2024 overview of sales tax in Hawaii

Welcome to Kintsugi's rundown on tax rates in the state of Hawaii. Hawaii's sales tax rates can vary depending on state, county/city and local tax rates. The base state rate for general excise tax (GET) in Hawaii is 4%, but it can be higher in specific areas such as the sales tax in Honolulu, HI which includes an additional surcharge.

Depending on the county, this rate may be higher; for example, sales tax in Honolulu HI imposes a surcharge that brings the total rate up to 4.5%. The additional 0.5% imposed by the county leads to a total tax rate of 4.5% for most transactions, impacting both consumers and local businesses. The lowest county rate is in Hawaii County at the base 4%.

As for district rates, localized increases can apply as well. The island of Oahu has the highest district rate due to additional surcharges.

When discussing the sales tax in Honolulu, HI, it is crucial to distinguish it from the General Excise Tax (GET) that the state primarily utilizes, as this affects both consumer and business financial planning. This distinction helps businesses and consumers better understand their tax liabilities and ensures accurate reporting and compliance.

Although referred to as a 'sales tax' colloquially, the GET is a broader tax applied to nearly all business activities, including retail sales, services, and even interest income, different from the Hawaii state sales tax which might be applied in other jurisdictions.

Sales tax range in Hawaii

As of 2024, Hawaii maintains a unique General Excise Tax (GET), distinguishing it from a traditional sales tax in Honolulu, HI or other counties. The state rate for the GET remains at 4.0%. However, this year has seen some modifications at the county surcharge levels.

• Oahu: In 2023, Oahu had a 0.5% county surcharge, resulting in a total GET of 4.5%. In 2024, this surcharge increased to 0.75%, making the total effective GET 4.75%.
• Maui: For 2023, Maui did not implement any county surcharge, so the total GET was 4.0%. In 2024, Maui introduced a new surcharge of 0.5%, raising the total GET to 4.5%.
• Hawaii (Big Island): In 2023, Hawaii County had a 0.25% surcharge, putting the total GET at 4.25%. For 2024, this surcharge remains unchanged, keeping the total GET at 4.25%.
• Kauai: During 2023, Kauai imposed a 0.5% surcharge, leading to a total GET of 4.5%. This rate continues into 2024 without any changes, maintaining the total GET at 4.5%.

These changes reflect an overall trend towards slight increases in the county surcharges, including the sales tax in Honolulu, HI, affecting the overall rates consumers and businesses experience. Importantly, the base state rate continues to stay steady at 4.0%.

An essential aspect of understanding the 'hi sales tax' or the colloquial 'sales tax Hawaii' includes recognizing the unique elements present in Hawaii's taxation system. The predominant General Excise Tax (GET) differs considerably from conventional sales taxes, imposing a 4% state rate along with additional county surcharges.

For instance, Oahu has implemented a 0.75% county surcharge starting in 2024. These nuances highlight the need for both consumers and businesses to stay informed about the specific rates and surcharges applicable in their respective localities.

Calculating Hawaii sales tax

Determine if the sale is taxable

• Most tangible goods are subject to sales tax.
• Certain services may also be taxable.
• Some items may be exempt; check state regulations.

Identify the applicable tax rate

• State General Excise Tax (GET) Rate: 4.0% statewide.
• County Surcharges:
  • Oahu: Additional 0.5% for a total of 4.5%.
  • No surcharges in other counties as of 2024.

Calculate tax for physical goods

• Multiply the sale price by the state GET rate.
• If applicable, add the county surcharge.

E-commerce transactions

• Hawaii law requires businesses to pay GET on e-commerce sales at the origin rate (4.0%).
• Remote sellers (out-of-state) must also collect GET if they meet economic nexus thresholds.

Software as a Service (SaaS)

• Taxable under Hawaii GET.
• Apply the state rate (4.0%) and any applicable county surcharge.

Service Sales

• Taxable services: Legal, accounting, or other professional services.
• Non-taxable services: Certain healthcare services.

Economic nexus for out-of-state sellers

• Threshold: Gross revenue of $100,000 or 200 transactions annually in Hawaii.

Rounding rules

• Round the tax to the nearest cent for precise calculations.

Collecting and remitting tax

• Businesses must separately list GET on receipts.
• File and remit GET payments to the Hawaii Department of Taxation regularly.

Online calculators and tools

• Consider using tax software for accurate calculations and compliance.

