Question 1

What is Hawaii's state income tax rate for 2025?

Accepted Answer

Hawaii uses a 12-bracket progressive structure - the most brackets of any state - with rates from 1.4% to 11%. Following Act 46 of SLH 2024 (HB 2404), single-filer brackets are: 1.4% up to $9,600; 3.2% to $14,400; 5.5% to $19,200; 6.4% to $24,000; 6.8% to $36,000; 7.2% to $48,000; 7.6% to $125,000; 7.9% to $175,000; 8.25% to $225,000; 9% to $275,000; 10% to $325,000; and 11% on income above $325,000. Hawaii's 11% top rate is tied with California for the second-highest state rate in the nation.

Question 2

What is Hawaii's General Excise Tax (GET) and how does it differ from a sales tax?

Accepted Answer

Hawaii imposes a General Excise Tax (GET) rather than a traditional sales tax: 4% statewide, plus county surcharges of 0.5% (Oahu, Kauai, Hawaii County) that bring the effective rate to 4.5% or 4.712% depending on how it is passed through. Unlike a sales tax, the GET is legally imposed on the seller (not the buyer), applies to nearly every business transaction including services, wholesale sales, and rents, and is typically passed on to customers by adjusting prices.

Question 3

Does Hawaii tax retirement income?

Accepted Answer

Hawaii fully exempts Social Security benefits from state income tax. It also fully exempts most employer-funded pension income, including public and private defined-benefit pensions to which the employee did not personally contribute. However, distributions from 401(k), 403(b), and IRA accounts funded with employee contributions are generally taxable at Hawaii state rates, because those contributions were not previously taxed at the state level.

Question 4

What is Hawaii's standard deduction for 2025?

Accepted Answer

For tax year 2025, Hawaii's standard deduction is $4,400 for single and MFS filers, $8,800 for MFJ and qualifying-widow(er) filers, and $6,424 for head-of-household filers. Hawaii also allows a $1,144 personal exemption per taxpayer and per dependent, plus additional exemptions for taxpayers age 65 or older and for blind or disabled taxpayers.

Question 5

Does Hawaii have reciprocal agreements with other states?

Accepted Answer

No. Hawaii has no reciprocal income-tax agreements with any other state, which reflects both the state's geographic isolation and its policy stance. Hawaii residents who earn income sourced to another state must file a non-resident return there and claim a resident credit on their Hawaii return under HRS Section 235-55 for taxes paid to the other state to avoid double taxation.

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