Ranking and TaxScore #43

Important Tax Facts: 

-The State of Hawaii has both Corporate income tax and personal income tax rates with maximum rates of 11.00% and 6.40%, respectively. Hawaii is also one of the few states that also has an estate tax. Read more below.

11.00%

State Income Tax

State
Income
Tax

6.40%

Cost of Setting Up A Business

state
business
tax

LOW

Property
Taxes

4.44%

STATE & lOCAL
Sales Tax

State Income Taxes in Hawaii

The state of Hawaii does have an individual income tax. Like most states with income tax, it is calculated on a marginal scale, eleven (11) tax brackets. They range from 1.40% to 11.00%. The highest bracket of 11.00% starts for income greater than $200,000.

State Business Taxes in Hawaii

The state of Hawaii has a Corporate Tax rate which is also calculated on a marginal scale. The Corporate Tax is only assessed on C Corporation (other flow-thru entities, such as S-Corps, LLCs and LLPs are not subject to the Corporate Tax). The Corporate Income tax ranges from 4.40% to 6.40% and the highest bracket starts at $100,000.

State and Local Sales Taxes in Hawaii

Like many states, Hawaii has multiple Sales tax rates. One at the state level and another at the local level. The state rate is 4.00% and the average local rate is 0.44% (total average rate for Hawaii Sales Tax is 4.44%) which is a low sales tax compared to most of the country.

Sales tax bases define what is taxable and nontaxable. Most states apply the sales taxes to only final retail sales. However, Hawaii’s sales tax has a broad tax base that additionally includes many business-to-business services. (Similar to New MexicoNorth Dakota, and South Dakota).

Property Taxes in Hawaii

The average property tax rate for residential property in the state of Hawaii is 0.30%, making it the lowest state in the union as far as Property Tax as a Percent of a taxpayer’s primary residence.

Estate Taxes in Hawaii

The state of Hawaii does have an estate tax that ranges from 10% to 20% depending on the size of the estate. The first $5,490,000 Million dollars of the estate is exempt from tax.

State Payroll taxes in Hawaii

Payroll (Unemployment Insurance) taxes are paid by business on the behalf of their employees to fund unemployment insurance. It consists of multiple factors, such as taxable wage base and UI tax rate. Below is an outline of important factors regarding State Payroll Taxes in Hawaii –

  • Wage Base – Hawaii’s wage base of $48,100 (the highest in the country)
  • New Employers – UI Contribution Tax is 2.40% for all new employers.
  • Education & Training Tax – E&T tax rate is 0.10% for all employers
  • UI Rates – range from 0.00% to 5.60%
  • Temp Disability Insurance (TDI) Benefits – Hawaii pays TDI for employees who have worked for an employer over 14 weeks. The employer may elect to deduct up to 0.50% from the employees pay to fund the TDI.

Hawaii Business Entities - LLCs

Hawaii is one of the less expensive states in regards to opening an LLC. Here are some important facts:

  • Hawaii’s annual LLC fee is $15 a year
  • When you register with the state, you pay a one time fee of $50
  • Secretary of State of Hawaii – click here
  • If you would like help setting up your LLC, we recommend using IncFile.com. They are simple and easy to use.

State #42

State #44