Understanding use tax in Hawaii

Use tax in Hawaii functions as a complement to the state's General Excise Tax (GET), aiming to ensure that purchases made outside Hawaii are subject to similar tax burdens as those bought within the state. Use tax applies to tangible personal property, services, and digital goods acquired from out-of-state vendors for use, consumption, or storage in Hawaii.

The primary goal is to provide an equitable tax environment and prevent businesses from circumventing the state's taxation system by making out-of-state purchases.

Individuals and businesses are liable for use tax if they acquire goods or services from out-of-state suppliers that did not charge Hawaii's GET or the Hawaii state sales tax at the point of sale.

The use tax rate typically mirrors the GET rate, standing at 4%, with an additional 0.5% surcharge in certain counties such as Oahu, Kauai, and Hawaii Island, making the effective rate 4.5% in these areas.

To comply, taxpayers must report and remit use tax to the Hawaii Department of Taxation. Businesses doing substantial volume transactions must file monthly, quarterly, or annually depending on their gross income, using tax forms G-45 (Periodic General Excise/Use Tax Return) and G-49 (Annual Return and Reconciliation of General Excise/Use Tax). Individuals can report use tax via form G-26 (Use Tax Return).

It's crucial for taxpayers to understand that failure to pay use tax can result in penalties and interest on the owed amount. Moreover, Hawaii conducts audits to ensure compliance, and taxpayers with significant out-of-state transactions are more likely to be scrutinized.

Recent changes to Hawaii sales tax

In 2024, Hawaii introduced several changes to its sales tax system to boost state revenue and support public services. Here are the key updates and their differences from 2023:

• Starting January 1, 2024, the General Excise Tax (GET) rate for most goods and services increased from 4.0% to 4.5%.
• The Transient Accommodations Tax (TAT), which applies to hotel, vacation rental, and other short-term lodging rates, rose from 10.25% in 2023 to 11.0% beginning January 1, 2024.
• The surcharge for Oahu, meant to fund the Honolulu Rail Transit project, remained at 0.5%, keeping the overall GET rate at 5.0% on Oahu.
• Neighbour islands such as Maui, Kauai, and Hawaii County implemented additional surtaxes to support local infrastructure projects. For example, Maui introduced a 0.25% surcharge effective March 1, 2024, bringing its overall GET rate to 4.75%.
• A new tax was introduced on digital goods and services, including streaming services and online courses, at a rate of 4.5%, lining up with the updated general GET. This was previously untaxed in 2023.
• Food and prescription drugs, exempt from GET in 2023, remain exempt in 2024, continuing to offer relief to consumers and maintaining the state’s effort to reduce the cost of living.
• With changes occurring in 2024, businesses in Honolulu, HI, must be particularly mindful of the updated regulations. The increased county surcharge in Oahu now sets the total GET here at 4.75%, which could be perceived as a hike in the 'hi sales tax.' This adjustment aims to fund significant public works and infrastructure projects within the county. Compliance with these updated rates is critical to avoid penalties and ensure smooth business operations within the state.

These updates reflect a moderate increase in tax rates aimed at generating additional state revenue, with targeted changes addressing new economic segments and regional needs.

Excise and discretionary taxes and other sales tax considerations in Hawaii

In Hawaii, the tax landscape includes unique aspects such as the General Excise Tax (GET) rather than a traditional sales tax. Here's an overview of key tax considerations in Hawaii for 2024:

General Excise Tax (GET)

• Hawaii imposes a General Excise Tax on all business activities in the state. Unlike typical sales taxes levied on consumers, GET is a tax on businesses for the privilege of doing business in Hawaii.
• The base GET rate is 4% across the state, with an additional 0.5% surcharge in Oahu (making it 4.5% in total).
• The GET applies to a broad range of activities, including retail sales, services, contracting, rental income, and interest income.

Use Tax

• Hawaii also has a Use Tax, which applies to imported goods, services, and contracting. Essentially, this tax ensures that businesses pay tax on items purchased from out of state, similar to the GET paid on in-state purchases.

Transient Accommodations Tax (TAT):

• This tax is imposed on the gross rental income derived from transient accommodations, such as hotels and vacation rentals.
• As of 2024, the standard TAT rate is 10.25%. Counties may impose additional surcharges, so the effective rate might be higher depending on the location.

County Surcharges:

• Counties in Hawaii have the authority to impose additional surcharges on the GET and TAT. For example, Oahu has a 0.5% surcharge on the GET.

Fuel Tax:

• Hawaii imposes a state fuel tax on gasoline, diesel, and other fuels. Counties can also add their own taxes, which vary by location.

