Hawaii's Tax Climate


Hawaii has a balanced, broad-based tax system. With business tax changes recently enacted, Hawaii tax laws can make business more profitable. Some favorable aspects:

  • No personal property tax. One of the few states no longer using tax on inventories, furniture, equipment, machinery, etc.
  • A credit against taxes paid on purchase of capital goods--machinery, equipment.
  • Corporate income tax rates lowered.
  • No State tax on goods manufactured for sale out of state.
  • No stock transfer tax.
  • No unincorporated business tax.

TAXES LEVIED IN HAWAII

  • Individual Income Tax. Individual tax rates vary from 2% for the first $1,500 up to a maximum 10% for taxable income over $20,500. Capital gains are taxed at a maximum 7.25%.
  • Corporate Income Tax. Net income of corporations, 4.4% if taxable income not over $25,000; 5.4% if over $25,000 but not over $100,000; and 6.4% on all over $100,000. The tax imposed on capital gains is 4%. Deductions, in general, conform to the Internal Revenue Code: federal taxes are not deductible.
  • General Excise (Gross Income) Tax (GET). On gross income, gross receipts or gross proceeds of all business activities: 0.5% on wholesaling, intermediary services, manufacturing, producing, canning, and blind, deaf, or totally disabled persons; 0.15% on insurance solicitors; 4% on retail sales of goods, services, and other activities. Exemptions for goods manufactured for export and certain services; refundable tax credit for GET paid on depreciable tangible personal property.
  • Use Tax. On tangible personal property imported or purchased without payment of the GET. Rates are 0.5% on goods imported for resale at retail; 4% on all other imports. Refundable income tax credit for use tax paid on depreciable tangible personal property.
  • Banks and Other Financial Corporations Tax. Unless otherwise exempt, 7.92% of net income on banks, building and loan associations, financial services loan companies, and other financial corporations. Federal income taxes upon income from sources in the state are deductible.
  • Rental Motor Vehicle and Tour Vehicle Surcharge Tax. Effective January 1, 1992, surcharge tax of $2 a day that a rental motor vehicle is rented or leased. Tax levied on lessor. Tour vehicle surcharge tax is $85 per month for each vehicle categorized by PUC as an 18 or over passenger carrier vehicle. Tax levied on tour vehicle operator. One-time $20 registration fee. Beginning January 1, 1993, tour vehicle surcharge tax is $65 per month for each vehicle in the 25 passenger seat and over category and $15 per month for each vehicle in the 8 to 25 passenger seat category.
  • Conveyance Tax. On actual and full consideration paid for transfer of realty, including leases and subleases, tax of 5 cents per $100 of sales value. Minimum tax on each transaction is $1. Certain exemptions allowed.
  • Property Tax. On real property, land and improvements. Assessments at 100% of "fair market value". Maximum exemption for owner-occupied homes if $40,000, with multiple exemptions allowed for those over 55. Various rates for land, improvements, and classes of property. Fiscal year 1992 commercial rates per $1,000 net assessed value are: Oahu, $8.51; Hawaii, $8.50 (building), $10.00 (land); Kauai, $7.59 (building), $7.99 (land); Maui, $6.50.