The Tax Foundation

Tax Data

Hawaii

The Facts on Hawaii's Tax Climate

Here are some basic facts on Hawaii's tax system and how it compares to other states:

Tax Freedom Day Arrives on April 26 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 2008, Hawaii taxpayers had to work until April 26, ranking them 10th highest in the nation. That's three days after the national Tax Freedom Day (April 23). The Tax Freedom Days of neighboring states are: Washington, April 29 (ranked 5th nationally), Oregon, April 16 (ranked 32nd nationally) and California, April 30 (ranked 4th nationally).

Tax Freedom Day has been projected using the most up-to-date economic and budget projections from official government agencies. However, Tax Foundation estimates of average state and local tax rates for 2008 will not be released until later this spring as we await more up-to-date data from various government agencies.
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 2008 Business Tax Climate Ranks 22nd
Hawaii ranks 22nd 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 (11th), Oregon (10th) and California (47th).
50-State Comparison of Business Tax Climates (data only)
2008 State Business Tax Climate Index, Fifth Edition (full study)

Hawaii's Individual Income Tax System
Hawaii's personal income tax system consists of nine brackets with top rate of 8.25% kicking in at an income level of $48,000. This top rate ranks the state 8th highest among states levying personal income taxes. Hawaii's 2005 individual income tax collections were $1,085 per person, which ranks 11th 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 bracket rate of 6.4% kicking in at $100,000 of corporate income. Among states levying corporate income taxes, Hawaii's top rate ranks 34th highest nationally. In 2006, state-level corporate tax collections (excluding local taxes) were $115.20 per capita, which ranks 36th nationally.
50-State Table of Corporate Income Tax Rates, 2000-2008
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household, 2005
50-State Table of State Corporate Income Tax Collections Per Capita, 2006

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 5.4%. State and local governments combined collected approximately $2,284 per person in general sales taxes in 2005, which is the highest in the nation. Hawaii's gasoline tax stands at 32.6 cents per gallon, which ranks 9th highest lowest 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 $1.80 per pack of twenty, which ranks 10th 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 and Gross Receipts Tax Collections Per Household and Per Capita, Fiscal Year 2005

Hawaii's Property Taxes Among Nation's Lowest
Hawaii's local governments collected $720,798,000 in property taxes during fiscal year 2004, which is the latest year available from the Census Bureau. Hawaii is one of the 13 states that collect no state-level property taxes, meaning its per capita property tax collections equaled $571 for all levels of government in FY 2004, ranking it 42nd 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

Tax Data from The Tax Foundation