Liquor and Tobacco Taxes:

• There are specific excise taxes on alcoholic beverages and tobacco products. These taxes are in addition to the GET.

Vehicle Weight Tax and Registration Fees:

• Vehicle owners in Hawaii must pay an annual vehicle weight tax and registration fee, which vary based on the vehicle's weight.

Understanding nexus in Hawaii for local and out-of-state sellers

Physical nexus

In 2024, Hawaii's physical nexus rules for sales tax showed notable updates compared to 2023. Comparatively, the 2024 rules maintain the structures already present in 2023, focusing heavily on physical presence and activities within the state as the basis for sales tax obligations.

Presence

• 2024: Physical presence continues to be a key determinant for nexus, including owning or leasing property, inventory, or having employees in Hawaii.
• 2023: Similarly, having physical property or employees in the state in 2023 constituted a physical nexus for sales tax purposes.

Temporary Presence

• 2024: Temporary physical presence still establishes nexus; if a business's employees or representatives frequently travel to Hawaii for sales activities, it’s considered a nexus.
• 2023: The rules were identical to 2024, where temporary physical presence through employees or sales representatives imposed sales tax obligations.

Affiliates

• 2024: A business using affiliates in Hawaii to help establish or maintain a market indirectly generates a physical nexus.
• 2023: This criterion was also applied in 2023, where affiliates contributed to creating a nexus if they played a role in market maintenance.

Trade Shows

• 2024: Participation in trade shows in Hawaii for more than just solicitation purposes influences nexus creation.
• 2023: The rules encompassing trade show participation affecting nexus were similar in 2023.

Economic nexus

In 2024, Hawaii's economic nexus laws for sales tax saw notable adjustments from 2023, impacting remote sellers and marketplace facilitators. This brief encapsulates these changes and compares them year-over-year.

Overall, while 2024 maintains several core aspects from 2023, significant efforts towards simplifying transaction counting requirements, enforcing compliance, and encouraging digital processes represent strides towards a more manageable tax environment for remote sellers and marketplace facilitators in Hawaii.

Threshold for Remote Sellers

In 2023, remote sellers were required to register for General Excise Tax (GET) collection if they had $100,000 in gross revenue or 200 separate transactions in the state in the current or preceding calendar year. In 2024, this threshold remains unchanged at $100,000 but the transaction requirement has been eliminated, simplifying compliance measurement.

Marketplace Facilitators

During 2023, marketplace facilitators needed to comply with the same nexus standards as remote sellers—$100,000 in sales or 200 separate transactions. In 2024, while the revenue threshold persists, the transaction count requirement has again been dropped, easing the tracking burden for facilitators.

Compliance and Reporting

The year 2023 mandated all entities meeting nexus requirements to report and remit GET quarterly. By 2024, the same quarterly reporting remains, but there is an added emphasis on digital filing, pushing entities towards electronic submissions instead of paper filings, aiming to streamline processes.

Economic Nexus Enforcement

In 2023, the enforcement of economic nexus was strict but mainly reactive. Hawaii’s 2024 laws bolster this with proactive audits and reviews, increasing the likelihood of compliance checks and potential penalties for non-compliance.

Registration Simplification

The previous year, 2023, saw a rather cumbersome registration process for new remote sellers. Come 2024, Hawaii introduced an online system designed to expedite this process, reducing the administrative overhead for new market entrants.

Affiliate nexus

In 2024, Hawaii's affiliate nexus for sales tax has undergone specific updates from 2023. Here are the summarized points:

Economic Threshold Change

In 2023, the threshold was set at $100,000 in sales or 200 transactions annually. In 2024, the threshold has been adjusted to $200,000 in sales or 300 transactions annually, reflecting inflation and changes in commerce patterns.

Extended Nexus Criteria

Originally, in 2023, physical presence, including property and employees in Hawaii, established nexus. In 2024, this now includes extensive affiliate relationships and activities, like marketing and product deliveries done by third-parties having nexus.

• Marketplace Facilitators: In 2023, marketplace facilitators were required to collect and remit sales tax if they met the economic threshold. In 2024, this requirement has broadened to include more stringent reporting and remittance guidelines, ensuring greater compliance and capturing more taxable transactions.
• Clarification on Affiliate Relationships: 2023 guidance was vague, causing confusion among businesses. The 2024 update provides clearer definitions and examples of what constitutes an affiliate relationship, reducing ambiguity and aiding businesses in compliance.
• Enforcement Enhancements: Enforcement mechanisms in 2023 were less rigorous. In 2024, Hawaii has implemented stricter audit and penalty processes for non-compliance, making it critical for businesses to adhere to the updated nexus laws meticulously.
• Remote Seller Impact: For remote sellers, the compliance burden in 2023 focused on economic thresholds. In 2024, changes include additional documentation and record-keeping requirements to substantiate their nexus status, aiming at greater transparency and accountability in tax collection.

