-
Overall Rank
43
Down 1 place since 2026 -
29
Down 1 place since 2026 -
46
Down 1 place since 2026 -
37
Up 2 places since 2026 -
19
Down 4 places since 2026 -
Unemployment Insurance Tax Rank
39
Up 4 places since 2026
Hawaii ranks 43rd overall on the 2027 State Tax Competitiveness Index.
Score 4.39 / 10
Notable Changes Hawaii is singled out in the study for forthcoming changes.
Forthcoming, Not Yet Reflected
In May 2026, Hawaii lawmakers adopted a new, additional tax bracket with a rate of 13 percent on residents with incomes over $500,000 ($1 million for married filers). While this change does not take effect until 2027, Hawaii can expect to see a drop in both its individual income tax rank and overall rank in coming years, much like Maine has seen in the current Index.
Snapshot date: The 2027 Index measures each state's tax law as of July 1, 2026. Changes enacted after that date are not reflected in these ranks.
About Hawaii's Tax Code
Hawaii’s tax code is complex and includes all major tax types, placing the state among the bottom 10 on the Index. Hawaii has one of the most complex, least neutral, and most progressive individual income tax systems in the nation, with 12 tax brackets, a top marginal rate of 11 percent, a very low standard deduction, and only a few manual bracket threshold adjustments for inflation in recent years. Additionally, in January of 2027, Hawaii will gain a new 13 percent top income tax bracket. The state does, however, provide favorable treatment of capital gains income. Conversely, Hawaii caps small business expensing under Section 179 at $25,000, whereas the 2026 federal limit is $2.56 million.
Hawaii’s corporate income tax is also progressive (which is unusual), with a top rate of 6.4 percent. The state does not index tax brackets for inflation, does not allow full expensing, and has a throwback rule, which exposes Hawaii-based businesses to tax on certain income earned in other states.
The state’s sales tax, known as the general excise tax (GET), has a relatively low rate of 4 percent but an extremely broad base that includes virtually all business inputs, both goods and services (including digital advertising), leading to significant tax pyramiding. Hawaii also allows counties to impose local option sales taxes, generally capped at 0.5 percent.
Hawaii has one of the highest estate tax rates in the nation at 20 percent, with an exemption of $5.49 million. The state’s property tax system is generally competitive, and particularly features low rates on owner-occupied property, though some counties have split roll property taxes, where commercial properties are taxed more heavily than residential ones. Some counties also impose assessment caps on homestead properties, which are less efficient than levy limits.
Component Scores
#43 overall · 4.39 / 10Each component is scored from 0 to 10, where 10 is best. Select a component for its detail page.
| Component | Rank | Score | |
|---|---|---|---|
| Corporate Taxes | #29 | 5.05 / 10 | |
| Individual Income Taxes | #46 | 3.65 / 10 | |
| Sales Taxes | #37 | 4.16 / 10 | |
| Property Taxes | #19 | 5.21 / 10 | |
| Unemployment Insurance Taxes | #39 | 4.43 / 10 |
Ranking Changes, 2020–2027
#43 in 2027 · down 5 places from 2020Hawaii ranked 38th in 2020 and ranks 43rd in 2027, a decline of 5 places. The axis is zoomed to the state's range. Ranks for 2020 through 2026 are backcast under the current methodology.
Show the Table
| Year | Overall | Corporate | Individual Income | Sales | Property | Unemployment Insurance |
|---|---|---|---|---|---|---|
| 2020 | 38 (4.68) | 23 (5.29) | 46 (3.87) | 35 (4.31) | 9 (5.82) | 30 (4.87) |
| 2021 | 44 (4.59) | 23 (5.28) | 47 (3.78) | 35 (4.30) | 12 (5.54) | 32 (4.78) |
| 2022 | 44 (4.54) | 22 (5.29) | 47 (3.81) | 35 (4.34) | 12 (5.53) | 41 (4.27) |
| 2023 | 43 (4.56) | 24 (5.28) | 46 (3.92) | 35 (4.29) | 20 (5.28) | 40 (4.47) |
| 2024 | 43 (4.45) | 24 (5.27) | 46 (3.86) | 36 (4.33) | 17 (5.33) | 50 (3.41) |
| 2025 | 43 (4.47) | 26 (5.25) | 46 (3.89) | 37 (4.21) | 19 (5.28) | 46 (3.95) |
| 2026 | 42 (4.48) | 28 (5.21) | 45 (3.82) | 39 (4.15) | 15 (5.49) | 43 (4.16) |
| 2027 | 43 (4.39) | 29 (5.05) | 46 (3.65) | 37 (4.16) | 19 (5.21) | 39 (4.43) |
Hawaii Compared across the States
#43 overallEach row places the states on a 0 to 10 score scale for one measure. Hawaii is the large outlined dot, and the dashed line is the 50-state median, so a dot to its right scores better than the typical state. Hover over or tab to any dot for detail, and select it to open that state's profile.
