Hawaii State Tax: Overview
Hawaii has the lowest property tax rate in the nation, yet it generally features high home prices. Groceries in Hawaii are taxed at the full rate, along with the highest income tax bracket, which stands at 11%.
Retirees can benefit from exemptions on state income tax since some retirement benefits are tax-exempt.
Hawaii Income Tax
Hawaii operates a graduated state individual income tax rate that ranges from 1.4% to 11%, as reported by the Tax Foundation.
Hawaii Tax on Retirement Benefits: Benefits such as Social Security, military and government pensions, private pensions, and Tier 1 Railroad Retirement benefits enjoy tax-exemption. However, employee contributions to 401(k) plans may be subject to tax in Hawaii, while employer contributions remain exempt.
Hawaii Sales Tax
Hawaii’s state sales tax rate is 4%. Local municipalities can add up to 0.5%, resulting in an average combined rate of approximately 4.5%, according to the Tax Foundation.
- Groceries: Taxable
- Prescription drugs: Taxable
- Clothing: Taxable
Property Taxes in Hawaii
The average effective property tax rate in Hawaii is a mere 0.26%, marking it as the lowest rate in the United States.
Hawaii Property Tax Breaks for Retirees
Honolulu Homestead Exemption: Property tax breaks for seniors can vary by county. For instance, in Honolulu County, homeowners aged 65 or older qualify for a larger home exemption of $160,000, compared to $120,000 for those younger.
Hawaii Gas Tax
Gasoline: $0.17 per gallon.
Diesel: $0.17 per gallon.
Taxes on Alcohol and Tobacco in Hawaii
Tobacco Taxes
| Product | Tax Amount |
|---|---|
| Cigarettes | $3.20 per pack |
| Large Cigars | 50% of wholesale price |
| Tobacco/Snuff | 70% of wholesale price |
Alcohol Taxes
| Product | Tax Amount |
|---|---|
| Wine | $1.38 per gallon |
| Beer | $0.93 per gallon |
| Liquor | $5.98 per gallon |
Hawaii Estate and Inheritance Taxes
Hawaii imposes estate tax on estates valued at $5.49 million or more. Therefore, estates with a value below this threshold are exempt from Hawaii estate tax.
For those estates that incur tax, rates vary between 10% to 20%. This structure reflects the state’s approach to taxation and estate management.