Click-through nexus

In 2024, Hawaii's click-through nexus rules for sales tax have undergone updates compared to 2023. The click-through nexus determines when an out-of-state seller is required to collect and remit sales tax based on referrals from in-state affiliates.

2024 Changes

• The sales threshold for click-through nexus has increased from $10,000 to $12,000.
• Advertising agreements now require specific tracking disclosures for referred sales.
• The definition of an affiliate has been expanded to include related entities with indirect ownership.
• The reporting requirements for out-of-state sellers have been streamlined for easier compliance.
• Penalties for non-compliance have been doubled to ensure proper adherence.

2023 Rules

• Sellers with more than $10,000 in sales from in-state referrals had to collect sales tax.
• No specific tracking disclosures for referred sales were mandated.
• An affiliate was narrowly defined, focusing solely on direct ownership.
• Reporting requirements were more cumbersome and less user-friendly.
• Penalties for non-compliance were less stringent and lower in monetary value.

Marketplace nexus

In 2024, Hawaii continues to implement changes to its marketplace nexus for sales tax.

The nexus standards focus on economic thresholds that define when out-of-state sellers and marketplace facilitators must collect and remit sales tax. These ongoing and new provisions indicate Hawaii's intent to bolster their tax compliance framework by holding marketplaces to stringent accountability measures.

2024 Changes

• Economic Threshold: The annual sales threshold remains at $100,000 in gross sales or 200 transactions for both marketplace facilitators and remote sellers within the state.
• Marketplace Facilitators Obligations: Marketplace facilitators must register, collect, and remit General Excise Tax (GET) on behalf of third-party sellers if they meet the state’s economic threshold.
• Simplified Registration: Enhanced online registration processes designed to streamline tax compliance for marketplace facilitators.
• Penalties for Non-Compliance: Increased penalties for marketplace facilitators failing to comply with Hawaii’s tax laws, including more stringent audits and higher fines.
• Documentation Requirements: Marketplace facilitators are required to maintain comprehensive records of sales and tax remittances for a minimum of five years.

Comparison to 2023

• Economic Threshold: There was no change from the $100,000 or 200 transactions threshold. Both 2023 and 2024 thresholds are identical.
• Marketplace Facilitators Obligations: Essentially unchanged in 2024, with continuous enforcement from 2023 standards requiring registration and tax collection responsibilities.
• Simplified Registration: Newly introduced in 2024, whereas 2023 relied on existing, less efficient registration systems.
• Penalties for Non-Compliance: Penalties have become more severe in 2024 compared to 2023, reflecting Hawaii's aim to tighten enforcement.
• Documentation Requirements: Documentation maintenance expanded from three years in 2023 to five years in 2024, increasing the period facilitators must keep records.

Trade shows

Trade shows in Hawaii in 2024 are governed by certain rules and regulations to ensure smooth operations and compliance with state law. Participants should be aware of the following sales tax obligations:

General Excise Tax (GET)

All businesses, including those at trade shows, must register for and pay GET on goods and services sold. This tax acts like a sales tax and is generally passed on to customers.

Temporary Business Registration

Out-of-state businesses participating in trade shows must obtain a temporary business registration to collect GET.

• Tax Rate: The GET rate stands at 4%, with an additional 0.5% surcharge for businesses in Honolulu County.
• Filing Requirements: Businesses must file periodic GET returns, even if no tax is due, to remain compliant.
• Certificate of Vendor Compliance: Participants should acquire this certificate to demonstrate that they have met Hawaii's tax obligations.
• Record Keeping: Maintain accurate records of all transactions and tax filings for audit purposes.
• Exemptions and Deductions: Be aware of any applicable exemptions or deductions and apply them correctly to avoid overpayment.

Fulfillment by Amazon and nexus

Fulfilment By Amazon (FBA) is a service where Amazon handles the storage, packaging, and shipping of products on behalf of sellers.

Sellers send their products to Amazon's fulfilment centers, and Amazon manages inventory, processes orders, and provides customer service. FBA simplifies logistics for sellers, enabling them to leverage Amazon's extensive distribution network.

