Hawaii State Income Tax: 2026 Brackets, Act 46 Cuts, and Deductions

Hawaii has one of the steepest state income tax systems in the country. It has 12 brackets, a top marginal rate of 11%, and thresholds that have historically started taxing people at very low incomes. For a household moving from Texas or Washington, where wages carry no state income tax at all, the first Hawaii paycheck often comes as a surprise.

That is starting to change. Act 46, signed in June 2024, is phasing in the largest income tax cut in state history. It widens the brackets and raises the standard deduction several times over through the early 2030s. A single filer’s standard deduction was $2,200 in 2023. It is $5,000 for tax year 2026 and is scheduled to reach $12,000.

This explainer covers the 2026 brackets and the Act 46 schedule. It works through examples at $60,000, $100,000 and $150,000 and compares them with California, Washington and Texas. It also covers the part-year rules for the year you move, how remote work is taxed, and filing through Hawaii Tax Online.

How Hawaii state income tax works at a glance

Hawaii taxes residents on their income from everywhere. It taxes nonresidents only on income earned in Hawaii. The calculation starts from federal adjusted gross income (AGI) and applies Hawaii-specific adjustments. Next comes a standard or itemized deduction and a personal exemption of $1,144 per person. What remains is taxed through a graduated rate schedule.

The Hawaii Department of Taxation runs the tax. No county or city in Hawaii has its own income tax. An Oahu resident and a Hilo resident with identical income owe exactly the same amount.

• Full-year resident return: Form N-11.
• Nonresident and part-year resident return: Form N-15.
• Employee withholding certificate: Form HW-4, separate from the federal W-4.
• Filing deadline: April 20, not April 15.
• Top marginal rate: 11%, on taxable income above $325,000 for single filers in 2026.

Where Hawaii differs from the federal return

Several items are treated differently from the federal return. Social Security benefits are fully exempt. Pensions paid for by the employer are generally exempt. Withdrawals from 401(k)s and IRAs that come from the employee’s own contributions are taxable. The site’s breakdown of how Hawaii taxes retirement income covers those rules in detail.

Long-term capital gains are taxed at no more than 7.25%. That matters for anyone who sells a mainland home or stock after becoming a resident. State income tax cannot be deducted on the Hawaii itemized schedule. Hawaii has also not adopted every recent federal change, so the state and federal returns rarely match line for line.

The 2026 Hawaii income tax brackets

Tax year 2026 uses the rate schedule set by Act 46. The rates themselves did not change and still run from 1.4% to 11%. What changed is the income level where each rate starts. For single filers, the 1.4% bracket now covers the first $9,600 of taxable income. Before the law it covered only the first $2,400.

Married couples filing jointly use thresholds exactly double the single amounts. Head-of-household filers have their own schedule, which sits between the two. The table shows single and joint thresholds, plus the total tax already owed when a single filer reaches the start of each bracket.

Hawaii’s brackets do not rise automatically with inflation. Every increase has to come from new legislation. Without it, the thresholds stay fixed while wages rise, and more income gets pushed into higher brackets. That problem is called bracket creep, and it is the main reason Act 46 matters.

The legislature can change the schedule in any session. Before relying on these figures for withholding or estimated payments, check them against the current Form N-11 instructions.

Marginal rate versus effective rate

A single filer earning $100,000 in wages is in the 7.6% bracket. That rate only applies to taxable income above $48,000. After the deduction, the exemption and the lower brackets, the tax works out to about 6.0% of gross wages. People moving to Hawaii often overestimate their bill by applying the top rate to all their income.

What Act 46 changed and when

Act 46 began as House Bill 2404, and Governor Josh Green signed it in June 2024. The law uses two levers at once: a much larger standard deduction and brackets that get wider over time. Both phase in over several years so the state budget can absorb the lost revenue gradually.

Before 2024, Hawaii’s standard deduction was $2,200 for single filers and $4,400 for joint filers, and it had barely moved in decades. During the 2024 session, Civil Beat and other local outlets described the old system as one of the harshest in the nation for low and middle earners.

The standard deduction schedule

At full phase-in, the single deduction will be more than five times the 2023 figure. A married couple’s first $24,000 plus $2,288 in exemptions would then be tax-free. That removes many part-time and lower-wage workers from the income tax rolls entirely.

Bracket widening

The bracket changes follow a separate timeline. The first widening took effect in tax year 2025 and continues through 2026. More widenings are scheduled for 2027, 2029 and 2031. Each one raises the income levels where the higher rates start, so more income stays in the 1.4% to 7.6% bands.

