Bottom Line
Middle-Class Families: Mixed (Go to the Kiplinger Tax Map for Middle-Class Families)
Retirees: Most Tax-Friendly (Go to the Kiplinger Tax Map for Retirees)
Income taxes in the Aloha State can be relatively high – especially for higher-income residents, who may face a whopping 11% top rate. Gasoline taxes are among the highest in the country as well.
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But there are still some rainbows in the Hawaiian tax system. The statewide median property tax rate is the lowest in the country (but keep in mind that Hawaiian property values are sky-high).
Sales taxes are low in Hawaii, too. The average combined state and local rate is only 4.44%, which is the seventh-lowest in the U.S. (but purchases of groceries, clothing and many other items are taxed).
Hawaii Income Taxes
Hawaii Income Tax Range
Low: 1.4% (on taxable income up to $4,800 for married couples filing jointly; on up to $2,400 for married couples filing separately and individual filers)
High: 11% (on taxable income over $400,000 for married couples filing jointly and surviving spouses; on over $200,000 for married couples filing separately and individual filers)
Hawaii Taxation of Social Security Benefits
Social Security benefits are not taxed by the state.
Hawaii Tax Breaks for Other Retirement Income
Income from private, government, and military retirement plans is fully exempt if the employee did not contribute to the plan (e.g., a traditional pension). If both the employee and employer contributed to the plan (e.g., a 401(k) plan with an employer matching program), the exclusion applies only to amounts attributable to employer contributions.
Tier 1 Railroad Retirement benefits are also exempt.
Hawaii Sales Tax
4% state levy. Localities can add as much as 0.5%, but the average combined rate is only 4.44%, according to the Tax Foundation.
- Groceries: Taxable
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
Hawaii Real Property Taxes
In Hawaii, the median property tax rate is $273 per $100,000 of assessed home value. That's the lowest statewide rate in the nation.
Hawaii Property Tax Breaks for Retirees
Property tax breaks for seniors vary by county in Hawaii. In Honolulu County, for example, homeowners 65 or older get a larger home exemption of $140,000 (as opposed to $100,000 for younger homeowners).
Hawaii Motor Fuel Taxes
Gasoline: 51.69¢ per gallon (varies by county).
Diesel: 52.41¢ per gallon (varies by county).
Hawaii Sin Taxes
Cigarettes and little cigars: $3.20 per pack
Large cigars: 50% of the wholesale price
Other tobacco products: 70% of the wholesale price
Beer: $0.93 per gallon
Wine: $1.38 per gallon ($2.12 if sparkling)
Liquor: $5.98 per gallon
Hawaii Estate and Inheritance Taxes
Hawaii imposes an estate tax on estates worth $5.49 million or more. Tax rates range from 10% to 20%.
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