For 2024, Hawaii imposes specific sales tax obligations on FBA sellers:

• Hawaii requires sellers to collect General Excise Tax (GET). This tax is levied on gross income from all business activities, including sales.
• From January 1, 2020, Hawaii has mandated marketplace facilitators like Amazon to collect and remit GET on sales made through their platform if they facilitate $100,000 or more in sales or 200 or more transactions within the state.
• Amazon, as a marketplace facilitator, is responsible for collecting and remitting the GET on behalf of sellers using FBA who meet the economic nexus threshold.
• Sellers meeting the economic nexus threshold must ensure they register for a GET license with the Hawaii Department of Taxation.
• Even with Amazon collecting GET, sellers may still have reporting obligations to Hawaii's tax authorities to ensure compliance with state tax laws.
• Hawaii’s tax rate for GET varies based on the business type and activity but generally ranges from 0.15% to 4.5%.

Permits, certificates and sales tax registration in Hawaii

To register for sales tax in Hawaii in 2024, businesses need to obtain a General Excise Tax (GET) license.

You can apply online through the Hawaii Department of Taxation’s website. Be prepared to provide business details, including your Federal Employer Identification Number (FEIN) and the nature of your business activities. Once registered, you must file periodic GET returns and pay the taxes due, based on your gross income from business activities.

Registering for sales tax collection in Hawaii

To register for sales tax collection in Hawaii in 2024, you need to complete the following steps:

Determine Eligibility

Ensure that you meet the requirements to collect General Excise Tax (GET) in Hawaii, which is the equivalent of sales tax. You need to register if you're engaged in business activities such as selling goods or services in the state.

Obtain Necessary Information

Gather relevant business information including name, address, type of business structure (e.g., sole proprietorship, partnership, corporation), Federal Employer Identification Number (FEIN) if applicable, and Social Security Numbers for sole proprietors.

Complete the Form BB-1

Fill out the Basic Business Application (Form BB-1). This form is required to register for a GET license. You can typically obtain this form from the Hawaii Department of Taxation (HDTax) offices or their website, but you'll need it physically or as a digital download rather than accessing it via direct links.

Submit the Application

Submit your completed Form BB-1 along with any applicable fees. This can typically be done by mailing it to the HDTax office, submitting it in-person at their offices, or possibly through an online portal if available.

Await Your License

Once your application is processed, you will receive your GET license. This license must be visibly displayed at your place of business.

Start Collecting GET

With your GET license, you are authorized to collect General Excise Tax from your customers on taxable sales and services. Be sure to understand the rates and how they apply to your specific business activities.

File and Pay GET

Regularly file GET returns and remit the taxes collected to the Hawaii Department of Taxation according to the schedule (monthly, quarterly, or annually) determined for your business.

Cost of registering for sales tax in Hawaii in 2024

In Hawaii, there isn't a specific fee for registering for a General Excise Tax (GET) license, which serves a similar role to sales tax registration in other states. Traditionally, businesses are required to obtain a GET license by completing Form BB-1 and there could be nominal administrative fees involved.

Federal tax ID requirements for registering

When registering for sales tax in Hawaii, you typically need an Employer Identification Number (EIN).

An EIN is a unique identifier for your business, similar to a Social Security number for an individual, and is used for various tax purposes, including registering for General Excise Tax (GET), which is Hawaii's equivalent of sales tax.

How to Register for an EIN

You can obtain an EIN from the Internal Revenue Service (IRS). The simplest and quickest way to apply for an EIN is online. Here are the steps to apply:

• Visit the IRS EIN application page: IRS EIN Application.
• Follow the instructions provided to complete the application form.
• Once you submit your application, you will receive your EIN immediately if you apply online.

Registering for Sales Tax (General Excise Tax) in Hawaii

Once you have your EIN, you will need to register for the General Excise Tax in Hawaii. You can do this through the Hawaii Department of Taxation. By completing these steps, you will be properly registered for sales tax in Hawaii.

• Visit the Hawaii Tax Online Portal: Hawaii Tax Online
• Create an account or log in if you already have one.
• Follow the prompts to register your business for the General Excise Tax.

Streamlined sales tax program and Hawaii

Hawaii is not a member of the Streamlined Sales Tax Governing Board.

The Streamlined Sales and Use Tax Agreement (SSUTA) is an initiative to simplify and modernize sales and use tax collection and administration. Not all states are members, and Hawaii has not been part of this program.