Overall
#43 4.39
Corporate Taxes
#29 5.05
Individual Income Taxes
#46 3.65
Sales Taxes
#37 4.16
Property Taxes
#19 5.21
Unemployment Insurance Taxes
#39 4.43
- Hawaii
- Other states, by rank (1st to 50th)
- 50-state median
Hawaii and Its Neighbors
#43 overallHawaii shares no land border with another state, so its closest competition is national rather than regional. Any state can still be compared below.
What Each Component Includes
The five components of the Index, what each one covers, and where Hawaii lands. Open any component for the full breakdown.
-
Corporate Taxes
Rank #29Includes corporate income taxes and gross receipts taxes. Measures the impact of each state’s principal tax on business activities.
Full Breakdown for Hawaii → -
Individual Income Taxes
Rank #46Covers the tax individuals pay on income, and with it a significant number of businesses — sole proprietorships, partnerships, and S corporations — that report their income through the individual income tax code.
Full Breakdown for Hawaii → -
Sales Taxes
Rank #37Covers the general sales tax levied on the purchase price of goods and services, plus excise taxes on gasoline, diesel, tobacco, vapor products, beer, and spirits, and taxes on digital advertising.
Full Breakdown for Hawaii → -
Property Taxes
Rank #19Includes taxes on real and personal property, net worth, and the transfer of assets — among them capital stock, estate, inheritance, and real estate transfer taxes.
Full Breakdown for Hawaii → -
Unemployment Insurance Taxes
Rank #39Covers the taxes employers pay into the state unemployment insurance program to finance benefits for workers recently unemployed.
Full Breakdown for Hawaii →
Tax Data Explorer
Every policy variable behind Hawaii's 2027 scores, grouped by the report's tables, as of July 1, 2026. Search the variables and values, or add up to 4 states to compare side by side.
157 data points
Corporate Taxes: Corporate Income Tax Rates
| Variable | Hawaii |
|---|---|
| Bracket 1 | 4.4% > $0 |
| Bracket 2 | 5.4% > $25,000 |
| Bracket 3 | 6.4% > $100,000 |
| Gross Receipts Tax | No |
Corporate Taxes: Tax Credits and Gross Receipts Deductions
| Variable | Hawaii |
|---|---|
| Job Credits | No |
| Research and Development Credits | Yes |
| Investment Credits | Yes |
| Compensation Expenses Deductible | n.a. |
| Cost of Goods Sold Deductible | n.a. |
Corporate Taxes: Net Operating Losses
| Variable | Hawaii |
|---|---|
| Conforms to Federal NOL Treatment | Yes |
| Carryback (Years) | Conforms to federal treatment |
| Carryback Cap | Conforms to federal treatment |
| Carryforward (Years) | Conforms to federal treatment |
| Carryforward Cap | Conforms to federal treatment |
Corporate Taxes: Treatment of Capital Investment
| Variable | Hawaii |
|---|---|
| Section 168(k) Expensing | 0% |
| Conforms to Section 163(j) Limitation | Yes |
| GILTI Inclusion | Decouples |
| Section 174 Expensing | No |
| Section 168(n) Expensing | No |
Corporate Taxes: Other Corporate Base Variables
| Variable | Hawaii |
|---|---|
| Federal Income Used as State Tax Base | Yes |
| Conformity Status | Static (current) |
| Allows Federal ACRS or MACRS Depreciation | Yes |
| Allows Federal Depletion | Yes |
| Throwback Rule | Yes |
| Foreign Tax Deductibility | Yes |
| Corporate AMT | No |
| Brackets Indexed for Inflation | No |
Individual Income Taxes: Individual Income Tax Rates
| Variable | Hawaii |
|---|---|
| Bracket 1 | 1.4% > $0 |
| Bracket 2 | 3.2% > $9,600 |
| Bracket 3 | 5.5% > $14,400 |
| Bracket 4 | 6.4% > $19,200 |
