Understanding Hawaii’s Sales Tax System: A Comprehensive Overview

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Understanding Hawaiis Sales Tax System
A Comprehensive Overview
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Hawaiis General Excise Tax (GET)

• In Hawaii, the General Excise Tax (GET) is the
  primary form of sales tax, applied to nearly all
  business activities, including retail sales,
  services, and even interest income.
• Base State Rate 4 for most transactions.
• Local Impact Certain counties, such as Honolulu,
  impose additional surcharges that increase the
  effective tax rate.

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County-Specific Sales Tax Rates

• Honolulu (Oahu) In 2024, the surcharge in
  Honolulu increases from 0.5 to 0.75, resulting
  in an effective GET of 4.75.
• Maui Maui introduced a 0.5 surcharge in 2024,
  bringing the GET rate to 4.5.
• Hawaii (Big Island) The surcharge remains 0.25,
  keeping the total rate at 4.25.
• Kauai Kauai maintains its 4.5 rate with a 0.5
  surcharge.

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What Is the General Excise Tax?
General Excise Tax (GET)

• The General Excise Tax (GET) is often mistakenly
  called a sales tax but is more comprehensive. It
  applies to businesses for the privilege of
  operating in Hawaii, covering retail, services,
  and even some income.
• Key Point Businesses need to account for the GET
  in their pricing and comply with state tax
  regulations.

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2024 Updates Whats Changed?

• The GET saw a modest increase in 2024
• Oahu 0.75 county surcharge (total 4.75).
• Maui New 0.5 surcharge (total 4.5).
• Kauai Hawaii No significant changes.

New Tax on Digital Goods Services Streaming
and online courses are now taxed at 4.5.
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How to Calculate Hawaii Sales Tax

• Step 1 Determine if the Sale is Taxable Most
  tangible goods and services are subject to GET.
  Some items may be exempt.
• Step 2 Identify the Applicable Rate Use the
  base GET rate (4.0) plus any applicable county
  surcharge.
• Step 3 Calculate Tax
• Physical Goods Sale price GET rate County
  surcharge.
• E-commerce Sales Apply GET to all online sales
  from Hawaii-based businesses.
• Software Services Taxable under GET, with
  applicable county surcharge.

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E-Commerce SaaS Taxation

• Businesses selling online must pay GET on
  e-commerce transactions at the origin rate (4).
• Remote sellers from out-of-state are also
  required to collect GET if they meet the economic
  nexus threshold of 100,000 in sales or 200
  transactions annually in Hawaii.
• Software as a Service (SaaS) Taxable under GET
  at 4 county surcharge.

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Understanding Use Tax

• The Use Tax ensures that items purchased out of
  state are taxed similarly to those bought in
  Hawaii.
• If Hawaiis GET wasnt charged on out-of-state
  purchases, businesses and individuals must pay
  the use tax, which mirrors the GET rate.
• The use tax rate is 4, with additional county
  surcharges in areas like Oahu (total 4.5).

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Key Compliance Tips

• Businesses must list GET separately on receipts
  and regularly file returns (monthly, quarterly,
  or annually).
• Use tax must also be reported and remitted for
  out-of-state purchases.
• Stay Informed Keep up-to-date with county
  surcharges and tax changes to ensure compliance.

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Recent Changes and Their Impact

• In 2024, Hawaii increased the Transient
  Accommodations Tax (TAT) from 10.25 to 11.
• Other surcharges include an additional 0.25 in
  Maui and changes to digital goods taxes.
• The goal of these increases is to fund
  infrastructure and public works projects.

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Conclusion
Tax Planning in Hawaii

• Hawaiis tax system is unique and requires
  businesses and residents to stay informed of the
  various rates, surcharges, and changes that may
  impact financial planning.
• Key Takeaways
• Base GET rate 4.
• County surcharges can increase the tax rate.
• Use tax applies to out-of-state purchases.
• 2024 brings minor increases in GET and digital
  goods taxation.

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