Acquiring a business and registering for sales tax in Hawaii

To register for sales tax in Hawaii if you're acquiring a business, you’ll need to follow these steps and gather the necessary information. Once you have all the documentation and have registered with the Hawaii Department of Taxation, you will be able to legally operate and collect GET as applicable for your business:

General Excise Tax (GET) License

In Hawaii, instead of a traditional sales tax, businesses are subject to the General Excise Tax (GET). You will need to obtain a GET license.

Business Registration:

Ensure that the business is properly registered with the Hawaii Department of Commerce and Consumer Affairs (DCCA). If you're acquiring an existing business, verify that the registration is updated to reflect the new ownership.

Federal Employer Identification Number (FEIN):

Obtain a Federal Employer Identification Number (FEIN) from the IRS, as this will be required when you register for state taxes.

Hawaii Tax Identification Number:

Apply for a Hawaii Tax Identification Number through the Hawaii Department of Taxation. You can do this online through the Hawaii Tax Online portal or by submitting Form BB-1, the Basic Business Application.

Form BB-1

• Fill out and submit Form BB-1. This form will require information such as:
• Type of business entity (sole proprietorship, partnership, corporation, etc.)
• FEIN
• Business name and address
• Description of business activities
• Names and addresses of the business owners or responsible parties
• Date of business acquisition

Seller’s Permit

Hawaii does not issue a separate seller’s permit like some states, since the GET license encompasses the requirements for conducting retail sales within the state.

Tax Rates and Filing:

Familiarize yourself with the GET rates and filing requirements. Different activities may be subject to varying rates.

Additional Permits and Licenses:

Depending on the nature of the business, additional permits or licenses may be required from state or local authorities.

Other Hawaii registrations to consider

In Hawaii, aside from the state's General Excise Tax (GET), which functions similarly to sales tax, there are other registrations and requirements you may need to consider depending on the nature of your business. Here are some key considerations:

State Tax Identification Number

You'll need to obtain a state tax ID number for reporting GET and other state taxes.

Federal Employer Identification Number (EIN)

If you have employees or operate as a corporation or partnership, you'll need an EIN from the IRS.

Business Licenses and Permits: Depending on the type of business you are conducting, you might need specific licenses or permits. This can include professional licensing and industry-specific permits (e.g., food service licenses for restaurants).

Hawaii Department of Commerce and Consumer Affairs (DCCA): You may need to register your business entity with the DCCA, which includes filing articles of incorporation for corporations or articles of organization for LLCs.

Zoning Permits: Ensure your business location complies with local zoning laws, which might require obtaining a zoning clearance.

Occupational Safety and Health Requirements: If your business involves certain types of work, you may need to adhere to occupational safety and health requirements and possibly additional permits.

Employee Registrations: If you have employees, you will need to handle the appropriate employee withholdings, unemployment insurance, and workers' compensation insurance requirements.

Environmental Permits: Depending on your business activities, you may need permits related to waste management, air quality, water quality, etc.

Liquor License: If you plan to sell alcoholic beverages, you must obtain the appropriate liquor license.

Requirements for online sellers in Hawaii

As of 2024, online sellers who conduct business in Hawaii are generally required to collect and remit sales tax on taxable transactions. In Hawaii, the tax applicable is the General Excise Tax (GET), which is different from the typical sales tax found in many other states. Here are some key points to be aware of:

Economic Nexus

Hawaii enforces economic nexus, meaning that out-of-state sellers (including those online) must collect and remit GET if they have a certain level of economic activity in the state. As of the latest guidelines, this typically includes a threshold of $100,000 in sales or 200 or more separate transactions in the state during the current or previous calendar year.

Registration

Online sellers meeting the economic nexus threshold must register with the Hawaii Department of Taxation for a GET license.

Tax Rates

The standard GET rate for most sales or transactions is 4%, but some counties may add a surcharge (e.g., Oahu has an additional 0.5%). It's crucial for sellers to apply the correct rate based on the buyer's location.

Reporting and Remittance

Sellers are required to regularly report and remit the collected GET to the Hawaii Department of Taxation. The frequency of filing (monthly, quarterly, or annually) usually depends on the seller's total tax liability.

Exemptions and Deductions

There are specific exemptions and deductions available under Hawaii's tax laws, but these often require additional documentation and compliance.

Collecting sales tax in Hawaii

In 2024, collecting sales tax in Hawaii involves understanding the unique General Excise Tax (GET) system. Unlike traditional sales tax, GET is levied on all business activities, including retail, services, and rentals. Businesses must ensure compliance by accurately calculating and remitting the tax to the Hawaii Department of Taxation.