| Bracket 5 | 6.8% > $24,000 |
| Bracket 6 | 7.2% > $36,000 |
| Bracket 7 | 7.6% > $48,000 |
| Bracket 8 | 7.9% > $125,000 |
| Bracket 9 | 8.25% > $175,000 |
| Bracket 10 | 9.0% > $225,000 |
| Bracket 11 | 10.0% > $275,000 |
| Bracket 12 | 11.0% > $325,000 |
| Standard Deduction (Single Filer) | $4,400 |
| Personal Exemption (Single Filer) | $1,144 |
| Personal Exemption Credit (Single Filer) | n.a. |
| Personal Exemption per Dependent | $1,144 |
| Personal Exemption Credit per Dependent | n.a. |
| Average Local Income Tax Rate | None |
| Surtaxes on Wage Income | n.a. |
Individual Income Taxes: Marriage Penalty, Capital Income, Indexation
| Variable | Hawaii |
|---|---|
| Marriage Penalty | No |
| Married Couples Can File Separately on One Return | No |
| Convenience Rule | No |
| Interest Taxed | Yes |
| Dividends Taxed | Yes |
| Capital Gains Taxed | Yes |
| Combined Capital Gains Tax Rate | 7.25% |
| Tax Brackets Indexed for Inflation | No |
| Standard Deduction Indexed for Inflation | No |
| Personal Exemption Indexed for Inflation | No |
| Progressivity Ratio | 1.53 |
Individual Income Taxes: Other Individual Base Variables
| Variable | Hawaii |
|---|---|
| Federal Income Used as State Tax Base | Yes |
| Conformity Status | Static (current) |
| Credits for Taxes Paid to Other States | Yes |
| AMT Levied | No |
| Recognition of S Corporation Status | Yes |
| Section 179 Expensing Limit | $25,000 |
| Tips | Exempt |
| Overtime | Taxable |
| Filing and Withholding Threshold Index | 5 |
Individual Income Taxes: Other Individual Income Variables
| Variable | Hawaii |
|---|---|
| Income Recapture | No |
Sales Taxes: Sales and Excise Tax Rates
| Variable | Hawaii |
|---|---|
| State Sales Tax Rate | 4.00% |
| Average Local Sales Tax Rate | 0.50% |
| Maximum Local Sales Tax Rate | 0.50% |
| Gasoline Tax (Cents per Gallon) | 18.50 |
| Diesel Tax (Cents per Gallon) | 18.5 |
| Cigarette Tax (Dollars per Pack of 20) | $3.60 |
| Beer Tax (Dollars per Gallon) | $0.93 |
| Spirits Tax (Dollars per Gallon) | $5.98 |
| Vapor Tax Ratio to Cigarette Tax | 183.1667% |
Sales Taxes: Business-to-Business Exemptions
| Variable | Hawaii |
|---|---|
| Business Inputs | Some Taxable |
| Farm Equipment | Taxable |
| Office Equipment | Taxable |
| Manufacturing Machinery | Taxable |
| Manufacturing Raw Materials | Taxable |
| Business Fuel and Utilities | Taxable |
| Business Leases and Rentals | Taxable |
| Information Services | Taxable |
| Software as a Service (SaaS) | Taxable |
| Platform as a Service (PaaS) | Taxable |
| Digital B2B Products | Taxable |
| Payroll Services | Taxable |
| Data Center Purchases | Taxable |
| Digital Advertising Tax | Yes |
Sales Taxes: Consumer Goods and Services in the Base
| Variable | Hawaii |
|---|---|
| Groceries | Taxable |
| Clothing | Taxable |
| Prescription Medication | Exempt |
| Nonprescription Medication | Taxable |
| Gasoline | Taxable |
| Landscaping | Taxable |
| Repair Services | Taxable |
| Real Estate Services | Taxable |
| Parking | Taxable |
| Dry Cleaning | Taxable |
| Fitness Services | Taxable |
| Barber Services | Taxable |
| Veterinary Services | Taxable |
| E-Books | Taxable |
| Streaming Video | Taxable |
| Medical Services | Taxable |
| Legal Services | Taxable |
| Financial Services | Taxable |
| Accounting Services | Taxable |
| Sales Tax Holiday | No |
Sales Taxes: Sales Tax Structure
| Variable | Hawaii |
|---|---|
| Uniform Base Definitions | Yes |
| Unified Tax Administration | Yes |