The later steps have a built-in check: some of them are tied to state revenue targets. A weak revenue year could lead the legislature to delay or change them. The Honolulu Star-Advertiser has covered that budget debate each session.

How much Act 46 saves at common incomes

These figures assume wages only, the standard deduction and one personal exemption. Higher earners save more dollars. Lower earners save a bigger share of their bill: at $60,000 the tax falls about 24%, compared with about 13% at $150,000.

Worked examples: $60,000, $100,000 and $150,000

Each example is a single filer with W-2 wages only, no dependents, and the standard deduction. Hawaii figures use the 2026 schedule. California figures use its 2025 schedule, the latest published. California adjusts its brackets for inflation every year and releases the new numbers late in the year.

Step by step: the $100,000 earner in Hawaii

1. Start with $100,000 of federal AGI. Ordinary wages need no Hawaii adjustments.
2. Subtract the 2026 standard deduction of $5,000.
3. Subtract one personal exemption of $1,144, leaving $93,856 of taxable income.
4. Tax on the first $48,000 is $2,539.20.
5. The remaining $45,856 is taxed at 7.6%, which adds $3,485.06.
6. Total Hawaii tax is $6,024, or 6.0% of gross wages.

The same method gives $2,984 at $60,000, where taxable income is $53,856. At $150,000 the tax is $9,881. There, the top $18,856 of taxable income is above $125,000 and taxed at 7.9%.

Hawaii versus California, Washington and Texas

Two patterns stand out. First, Hawaii takes more than California at every income shown, and the gap is widest for moderate earners. At $60,000, a Hawaii resident pays about $1,344 more. California’s lower brackets have lower rates and cover more income, and its $5,706 standard deduction is larger.

Second, the gap shrinks as income rises. California’s 9.3% bracket starts at about $72,700 of taxable income for single filers. Hawaii’s rate stays at 7.6% up to $125,000. The two states cost about the same near $160,000 of wages, and above that California generally costs more.

Payroll deductions widen the gap slightly. California withholds State Disability Insurance at 1.2% of all wages in 2025 with no cap, which comes to $1,200 at $100,000. Hawaii’s Temporary Disability Insurance takes 0.5% of wages up to a weekly cap, which usually totals under $400 a year.

Why Washington and Texas are not really zero

Washington and Texas do not tax wages, but both collect revenue in other ways. Washington taxes long-term capital gains at 7% above roughly $278,000 of gains in 2025, plus another 2.9% on gains over $1 million. Texas relies on property taxes, and effective rates around 1.6% of home value are common.

Hawaii works the other way around. Its residential property tax rates are the lowest in the nation. Oahu’s owner-occupant rate, set by the City and County of Honolulu, has been $3.50 per $1,000 of assessed value before the home exemption. A $900,000 Honolulu home might owe under $3,000 a year. In a Texas county at 1.6%, the same home would owe about $14,400.

Sales taxes matter too. Hawaii’s general excise tax is 4% statewide and up to 4.5% where a county adds a surcharge. Businesses usually pass it on to customers, and it applies to services and groceries. Seattle’s combined sales tax is above 10%, and Texas tops out at 8.25%. A fair comparison of total tax burden needs all three taxes, not just income tax.

Part-year resident rules for the move year

The year a household moves to Hawaii is usually its most complicated filing year. Hawaii treats the mover as a part-year resident. It taxes all income received after the move, plus any income earned in Hawaii before it. The return is Form N-15, not the N-11.

When residency begins

Under Hawaii law, a resident is someone whose permanent home (domicile) is in Hawaii, or someone living there for more than a temporary purpose. Spending more than 200 days in Hawaii in a tax year creates a presumption of residency. A taxpayer can challenge that presumption with evidence.

For most movers, residency starts on the day they arrive intending to stay. The department looks at concrete signs of that intent, so it helps to set up several of them quickly:

• A Hawaii driver’s license and vehicle registration.
• Voter registration in a Hawaii county.
• A lease or deed on a Hawaii home.
• Cancellation of any homestead exemption on mainland property.
• A Hawaii address on bank, brokerage and employer records.
• Enrollment in a Hawaii health plan, covered in the Kaiser versus HMSA comparison.

Everyday records help as well. A jury duty summons for new residents usually arrives after voter or license registration and adds another dated record. Ending residency in the old state matters just as much. California in particular audits former residents who say they have left.