Understanding origin vs. destination sales tax collection

Hawaii operates on a unique tax structure known as the General Excise Tax (GET) rather than a traditional sales tax system. This tax is technically a tax on the business for the privilege of doing business in the state, although it is often passed on to consumers.

The GET applies to most transactions at all levels of business, including wholesale and retail, making it a "modified origin" system where the tax is generally paid by the business rather than directly by the consumer.

Taxable products in Hawaii

In the state of Hawaii, the General Excise Tax (GET) is applied broadly rather than a traditional sales tax. This applies not only to tangible goods but also to services and other transactions.

The GET rate in Hawaii is generally around 4%, but it can be slightly higher depending on the county. Maui, Kauai, and Hawaii counties have their own additional rates. Here’s an overview of product genres that typically incur the GET:

Tangible Personal Property

• General Merchandise: Clothing, electronics, furniture, books, and other retail items.
• Groceries: Both perishable and non-perishable food items.
• Automobiles: New and used vehicles, motorcycles, and other motorized forms of transportation.
• Appliances: Major and minor household appliances, electronics.
• Alcohol and Tobacco Products: Beers, wines, spirits, cigarettes, and other tobacco products.

Services

• Professional Services: Legal, medical, accounting, and consulting services.
• Personal Services: Beauty and grooming, housekeeping, repairs, and other personal services.
• Entertainment: Admission to events, movies, concerts, and similar activities.
• Construction and Contracting: Both residential and commercial projects.

Digital Goods and Services

• Software and Digital Products: Downloadable applications, eBooks, online subscriptions.
• Streaming Services: Subscription fees for movies, music, and other streaming services.

Rentals and Leases

• Real Property Rentals: Residential and commercial property leases.
• Vehicle Rentals: Cars, trucks, and other vehicle rentals.

Miscellaneous

• Utilities: Electricity, water, sewage, gas.
• Telecommunications: Cable, internet, phone services.

Non-taxable products in Hawaii

In Hawaii, as of 2024, certain products and services may be exempt from the General Excise Tax (GET), which is the state's equivalent to a sales tax. Here is an overview of exempt product genres:

Prescription Drugs

Medications prescribed by a licensed physician and purchased through a pharmacy are typically exempt from GET.

Prosthetic Devices

These include items like artificial limbs, hearing aids, and other similar devices.

Medical Services: Many medical services provided by licensed practitioners are also often exempt from the GET.

This overview provides a general idea of some categories that might be exempt, but tax laws can change, and exemptions can vary based on specific circumstances.

For the most current and comprehensive information, please refer to the Hawaii Department of Taxation. Their official website provides detailed information and updates regarding taxable and exempt products and services within Hawaii.

Is SaaS taxable in Hawaii?

In Hawaii, SaaS (Software as a Service) is generally considered taxable under the state's General Excise Tax (GET). This tax applies to the gross income from business activities, including the sale of software services. Therefore, companies offering SaaS to customers in Hawaii must ensure they comply with GET regulations.

Are digital products taxable in Hawaii?

In Hawaii, digital products are subject to taxation under the state's General Excise Tax (GET). This includes items like software, e-books, and streaming services. Businesses selling digital goods must collect and remit this tax, which applies to both local and out-of-state sellers catering to Hawaiian customers.

Are services taxable in Hawaii?

In Hawaii, most services are subject to the state's General Excise Tax (GET). Unlike sales tax, the GET is applied to the business's gross income, covering a wide array of services including professional, construction, and personal services. The rate may vary depending on the type of service and transaction.

Sales tax exemption certificates

In Hawaii, sales tax exemption certificates permit eligible businesses and organizations to make tax-free purchases of goods and services that are typically subject to the state's General Excise Tax (GET). To qualify, purchasers must fall into specific categories such as nonprofit organizations, government agencies, or businesses purchasing items for resale.

These certificates must be completed accurately and presented to the vendor at the time of purchase. The vendor retains the certificate to substantiate the tax-exempt transaction during audits. Misuse or incorrect application of these certificates can result in penalties, including payment of the owed tax plus interest and fines.

State tax holidays in Hawaii for 2024

Sales tax holidays are specific periods when sales tax is not charged on certain items, typically to encourage consumer spending.

Hawaii does not have any sales tax holidays scheduled for 2024.