| Safe Harbor for Remote Sellers | Sales or Transactions Threshold |
Property Taxes: Property and Capital Stock Tax Rates
| Variable | Hawaii |
|---|---|
| Property Tax Collections per Capita | $1,928 |
| Property Tax as a Percentage of Personal Income | 2.69% |
| Assessment Limit | No |
| Levy Limit | No |
| Capital Stock Tax Rate | None |
| Capital Stock Tax Maximum Payment | n.a. |
| Payment Options for Capital Stock and Corporate Income Taxes | n.a. |
Property Taxes: Property Tax Bases
| Variable | Hawaii |
|---|---|
| Tangible Personal Property Tax | No |
| Tangible Personal Property De Minimis Exemption | n.a. |
| Intangible Property Tax | No |
| Inventory Tax | No |
| Real Estate Transfer Tax | Yes |
| Split Roll | Yes |
| Split Roll Ratio | 3.54 |
| Estate Tax | 20% |
| Inheritance Tax | No |
| Gift Tax | No |
Unemployment Insurance Taxes: UI Tax Rates
| Variable | Hawaii |
|---|---|
| Minimum Rate | 0.00% |
| Maximum Rate | 5.60% |
| Taxable Wage Base | $64,500 |
| Most Favorable Schedule: Minimum Rate | 0.00% |
| Most Favorable Schedule: Maximum Rate | 5.40% |
| Least Favorable Schedule: Minimum Rate | 2.40% |
| Least Favorable Schedule: Maximum Rate | 6.60% |
| Employer Contributions as a Share of Total Wages | 0.98% |
| Employer Contributions as a Share of Taxable Wages | 1.40% |
| Trust Fund Solvency Ratio | 0.65 |
| New Employer Rate | 2.40% |
Unemployment Insurance Taxes: Experience Formulas and Charging Methods
| Variable | Hawaii |
|---|---|
| Experience Formula Based On | Reserve Ratio |
| Benefits Charged in Proportion to Base-Period Wages | Yes |
| Charged If Employee's Benefit Award Is Reversed | Yes |
| Charged for Reimbursements on Combined Wage Claims | No |
| Charged If Employee Left Voluntarily | No |
| Charged If Employee Was Discharged for Misconduct | No |
| Charged If Employee Refused Suitable Work | No |
| Charged If Employee Continues to Work Part-Time | No |
Unemployment Insurance Taxes: Other UI Base Variables
| Variable | Hawaii |
|---|---|
| Solvency Tax | No |
| Taxes for Socialized Costs or Negative Balance Employers | No |
| Loan and Interest Repayment Surtaxes | Yes |
| Reserve Taxes | No |
| Surtaxes for UI Administration or Non-UI Purposes | Yes |
| Temporary Disability Insurance | Yes |
| Voluntary Contributions | No |
| Years to Qualify for Experience Rating | 1 |
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About the Authors
Janelle Fritts is a Senior Policy Analyst with the Tax Foundation’s Center for State Tax Policy. She is the lead researcher on the annual State Tax Competitiveness Index and serves as a resource to policymakers in their efforts to modernize and improve the structures of their state tax codes. Her work has been cited in The New York Times, the Associated Press, Bloomberg, and numerous state media outlets across the country.
Jared Walczak is a Senior Fellow at the Tax Foundation, where he spent five years as Vice President of State Projects, and president of Walczak Policy Consulting.
Nicole Fox is a Policy Analyst with the Center for State Tax Policy at the Tax Foundation, where she serves as a resource to policymakers in their efforts to modernize and improve the structure of their state tax codes.
Katherine Loughead is the Vice President of State Tax Policy at the Tax Foundation, where she oversees the state tax policy team’s research agenda and serves as a resource to policymakers in their efforts to modernize and improve the structure of their state tax codes.
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