Research Areas
Hawaii
The Facts on Hawaii's Tax Climate
Last updated July 1, 2009.
Here are some basic facts on Hawaii's tax system and how it compares to other states:
Tax Freedom Day Arrives on April 13 in Hawaii
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2009, Hawaii taxpayers had to work until April 13, the same day as the national Tax Freedom Day, ranking them 14th highest in the nation. The Tax Freedom Days of neighboring states are: Washington, April 16 (ranked 8th nationally), Oregon, April 9 (ranked 26th nationally) and California, April 20 (ranked 4th nationally).
Full study of Tax Freedom Day, nationwide and in each state
Hawaii's State/Local Tax Burden Fifth-Highest in Nation
During the past three decades, Hawaii has consistently had one of the nation's highest tax burdens. Estimated at 10.6% of income, Hawaii's state/local tax burden percentage ranks 5th highest, well above the national average of 9.7%. Taxpayers in the Aloha state pay $4,920 per capita in state and local taxes.
Hawaii's State-Local Tax Burden, 1977-present
Other States' State/Local Tax Burdens
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2008
Hawaii's 2010 Business Tax Climate Ranks 24th
Hawaii ranks 24th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: Washington (9th), Oregon (14th) and California (48th).
50-State Comparison of Business Tax Climates (data only)
2009 State Business Tax Climate Index, Sixth Edition (full study)
Hawaii's Individual Income Tax Highest in the Nation
Hawaii's personal income tax system consists of twelve brackets with a top rate of 11% kicking in at an income level of $200,000. This makes Hawaii's rate the highest in the nation. Hawaii's 2006 individual income tax collections were $1,218 per person, which ranks 9th highest nationally.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita
Hawaii's Corporate Income Tax System
Hawaii's corporate tax structure consists of three brackets with an upper rate of 6.4% kicking in at $100,000 of corporate income. Among states levying corporate income taxes, Hawaii's top rate ranks 33rd highest nationally. In 2007, state-level corporate tax collections (excluding local taxes) were $79 per capita, which ranks 44th nationally.
50-State Table of Corporate Income Tax Rates
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household
50-State Table of State Corporate Income Tax Collections Per Capita
Hawaii Levies Sales Tax Below National Median, but Sales Tax Collections are Among Nation's Highest
Hawaii levies a 4% general sales or use tax on consumers, which is below the national median of 6%.State and local governments combined collected approximately $1,850 per person in general sales taxes in 2006, which is the 2nd highest in the nation. Hawaii's gasoline tax stands at 33.6 cents per gallon, which ranks 7th highest nationally. However, the state's general sales tax is applied to purchases of gasoline, and municipalities are allowed to levy additional "local option" taxes on gasoline. Hawaii's cigarette tax stands at $2.60 per pack of twenty, which ranks 4th highest nationally. The sales tax was adopted in 1935, the gasoline tax in 1932 and the cigarette tax in 1939.
50-State Table of Sales and Excise Tax Rates
50-State Table of State and Local General Sales Tax Collections Per Capita and Per Household
50-State Table of State and Local General Sales and Gross Receipts Tax Collections Per Household and Per Capita
Hawaii's Property Taxes Among Nation's Lowest
Hawaii's local governments collected $771.85 in property taxes per capita during fiscal year 2006, which is the latest year available from the Census Bureau. Hawaii is one of the 13 states that collect no state-level property taxes. The state’s per capita property tax collections in FY 2006 rank 39th nationally.
State property tax collections per capita by state
Federal Tax Burdens and Expenditures: Hawaii is a Beneficiary State
Hawaii taxpayers receive more federal funding per dollar of federal taxes paid than the average state. Per dollar of Federal tax collected in 2005, Hawaii citizens received approximately $1.44 in the way of federal spending. This ranks the state 12th highest nationally and represents a significant rise from 1995 when Hawaii received $1.26 per dollar of taxes in federal spending (ranking 15th highest). Neighboring states and the amount of federal spending they received per dollar of federal taxes paid were: Alaska ($1.84), Oregon ($0.93), Washington ($0.88) and California ($0.78).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state