Filing sales tax returns in Hawaii

Filing sales taxes in Hawaii involves the General Excise Tax (GET) rather than a traditional sales tax. Here are the steps to file GET for 2024:

Obtain a GET License

Register for a GET License with the Hawaii Department of Taxation.

Determine Filing Frequency

Filing frequency is based on estimated liability: monthly, quarterly, or semiannually.

Collect GET

Collect GET from customers; typical rates are 4% on Oahu and 4.5% on other islands.

Complete Form G-45

Use Form G-45 for periodic (monthly/quarterly/semiannual) returns.

Complete Form G-49

Use Form G-49 for the annual return to reconcile and summarize the entire year's GET activities.

Report All Gross Income

Report all gross income including most business activities, including rental income and commissions.

Claim Deductions and Exemptions

Deduct eligible expenses such as subcontractors or sales to federal government.

Calculate Net Income

Assess the net taxable income after deductions and exemptions.

Pay the GET

Submit payment along with the completed forms through the Hawaii Tax Online portal or by mail.

Electronic Filing

E-filing is encouraged and sometimes required based on business size and tax amount.

Meet Deadlines

Monthly returns by the 20th of the following month, quarterly by the 20th of the following month after each quarter, and annual returns by April 20th.

Sales tax filing frequency

In Hawaii, businesses are required to file and remit General Excise Tax (GET) rather than a traditional sales tax. The General Excise Tax is imposed on the gross income of businesses conducting activities in the state. The frequency of filing GET returns for businesses in Hawaii depends primarily on the amount of gross income generated within a given period:

Monthly Filing

Businesses with a gross income exceeding $4,000 per month must file GET returns on a monthly basis. These returns are due on the 20th day of the following month. For example, a return for income earned in January must be filed by February 20th.

Quarterly Filing

If a business’s gross income is between $2,000 and $4,000 per month, they are allowed to file returns quarterly. Quarterly returns are due on the 20th day of the month following the end of each quarter. For example, for the quarter ending June 30th, the return is due by July 20th.

Semiannual Filing

Businesses with a gross income of less than $2,000 per month can file on a semiannual basis. Semiannual returns are due by the 20th day of the month following the end of each semiannual period. For example, a return for the period ending June 30th is due by July 20th.

Filing when no sales tax has been collected

In Hawaii, if a business registered for sales tax (general excise tax) fails to collect it, they remain liable for the amount that should have been collected. The state expects businesses to remit the tax even if not collected from customers. This can result in penalties, interest on the unpaid amount, and increased scrutiny from tax authorities.

Penalties for late filing and non-payment of sales taxes

In the state of Hawaii in 2024, late sales tax filing and non-payment of sales taxes can lead to serious consequences. If a business files its sales tax return after the due date, it may incur penalties and interest charges.

The penalty for late filing is generally a percentage of the unpaid tax, which increases the longer the return remains unfiled. Additionally, any unpaid tax amount will accumulate interest daily from the original due date until the tax is paid in full.

Non-payment of sales taxes is treated even more severely. Businesses that fail to remit collected sales taxes are violating state tax laws, which can result in substantial fines and possibly even criminal charges. The state may also take enforcement actions such as placing liens on business property, garnishing wages, or seizing assets.

To avoid these repercussions, businesses are advised to pay close attention to filing deadlines and ensure that all collected sales taxes are remitted to the state timely.

Sales tax discounts and incentives

In 2024, Hawaii offers several sales tax incentives and discounts designed to stimulate business growth and investments.

Firstly, there is the General Excise Tax (GET) exemption for certain exported goods and services, meaning businesses can benefit from a reduced tax burden on out-of-state transactions.

Additionally, there's a GET exemption for enterprise zones, which allows qualifying businesses within these zones to enjoy lower tax rates. The state also provides tax credits for renewable energy projects and investments in tech industries to encourage sustainable development and innovation.

2024 sales tax filing due dates for Hawaii

Coming soon.

Shipping and sales tax in Hawaii

When to pay tax on shipping in Hawaii

In Hawaii, sales tax is generally referred to as the General Excise Tax (GET).

For businesses in Hawaii, the General Excise Tax applies to all business activities, including the sale of goods and services. In terms of shipping, the GET applies to the entire sales price, which typically includes the shipping or delivery charges if they are part of the sale.

Therefore, a business in Hawaii would pay the General Excise Tax on shipping charges if those charges are included in the total sales price billed to the customer. If shipping is itemized separately as a service, it may still be subject to the GET, as the tax covers a broad range of business activities.