The State of Hawaii Department of Taxation levies a General Excise Tax (GET) instead of a state sales tax rate for retail sales and services. All business activities are subject to the general excise tax. Different industries have different rates they must pay. While a business does not have to charge its customers the general excise tax, it must pay the tax regardless. Thus, most businesses pass this cost on to their customers.
This guide does not fully describe all of Hawaii’s laws and regulations regarding taxes. Businesses should contact a business attorney or visit the State of Hawaii Department of Taxation (Department of Revenue in other states) to learn more about the rules and regulations associated with their industries and the types of taxes due.
Types of taxes
In addition to the general excise tax, Hawaii’s legislature authorized counties to implement a county surcharge on any state general excise tax at the 4-percent rate. County surcharges do not apply to any businesses that are taxed at other rates.
Counties (jurisdictions) that implement a surcharge (local sales tax or discretionary sales tax) include:
- Honolulu, including the city of Honolulu: 0.5 percent, effective until December 31, 2030.
- Kauai: 0.5 percent effective until December 31, 2030.
- Hawaii: 0.25 percent effective until December 31, 2030.
Maui does not have a county surcharge.
In addition to the general excise tax, Hawaii also charges other taxes for the following industries:
Hotels and other short-term rental business taxpayers in Hawaii must pay a transient accommodations tax of 10.25 percent. Short-term rental include:
- Timeshare vacation units.
- Beach houses.
- Hotel rooms and suites.
A short-term rental is less than 180 consecutive days. Businesses charge the transient accommodations tax on gross receipts. If you separate the general excise tax and the transient accommodations tax on the receipt, they are not included in the gross proceeds. However, if you do not list the taxes separately, they are then included in the gross proceeds to figure each tax.
For example, if a room is $100 per night, and the business charges the general excise tax and transient accommodations tax on separate lines, the transient tax is $10.25, and the general excise tax is $4, for a total of $114.25.
However, if you do not list the taxes separately, you must charge the general excise tax and the transient accommodations tax on the full amount. For example:
- If you include the transient accommodations tax of $10.25 in the room prices, making the price $110.25, you must charge the general excise tax on the full $110.25.
- If you charge a flat rate for the room that includes the general excise tax and the transient accommodations tax for a total of $114.25 and do not list the taxes separately, you would have to pay the general excise tax and transient accommodations tax on $114.25 to the state.
The same applies to any county surcharge taxes. If you keep them visible on a separate line, you do not have to apply the transient accommodations tax or the general excise tax to that amount.
Rental motor, tour, and car-sharing vehicles
The rental motor vehicle surcharge tax is $5.50 per day through December 31, 2022. The surcharge tax increases $0.50 for each subsequent year through December 31, 2027. Thus, for 2023, the surcharge tax is $6.00; for 2024, it is $6.50 and so on.
For tour vehicles, the tax is $66 per month for a vehicle that seats more than 25 passengers and $16 for vehicles that seat 8 to 25 people.
Car-sharing companies must charge a surcharge tax of $0.25 per half hour or any portion of a half hour.
The rental motor, tour, and car-sharing surcharge taxes are due monthly, quarterly or semiannually, depending on the amount of tax liability the business has. The business must file Form RV-2 with the payment on or before the 20th day of the month following the end of the period.
For example, if a business is required to pay:
- Monthly: Remit taxes you collect in January are due on or before February 20.
- Quarterly: Remit taxes you collect in the first quarter – January through March – on or before April 20.
- Remit taxes you collect in the first half of the year – January through June – on or before July 20.
Businesses must also file an annual return and reconciliation (Form RV-3) that summarizes the tax activity for the previous year. If your tax liability is more than $100,000 per year, you must file and pay by electronic funds transfer (EFT).
If you do not have rental tax due, you must still file your report and enter “0.00” on Line 8.
Use tax, remote taxes, and marketplace sellers
Hawaii use tax works in conjunction with the general excise tax. If a buyer purchases tangible personal property and services from someone located in another state, and the seller is not licensed in Hawaii, the buyer must pay a use tax unless the buyer resells the goods. The use tax rates are the same as the general excise tax rates for sales of tangible personal property.
Items subject to use tax include:
The buyer pays use tax based on the item’s landed value when the item is imported. The landed value includes:
- Purchase price.
- Insurance costs.
- Shipping and handling costs.
- Other related costs.
Items that are subject to the use tax include:
- Consulting services.
- Repair services.
- Legal services.
- Medical services.
Other taxes include liquor, cigarettes and tobacco, and liquid fuel. The use tax return is combined with the general excise tax return.
Registering for Hawaii's general excise taxes
HAWAII DEPARTMENT OF TAXATION
P.O. Box 1425
Honolulu, HI 96806-1425
Due dates for Hawaii’s general excise taxes
A business can pay the general excise taxes for sales of goods and services monthly, quarterly, and semi-annually, depending on the amount of taxes it collects. When you log into your account, the state will let you know when the due dates are based on the previous year’s sales.
Due dates to file sales tax returns (GET) are:
- Monthly: The 20th day of the month following the collection month. For example, pay the taxes you collected in January on or before February 20.
- Quarterly: The 20th day of the month following the end of the quarter. For example, pay the taxes you collected in the first quarter (January through March) on or before April 20th.
- Semi-annually: The 20th day of the month following the half-year mark. For example, pay the taxes you collected from January through June on or before July 20th.
Hawaii general excise tax exemptions
Hawaii does not offer sales tax exemptions since every business pays the general excise tax on gross receipts. However, if a business might be exempt based on its tax-exempt status as recognized by the Internal Revenue Service. For example, 501(c)(3) nonprofit businesses can apply for exemption from the general excise tax (what other states call the retail sales tax). In most cases, the following types of organizations can apply for an exemption:
- Social welfare activities.
- Portable water company.
Business filers can only file the application for exemption via the electronic portal. It cannot mail or hand-deliver the application for an exemption certificate. Visit the Hawaii Department of Taxation or contact a business tax attorney for more tax information on exempt businesses if you are not sure whether your business qualifies for the exemption.
Calculating Hawaii's general excise tax
To calculate Hawaii’s general excise tax, multiply gross receipts by 4 percent. For example, a grocery receipt for $100 would have a general excise tax of $4 for a total of $104.
For counties with a surcharge tax, add the two taxes together, then multiply them by gross receipts. For example, Hawaii County has a 0.25 percent tax. Add that to the state’s 4 percent for 4.25 percent. The $100 grocery receipt would have a general excise tax of $4.25 for a total of $104.25.
For selling retail goods, the GET is 4 percent, plus any taxes required by local jurisdictions.
The license has a one-time fee of $20.
You can print an application online (link above) or apply for the license at the Business Action Center, 335 Merchant Street, Suite 201 from 7:45 a.m. until 4:30 p.m. Monday through Friday.
No. You must apply for a new license and pay the one-time $20 fee for the new license.
For every month you do not file a report and pay the general excise tax, the penalty is 5 percent of the unpaid tax. This percentage also applies for partial months. The maximum penalty is 25 percent.
The address you use depends on the type of tax you are applying for.
- General excise tax and Form BB-1: Hawaii Department of Taxation, PO Box 1424, Honolulu, HI 93806-1425
- Transient Accommodations Tax and Rental Motor Vehicle, Tour Vehicle and Car-Sharing Vehicle Surcharge Tax: PO Box 2430, Honolulu, HI 93804-2430
Most businesses must pay the 4 percent rate. If a business is a wholesaler or manufacturer, it pays 0.5 percent. Additionally, the business activities of disabled people are taxed at a 0.5 percent rate.