Hawaii Tax Guide

Hawaii state tax: overview

Hawaii distinguishes itself with low property taxes, just 0.27% on average, ranking as the lowest in the U.S. Yet, buyers face some of the nation’s steepest home prices, with median values soaring above $760,000.

When it comes to daily expenses, even groceries are taxed at 4% (and sometimes 4.5% with local surcharges) through the state’s General Excise Tax.

Income taxes also run high compared to other states, with the top bracket at 11%, but retirees can find relief since many pensions and Social Security benefits escape state tax.

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Looking ahead, as Kiplinger has reported, Hawaii will launch a new “Green Fee” in 2026, adding to the current lodging taxes and bringing the total to 11% for hotel stays.

The proceeds will support environmental and climate initiatives, making Hawaii the first state to enact sustainable tourism funding.

[Data for this state tax guide was gathered from a number of sources including the Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]

Hawaii income tax

Hawaii has a graduated state individual income tax rate ranging from 1.4% to 11%, according to the Tax Foundation.

Hawaii retirement taxes

Social Security retirement benefits, military and government pensions, private pensions, and Tier 1 Railroad Retirement benefits are tax-exempt.

(Employee contributions to 401(k) plans or other retirement plans may be taxed in Hawaii. Employer contributions are tax-exempt.)

Hawaii sales tax

Hawaii has a state sales tax rate of 4%. Localities can add as much as 0.5%, but the average combined rate is only 4.5%, according to the Tax Foundation.

• Groceries: Taxable
• Prescription drugs: Taxable
• Clothing: Taxable

How much are property taxes in Hawaii?

In Hawaii, the average effective property tax rate is 0.26%, which is the lowest rate in the U.S.

Source: Tax Foundation

Hawaii Property Tax Breaks for Retirees

Honolulu Homestead Exemption: Property tax breaks for older adults vary by county in Hawaii.

For example, homeowners 65 or older get a larger home exemption of $160,000 (as opposed to $120,000 for younger homeowners) in Honolulu County.

Hawaii gas tax

Gasoline: $0.17 per gallon.

Diesel: $0.17 per gallon.

Source: Sales Tax Handbook

Hawaii taxes on alcohol and tobacco

Hawaii tobacco taxes

Source: Sales Tax Handbook

Hawaii alcohol taxes

Source: Sales Tax Handbook

Hawaii estate and inheritance taxes

Hawaii imposes an estate tax on estates worth $5.49 million or more. So, if your estate is worth less than that amount, your estate won't be taxed by Hawaii.

For estates that are taxed, tax rates range from 10% to 20%.

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