Hawaii Does Charge State Income Tax
Yes, Hawaii has a state income tax. Unlike a handful of states that do not tax wages at all, Hawaii taxes resident income on wages, self-employment earnings, interest, dividends, and other sources. The state tax rate ranges from 1.4% to 11%, depending on your income bracket. If you live in Hawaii or work there, you will owe state income tax on your earnings.
Hawaii's income tax system is progressive, meaning the rate increases as your income increases. A single filer earning $17,200 or less pays 1.4%, while someone earning over $100,000 pays 11%. The brackets and rates are adjusted annually for inflation, so the exact thresholds change each year. This means your tax rate depends on which bracket your total income falls into, not on a flat percentage across all earnings.
Key Takeaways
- Hawaii residents pay state income tax on wages, self-employment income, and investment income at rates ranging from 1.4% to 11% depending on income level.
- Hawaii's income tax brackets are adjusted each year for inflation, so the exact dollar thresholds change annually.
- You owe Hawaii state income tax if you are a resident or if you worked in Hawaii during the tax year, even if you moved away.
- Hawaii does not have a separate capital gains tax; long-term and short-term gains are taxed as ordinary income at your regular rate.
Who Has to Pay Hawaii Income Tax
You owe Hawaii state income tax if you are a resident of the state. Hawaii considers you a resident if you live there, even part-time, or if you maintain a home there with the intent to return. If you moved to Hawaii during the year, you owe tax on income earned after you became a resident. The state looks at where you physically lived and where your permanent home is located.
Non-residents who worked in Hawaii during the tax year also owe state income tax on the wages they earned there. If you worked in Hawaii for part of the year and then moved, you report only the income earned while you were working in the state. You will need to file both a Hawaii return and a return in your new state of residence, reporting the income earned in each location on the appropriate return.
Hawaii Income Tax Brackets for 2024
| Income Range (Single Filer) | Tax Rate |
|---|---|
| $0 to $17,200 | 1.4% |
| $17,201 to $37,200 | 3.2% |
| $37,201 to $57,200 | 5.5% |
| $57,201 to $100,000 | 7.2% |
| Over $100,000 | 11% |
These brackets are for single filers. Married couples filing jointly have higher income thresholds at each bracket. Heads of household have their own set of brackets as well. The Hawaii Department of Taxation publishes updated brackets each January, so check their website if you are filing in a later year.
The progressive structure means you do not pay the top rate on all your income—only on the portion that falls into each bracket. For example, a single filer earning $50,000 pays 1.4% on the first $17,200, then 3.2% on the next $20,000, then 5.5% on the remaining $12,800. This results in an overall effective tax rate lower than the top bracket rate.
Deductions and Credits Available in Hawaii
Hawaii allows you to claim the standard deduction, which reduces the income you pay tax on. For 2024, the standard deduction for a single filer is $2,600, and for married couples filing jointly it is $5,200. These amounts are lower than the federal standard deduction, so most Hawaii residents will still owe state tax even if they do not itemize deductions on their federal return.
Hawaii also offers several tax credits that can lower your bill. The Earned Income Tax Credit (EITC) is available to low-income workers, and Hawaii's version is more generous than the federal credit in some cases. You may also claim credits for dependent care expenses, education costs, and property tax paid. Check the Hawaii Department of Taxation website or your tax software to see which credits explore to your situation, since credits directly reduce the tax you owe rather than just reducing your taxable income.
How to File Hawaii State Income Tax
You file Hawaii state income tax using Form N-11 (the short form) or Form N-1 (the long form), depending on your income and situation. Most residents use the short form. You can file by mail, electronically through the Hawaii Department of Taxation website, or through tax software that supports Hawaii returns.
The important date to file is April 15, the same as the federal important date. If you need more time, you can request an extension, which gives you until October 15 to file. An extension to file does not extend the time to pay, so if you owe tax, you should pay by April 15 to avoid penalties and interest, even if you file late. You can pay online through the Hawaii Department of Taxation website or by check with your return.
Military Personnel and Special Situations
Active-duty military members stationed in Hawaii are not required to pay Hawaii state income tax on their military pay, even if they are Hawaii residents. However, they do owe tax on any non-military income, such as a spouse's wages or self-employment earnings. You will need to file a Hawaii return and claim the military pay exclusion on the appropriate line of your form.
If you are a Hawaii resident who moved out of state during the year, you owe tax only on income earned while you lived in Hawaii. You will file a part-year resident return and report only the income from the months you were a resident. Keep documentation of when you moved, such as a lease, utility bill, or change of address confirmation showing your move date, because the state may ask for proof if you claim part-year residency.
Frequently Asked Questions
Does Hawaii tax retirement income and Social Security?
Hawaii does not tax Social Security benefits. Retirement income from pensions and 401(k) withdrawals is taxed as ordinary income at your regular rate. If you are over 59½ and receive distributions from a traditional IRA or 401(k), those withdrawals are subject to Hawaii income tax.
What if I work remotely for a company outside Hawaii but live in Hawaii?
You owe Hawaii state income tax on wages earned while you are a Hawaii resident, regardless of where your employer is located. Your employer may not withhold Hawaii tax automatically, so you may need to make estimated tax payments or adjust your federal withholding to cover the state tax you will owe.
Do I have to file a Hawaii return if I only earned a small amount?
Hawaii has a filing threshold based on your income and filing status. For 2024, single filers with income over $17,200 must file. If your income is below the threshold, you generally do not have to file, but you may want to file anyway if you had taxes withheld, because you could receive a refund.
Can I deduct property taxes or mortgage interest on my Hawaii return?
Hawaii does not allow you to itemize deductions like property tax or mortgage interest on your state return. You must use the standard deduction. However, you can still claim these deductions on your federal return if you itemize there.
What happens if I move out of Hawaii mid-year?
You file a part-year resident return and report only the income earned during the months you lived in Hawaii. You will also file a return in your new state for income earned after you moved. Provide both states with documentation of your move date, such as a lease or utility bill.