How the N-15 calculation works

On Form N-15, the taxpayer reports total income from all sources, then marks the portion Hawaii can tax. The standard deduction and personal exemptions are scaled down by the share of total AGI that is Hawaii AGI. The resulting Hawaii taxable income then goes through the normal rate schedule.

The first half of the year’s wages is reported to the old state under its own part-year rules. A mover from Texas or Washington owes nothing there. A mover from California files California Form 540NR, which taxes the California wages at a rate based on the year’s total income.

Income that trips up movers

• Bonuses paid after the move for work done before it may be taxed by the old state.
• A mainland home sold after residency starts is taxable in Hawaii on gains above the $250,000 federal exclusion.
• Stock options granted on the mainland may be split between states by workdays.
• Interest and dividends are taxed by whichever state the owner lived in when they were received.

Remote workers for mainland employers

Many recent arrivals keep their mainland job and work from home in Honolulu, Kona or Kihei. The state tax rule is simple: wages are taxed where the work is physically done. Once a worker lives and works in Hawaii, those wages are Hawaii income, wherever the employer is based.

Employer withholding and registration

An employer with a worker in Hawaii is expected to open a Hawaii withholding account, usually by filing Form BB-1. It then withholds Hawaii tax based on the employee’s Form HW-4. Large payroll providers handle this routinely. A small mainland company that has never registered in Hawaii may take several pay periods to set it up.

Until withholding starts, the employee is not having enough tax taken out. The practical fix is quarterly estimated payments on Form N-1, due April 20, June 20, September 20 and January 20. Skipping them can lead to underpayment interest when the return is filed in April.

Employers have other Hawaii obligations too, including unemployment insurance and Temporary Disability Insurance. Under the Prepaid Health Care Act, employers must also offer health coverage to employees who work 20 or more hours a week. Workers who freelance on the side should read starting a business in Hawaii as a new resident, because self-employment income needs a general excise tax license.

Convenience-of-the-employer states

A few states tax nonresidents who work remotely for an in-state employer when working remotely is the employee’s choice. This is known as the convenience-of-the-employer rule. New York enforces it most aggressively, and Delaware, Nebraska and Pennsylvania have similar rules. A Hawaii resident working remotely for a Manhattan company can end up owing New York tax on the same wages.

Hawaii prevents full double taxation with a credit for income tax paid to another state, claimed on Schedule CR. The credit cannot exceed the Hawaii tax on the same income. In practice, the worker pays whichever state’s tax is higher on those wages and files one extra return.

Nonresidents working temporarily in Hawaii

A mainland resident who spends a winter working remotely from a Maui rental owes Hawaii tax on wages earned during those days and files Form N-15. Employers generally do not have to withhold for nonresident employees working in Hawaii 60 days or fewer in a calendar year. The tax is still owed from the first day.

Stays of more than 200 days trigger the residency presumption described above. Long-term visitors who work remotely should keep a dated log of their days on the island.

Deductions and credits worth knowing

Hawaii’s standard deduction is still much smaller than the federal one. As a result, more people itemize on their Hawaii return than on their federal return. Hawaii lets taxpayers itemize on the state return even if they take the federal standard deduction. Homeowners with mortgage interest and property tax benefit most.

Itemized deductions

• Mortgage interest and real property tax on a qualifying home.
• Charitable contributions, generally following federal rules.
• Medical expenses above 7.5% of AGI.
• State income tax paid cannot be deducted on the Hawaii return.

Credits that reduce the bill

• Renters’ credit: $150 per exemption for renters with AGI under $60,000.
• Food/excise tax credit: refundable, and scaled to income and household size.
• Hawaii earned income tax credit: refundable, calculated as a percentage of the federal credit.
• Credit for taxes paid to other states: capped at the Hawaii tax on the same income.
• Cesspool conversion: up to $10,000 under the Act 326 cesspool tax credit.

Homeowners can also claim a renewable energy technologies credit. For solar water heating on a single-family home, it is 35% of cost up to $2,250. For rooftop solar panels, the cap is $5,000 per system. New construction has its own solar water heater requirement, explained in the guide to the HRS 196-6.5 solar water heater variance.

Filing through Hawaii Tax Online

Hawaii Tax Online is the department’s free web portal, linked from tax.hawaii.gov. Individuals can file the resident N-11 directly, make payments, request payment plans, check refund status and answer department letters. Commercial tax software can also e-file Hawaii returns. Part-year and nonresident filers should check whether the portal supports the N-15 for the current year.

