Living in Hawaii isn't cheap. Between the "Paradise Tax" on a gallon of milk and the eye-watering price of a modest condo in Kaka'ako, residents are used to a high cost of living. But there is actually some massive news on the horizon for your wallet. If you’ve been wondering what is the tax rate in Hawaii, the answer right now is basically "it depends," but it’s about to get a whole lot simpler—and for most workers, cheaper.
Governor Josh Green signed a historic tax relief bill (HB 2404) that is fundamentally restructuring the state's income tax brackets. We are talking about the largest tax cut in Hawaii's history. By 2026, the way you look at your paycheck is going to feel very different than it did a few years ago.
The Big Shift: Hawaii Income Tax Rates in 2026
Hawaii has long been known for having one of the most aggressive and "progressive" income tax systems in the country. For years, we dealt with 12 different tax brackets. It was a headache. If you were a high earner, you were looking at a top marginal rate of 11%.
Starting in 2026, the state is continuing its multi-year phase-in to simplify this mess. The goal is to eventually whittle those 12 brackets down to just a few.
For the 2026 tax year, the standard deduction is seeing a massive jump. If you are filing as a Single or Married Filing Separately taxpayer, your standard deduction is hitting $8,000. If you're Married Filing Jointly, it’s doubling to $16,000. Head of Household filers get $12,000. This matters because it means a much larger chunk of your income isn't even touched by the state before they start calculating what you owe.
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The rates themselves still range from a low of 1.4% to a high of 11%, but the "brackets"—the buckets of money that determine which rate you pay—are moving. This "bracket creep" adjustment means you can earn more money before being bumped into a higher tax percentage.
The General Excise Tax (GET): It’s Not a Sales Tax
Ask any local and they’ll tell you: Hawaii doesn't have a sales tax. Kinda.
Technically, we have the General Excise Tax (GET). While a sales tax is charged to the consumer, the GET is charged to the business for the privilege of doing business in Hawaii. Most businesses just pass that cost directly to you at the register.
For 2026, the base state GET rate remains 4.0%. However, almost every county has a surcharge.
- Honolulu (Oahu): 4.5%
- Hawaii County (The Big Island): 4.5%
- Kauai: 4.5%
- Maui: 4.5%
You might notice a weird number on your receipt like 4.712%. That isn't a typo. Because businesses are allowed to pass on the tax they pay on the tax they collect (it’s a bit recursive), the "visible" pass-on rate is slightly higher than the actual 4.5% tax. It’s annoying, but it’s legal.
Property Taxes: The One Place Hawaii is "Cheap"
Believe it or not, Hawaii has some of the lowest residential property tax rates in the United States. Don't get too excited—the home values are so high that the total bill is still a gut-punch for many.
Property taxes are handled by the counties, not the state. For the fiscal year beginning July 1, 2025, and running into 2026, the rates are tiered based on whether you actually live in the house (Owner-Occupied) or if it’s an investment.
In Honolulu, the "Homeowner" rate is generally around $3.50 per $1,000 of net taxable value. But if you have a second home valued over $1 million, you get hit with "Residential A" rates, which are significantly higher—starting at **$4.50** and jumping to $11.40 for the portion of value over $1 million.
On Kauai, the owner-occupied rate is even lower at $2.59 per $1,000. Meanwhile, if you're running a vacation rental on the Garden Isle, you're looking at a steep $11.30 to $12.20 depending on the property value.
The Tourist Tax: Staying in Hotels Just Got Pricier
If you’re visiting or have family coming to stay, keep an eye on the Transient Accommodations Tax (TAT). This is the tax added to hotel rooms and "short-term" rentals (less than 180 days).
Effective January 1, 2026, Act 96 has bumped the TAT up by 0.75%. The state rate is now 11%.
When you add the 4.5% GET and the various county-level TAT surcharges (which are usually around 3%), a tourist is paying roughly 18-19% in taxes on top of their room rate. This increase is specifically designed to fund the Hawaiian Home General Loan Fund, helping Native Hawaiian beneficiaries get into homes.
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Real-World Example: What This Means for a Maui Family
Let’s say you’re a married couple on Maui earning a combined $100,000.
Under the old 2023 rules, you’d be losing a significant chunk to the state. With the 2026 changes, your standard deduction has nearly doubled. This lowers your "taxable income" significantly before the percentages even apply. Most families in this bracket will see their state income tax bill drop by over $1,000 a year compared to three years ago.
That’s money that can actually go toward the $9-per-gallon milk at Safeway.
Actionable Steps for Hawaii Taxpayers
- Check Your Withholding: Since the rates and brackets are shifting in 2026, your employer should be updating their payroll tables. Check your first pay stub in January 2026 to ensure your take-home pay has actually increased. If not, you might need to file a new Form HW-4.
- Claim Your Exemptions: If you’re a resident homeowner, make sure you’ve filed your Homeowners Exemption with your county tax office. In Honolulu, this can knock $80,000 to $160,000 off your property's assessed value before the tax is calculated.
- Track GET for Business: If you’re a freelancer or run a small side-hustle (like Uber or Etsy), remember that you owe the 4.5% GET on your gross income, not just your profits. You have to file these returns monthly, quarterly, or semi-annually depending on your volume.
- Review the New Standard Deduction: When you go to file your returns in early 2027 (for the 2026 tax year), compare whether itemizing still makes sense. With the standard deduction at $16,000 for couples, fewer people will need to track every single charitable donation or medical expense.
Hawaii's tax landscape is moving toward a system that rewards residents while shifting the burden onto high-value real estate and tourism. It’s a complicated transition, but for the average worker, the 2026 tax rates are finally providing some breathing room.