Hawaii Retirement Taxes
There are a couple of things you should keep in mind if you’re considering a retirement in Hawaii. The first is the cost of living, which in Hawaii is well above than the national average.
The second item to pay attention to is the tax system. Depending on how you plan to live during retirement, you may find Hawaii’s tax system quite reasonable or quite onerous. That’s because the state entirely exempts some types of retirement income, including Social Security and pension income, while fully taxing income from retirement savings accounts.
Likewise, although the state’s property tax rate is the lowest in the U.S., housing costs remain quite high because property in the Aloha State is so expensive.
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Is Hawaii tax-friendly for retirees?
Hawaii is moderately tax-friendly, but it really depends on each retiree’s personal financial situation. For a person living off of Social Security and pension income, with small contributions from an IRA or another retirement account, Hawaii can be very tax-friendly.
For someone relying entirely on a 401(k) or IRA for their retirement income, Hawaii will be rather unfriendly because that income would be subject to some steep income tax rates.
Is Social Security taxable in Hawaii?
According to Hawaii law, Social Security income is not subject to state income taxes.
Are other forms of retirement income taxable in Hawaii?
The good news is that public and private pension income is tax-exempt in Hawaii. The bad news is that all other forms of retirement income are taxed and are not eligible for any kind of deduction. So if you plan on living off of income from a 401(k), an IRA, you should plan to pay taxes on that income.
Income Tax Brackets
- Single Filers
- Married, Filing Jointly
- Married, Filing Separately
- Head of Household
| Single Filers | |
| Hawaii Taxable Income | Rate |
|---|---|
| $0 - $2,400 | 1.40% |
| $2,400 - $4,800 | 3.20% |
| $4,800 - $9,600 | 5.50% |
| $9,600 - $14,400 | 6.40% |
| $14,400 - $19,200 | 6.80% |
| $19,200 - $24,000 | 7.20% |
| $24,000 - $36,000 | 7.60% |
| $36,000 - $48,000 | 7.90% |
| $48,000 - $150,000 | 8.25% |
| $150,000 - $175,000 | 9.00% |
| $175,000 - $200,000 | 10.00% |
| $200,000+ | 11.00% |
| Married, Filing Jointly | |
| Hawaii Taxable Income | Rate |
|---|---|
| $0 - $4,800 | 1.40% |
| $4,800 - $9,600 | 3.20% |
| $9,600 - $19,200 | 5.50% |
| $19,200 - $28,800 | 6.40% |
| $28,800 - $38,400 | 6.80% |
| $38,400 - $48,000 | 7.20% |
| $48,000 - $72,000 | 7.60% |
| $72,000 - $96,000 | 7.90% |
| $96,000 - $300,000 | 8.25% |
| $300,000 - $350,000 | 9.00% |
| $350,000 - $400,000 | 10.00% |
| $400,000+ | 11.00% |
| Married, Filing Separately | |
| Hawaii Taxable Income | Rate |
|---|---|
| $0 - $2,400 | 1.40% |
| $2,400 - $4,800 | 3.20% |
| $4,800 - $9,600 | 5.50% |
| $9,600 - $14,400 | 6.40% |
| $14,400 - $19,200 | 6.80% |
| $19,200 - $24,000 | 7.20% |
| $24,000 - $36,000 | 7.60% |
| $36,000 - $48,000 | 7.90% |
| $48,000 - $150,000 | 8.25% |
| $150,000 - $175,000 | 9.00% |
| $175,000 - $200,000 | 10.00% |
| $200,000+ | 11.00% |
| Head of Household | |
| Hawaii Taxable Income | Rate |
|---|---|
| $0 - $3,600 | 1.40% |
| $3,600 - $7,200 | 3.20% |
| $7,200 - $14,400 | 5.50% |
| $14,400 - $21,600 | 6.40% |
| $21,600 - $28,800 | 6.80% |
| $28,800 - $36,000 | 7.20% |
| $36,000 - $54,000 | 7.60% |
| $54,000 - $72,000 | 7.90% |
| $72,000 - $225,000 | 8.25% |
| $225,000 - $262,500 | 9.00% |
| $262,500 - $300,000 | 10.00% |
| $300,000+ | 11.00% |
How high are property taxes in Hawaii?
At 0.28%, the median effective property tax rate in Hawaii is the lowest in the country. But because of Hawaii’s sky-high home values, the annual property taxes paid by Hawaiians rank near the middle of the pack across the 50 states and Washington D.C. The median annual property tax in Hawaii is $1,893.
What is the Hawaii home exemption?
Hawaii’s home exemption is available to Hawaii residents who own and occupy their home. The exemption is subtracted from the assessed value when calculating taxes.
The amount of the exemption varies by county. In Honolulu County, the basic exemption is $120,000. Seniors age 65 and older qualify for a larger exemption of $160,000.
How high are sales taxes in Hawaii?
Sales taxes in Hawaii are relatively low. In fact, the state technically doesn’t have a sales tax. Hawaii has a General Excise Tax (GET) which is paid by businesses and passed indirectly to consumers.
The statewide GET is equivalent to a 4% sales tax. Honolulu County collects an extra 0.50% tax, so the total GET there is 4.50%. This is still lower than the average sales tax in the rest of the country. Seniors will save on prescription drugs, however, as these are not taxed. Food is taxable, though.
What other Hawaii taxes should I be concerned about?
Seniors in Hawaii who have assets worth more $5.49 million should be aware of the state’s estate tax. Estates with a taxable value below that amount will not be taxed. Those above that limit, however, can expect to pay rates up to 20%.
