Hawaii
Taxes and business formation • USA 2025–2026
LLC in Hawaii
Corporation in Hawaii
Tax system of Hawaii
Income Tax
Hawaii uses a progressive personal income tax. Rates range from 1.4% to 11%, which makes Hawaii one of the states with the highest income tax, especially for income above $200,000. The tax covers all major income sources — wages, business income, rental income, and capital gains. The state offers standard deductions, child tax credits, and tax relief for retirees and low-income households.
Sales Tax
Instead of a standard sales tax, Hawaii uses the General Excise Tax (GET), which is charged to the business rather than the consumer on sales of goods and services. The base GET rate is 4%, and most counties add a local surcharge of 0.5%, bringing the combined rate to 4.5%. The tax applies to nearly all types of commercial activity — from real estate rentals to professional and personal services.
Property Tax
Property tax in Hawaii is levied at the county level, and rates depend on the type of property (residential, investment, hotel, commercial). The average effective rate is about 0.28%, which is one of the lowest in the U.S. However, in popular tourist areas the tax can be significantly higher for rental homes or properties owned by non-residents.
Business Taxes
C-corporations are subject to a progressive corporate tax ranging from 4.4% to 6.4% depending on the level of profit. In addition, all businesses must pay the GET regardless of entity type, which requires careful attention to structure selection and pricing. The Annual Report is mandatory for all companies registered in Hawaii (LLCs, corporations, nonprofits) and must be filed each year by the end of the quarter in which the company was registered. Businesses are also required to file tangible personal property returns, especially in the case of commercial real estate and equipment.
Excise Taxes
Hawaii levies excise taxes on alcohol, tobacco, and gasoline, as well as on car rentals, tourism services, and short-term accommodations (the Transient Accommodations Tax, or TAT). The TAT rate is 10.25% on short-term rentals (hotels, Airbnb, etc.), plus local surcharges.
Estate / Inheritance Tax
Hawaii is one of the few states with an estate tax. The rate is progressive, up to 20%, and applies to estates exceeding $5.49 million (for 2025, subject to adjustment).
Favorable Tax Conditions
Despite the high personal income tax rates and the complexity of the GET, Hawaii offers: • One of the lowest property tax rates in the U.S.; • A low corporate tax for smaller companies.
Compared to Other States
• Personal income tax up to 11% — one of the highest in the U.S.; • The GET replaces a traditional sales tax and is difficult to calculate correctly without professional support; • One of the lowest property taxes in the country; • Corporate tax is lower than in Connecticut, New Jersey, or California; • An estate tax applies — similar to Oregon or Massachusetts.
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