Step-by-step filing

1. Finish the federal return first, because Hawaii starts from federal AGI.
2. Register for a Hawaii Tax Online account and complete identity verification.
3. Choose Form N-11 for a full year as a resident, or N-15 for a move year or nonresidency.
4. Enter each W-2, including the Hawaii wages and state withholding boxes.
5. Attach Schedule CR if another state taxed the same income.
6. Pay any balance by bank debit, or schedule the payment for April 20.

Key dates for tax year 2026

Refunds on e-filed returns generally arrive much faster than paper ones. Paper returns can take 12 weeks or more during the spring rush. Filing early in February and choosing direct deposit gives the best chance of a quick refund.

Income tax in the context of Hawaii living costs

Comparing income tax alone understates how much finances change after a move. The BLS consumer price index for Urban Hawaii consistently runs above the national index. According to the EIA’s Hawaii electricity profile, household electricity averages above 40 cents per kWh, more than double the U.S. average.

Higher incomes make up some of the difference. Census QuickFacts puts Hawaii’s median household income near $98,000, compared with a national median of about $78,000. A married couple earning $98,000 in 2026 would owe about $4,338 in Hawaii income tax, or 4.4% of gross income.

Planning for the first two tax years

Moving households with investments that have grown in value should think about when to sell. A Texan who sells stock with a $200,000 gain before moving owes no state tax on it. The same sale after becoming a Hawaii resident could cost up to $14,500 at the 7.25% cap.

For Californians, the timing works the other way. California would tax that gain at up to 9.3% or more, so selling after Hawaii residency is clearly established can save money. California will look closely at any large sale close to the move date.

• File a new HW-4 with the employer during the first week of Hawaii residency.
• Keep dated proof of the arrival day: airline receipts, lease start date and moving invoices.
• Review mainland withholding so the old state stops taking tax after the move.
• Budget for Form N-1 estimated payments if the employer is slow to set up Hawaii payroll.

Wealthier households should also look beyond income tax. Hawaii’s $5.49 million estate tax threshold is far lower than the federal exemption. Tools such as a transfer on death deed under HRS 527 can keep Hawaii real estate out of probate.

Frequently asked questions

What is the Hawaii state income tax rate in 2026?

Hawaii has 12 brackets for tax year 2026, with rates from 1.4% to 11%. For single filers, the 1.4% rate covers the first $9,600 of taxable income, and the 11% top rate applies above $325,000. Joint filers use thresholds exactly double those amounts.

Does Hawaii tax Social Security benefits?

No. Hawaii fully exempts Social Security benefits, and pensions paid for by the employer are generally exempt too. Withdrawals from 401(k) plans and IRAs that come from the employee’s own contributions are still taxable. Retirees moving from states that tax Social Security may pay noticeably less state tax on that income.

When is the Hawaii income tax return due?

Hawaii individual returns are due April 20, five days after the federal deadline. For tax year 2026, that is April 20, 2027. An automatic six-month extension moves the filing deadline to October 20. Any balance owed must still be paid by April 20 to avoid penalties and interest.

Do remote workers for mainland companies pay Hawaii income tax?

Yes. Hawaii taxes wages where the work is physically done. A resident working from a Hawaii home office owes Hawaii tax even if the employer is in Seattle or Austin. The employer should withhold Hawaii tax. If it does not, the worker should make quarterly estimated payments on Form N-1.

How do part-year residents file in Hawaii?

Part-year residents file Form N-15. They report all income received while living in Hawaii, plus any income earned in Hawaii before the move. The standard deduction and exemptions are reduced by the share of total AGI that is Hawaii AGI. The regular rate schedule then applies.

Is Hawaii income tax higher than California’s?

For many middle-income earners, yes. A single filer earning $60,000 pays about $2,984 in Hawaii and roughly $1,640 in California. The gap shrinks as income rises, and the two states cost about the same near $160,000. Above that, California’s 9.3% and higher brackets usually produce the bigger bill.

Will Hawaii income taxes keep falling under Act 46?

The law schedules more cuts. The single standard deduction rises from $5,000 in 2026 to $8,000 in 2028 and $12,000 by 2030. Brackets widen again in 2027, 2029 and 2031. Some later steps are tied to revenue targets, so the legislature could change or delay them.

Does Hawaii have a local or city income tax?

No. No county or city in Hawaii has its own income tax. Residents of Honolulu, Maui, Kauai and Hawaii Island all pay the same state rates. Counties raise money mainly through property taxes, which are the lowest in the nation, and a general excise tax surcharge of up to 0.5%.