fall below more than half of the United States.

Residents whose income exceeds basic deductions are required to file their state income tax returns. The Hawaii tax code has 12 marginal income tax brackets. For individual taxpayers, the lowest bracket levies a tax rate of 1.4 percent on the first $2000 of taxable income. The income tax rate increases as the taxable income becomes larger. The maximum marginal tax rate is 11 percent on taxable incomes over $300,000.

Instead of collecting direct sales tax from consumers, Hawaii uses the excise tax system to collect 4% tax from businesses, products, and services. However, since business owners carry the effect of this “sales” tax to the costs of products and services, the effect to consumers is still the same. Moreover, Hawaii has special jurisdictions that have local surtax charges.

There are no property taxes for personal properties such as vehicles in Hawaii. However, real properties are levied with property tax per $1000 net assessed value. Hawaiian counties collect an average of 0.26% property tax from the fair market value of properties in Hawaii. Honolulu levies the highest property tax rate while the Kalawao County collects the least property tax.

Taxpayers in Hawaii can file their tax returns electronically or through mail.