Hawaii Sales Tax Rates

Total Range for 2024

4% – 4.5%

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Why do you need to collect sales tax in Hawaii?

If you’re selling goods and services in Hawaii then sales tax (or in this case general excise tax) might apply! To determine your obligation, you must understand “nexus,” which ties businesses to states for tax purposes.

Two types of nexus exist:

  1. Physical Nexus: Having a physical presence, like an office, warehouse, or employees in Hawaii, triggers this type. If you do, you likely need to collect sales tax.
  2. Economic Nexus: This kicks in when your sales within Hawaii exceed a certain economic threshold. Even without a physical presence, surpassing this threshold requires collecting sales tax.

In Hawaii, there is also a transaction threshold of 200, which means that even if your sales aren’t over $100,000 if you’ve sold more than 200 items then you still need to pay sales tax.

Is what you’re selling taxable in Hawaii?

Now that you understand your Hawaii sales tax obligations, the next step is to determine if the specific products or services you offer are subject to Hawaii sales tax. In Hawaii, there’s a general excise tax (GET) instead of a traditional sales tax. This GET applies to most business transactions, including:

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How to register for sales tax in Hawaii

In Hawaii, sales tax is referred to as the General Excise Tax (GET). To register for a GET license, you have two options:

  • Online: This is the faster and recommended method. You can register through the Hawaii Tax Online portal (https://tax.hawaii.gov/). 
    • Click “File and Pay your Taxes Online Here” 
    • You’ll need to fill out the State of Hawaii Basic Business Application (Form BB-1) and pay a one-time $20 registration fee.
  • By mail or in-person: You can complete a paper Form BB-1, which you can find on the Hawaii Department of Taxation website. Mail it in or bring two copies to any district office along with the $20 fee. However, this method takes longer to process.

Whichever method you choose, be prepared to provide information about your business, including:

  • Business name, address and contact details
  • Federal Employer Identification Number (EIN)
  • Date your business began or will begin operations
  • Projected monthly sales and taxable sales
  • Products or services you will be selling

After submitting your application, you can expect to receive your Hawaii Tax ID within a week if applying online, or 4-6 weeks by mail. For in-person applications, you’ll receive it right away.

How to collect sales tax in Hawaii

There are three steps to sales tax collection in Hawaii. Here’s how it works for businesses:

Registering for GET:

  • You’ll need a GET license obtained through the Hawaii Department of Taxation – the steps for this are in the section above.

Collecting GET (Optional):

  • Businesses can choose to include GET in their prices or display it separately on receipts. There’s no requirement to pass it on to the customer.

Calculating and Remitting GET:

  • Regardless of collection method, businesses owe GET on their total sales. This includes any GET collected from customers (to cover the additional tax on that amount).
  • The GET rate varies depending on the type of business and isn’t a flat rate like traditional sales tax.
  • Businesses need to file and remit GET to the Hawaii Department of Taxation electronically or by mail using designated forms.

Example:

Let’s say you run a small clothing store on Oahu in Hawaii. Here’s how to calculate the GET you owe on a sale:

  1. Sale Price: A customer purchases a shirt for $50 (pre-tax).
  2. GET Rate: Oahu has a 0.5% county surcharge on top of the base 4% GET rate, making it a total of 4.5% (check the Hawaii Department of Taxation website for specific rates in your county).
  3. GET Amount on Sale:
    • GET = Sale Price x GET Rate
    • GET = $50 x 4.5%
    • GET = $2.25

FAQs

Do you have a physical nexus in Hawaii?

In Hawaii, having a physical nexus generally means your business has a sufficient physical presence in the state to be required to register for a General Excise Tax (GET) license and potentially collect and remit GET. Here’s how to determine if you have a physical nexus:

Physical Presence Examples:

  • Owning or leasing: A brick-and-mortar store, warehouse, office, or any other property in Hawaii.
  • Employees or representatives: Having employees, salespeople, or independent contractors regularly working in Hawaii, even if they work remotely.
  • Inventory: Storing inventory in Hawaii for sale or distribution.
Do you have an economic nexus in Hawaii?

Hawaii also recognizes economic nexus, meaning even without a physical presence, exceeding a certain sales threshold within the state can trigger GET obligations. Currently, the threshold is:

  • $100,000 or more in gross income from sales delivered to Hawaii in the previous or current calendar year.
  • Over 200 separate transactions involving deliveries to Hawaii in the previous or current year.
What is use tax in Hawaii?

In Hawaii, use tax applies to purchases you make from out-of-state sellers who are not licensed to collect General Excise Tax (GET) and that you import for use in Hawaii. Essentially, it ensures you pay your fair share of tax even when buying from outside the state.

Here’s a breakdown of use tax in Hawaii:

  • What’s taxed: Tangible personal property (goods), services, contracting, and intangibles brought into Hawaii for use, consumption, or business purposes (unless for resale at wholesale).
  • Who pays: The purchaser is responsible for paying use tax if the seller hasn’t already collected GET.
  • Tax rate: The use tax rate depends on your location in Hawaii:
    • 4% for Maui County
    • 4.5% for the City and County of Honolulu and the Counties of Kauai and Hawaii
    • 0.5% for imports for resale at retail
    • 0% for imports for resale at wholesale
Do you need a seller/reseller permit?

Hawaii doesn’t technically have a seller/reseller permit in the traditional sense. However, they utilize a Resale Certificate (Form G-17) which achieves a similar purpose. Most businesses in Hawaii that resell goods at retail need a resale certificate.

How to get a sales tax permit/license in Hawaii?

Hawaii actually doesn’t have a sales tax permit/license in the traditional sense. Instead, they rely on a General Excise Tax (GET) license for businesses that sell taxable goods or services.

Here’s how to register for a GET license:

  1. Online (Recommended – Faster Processing)
  2. By Mail or In-Person
When are Hawaii's Returns Due?

The due date for filing Hawaii’s GET returns depends on the frequency you file with, which is determined when you register for your GET license. Here’s a breakdown:

  • Monthly Filers: The due date is the 20th day of the month following the close of the tax period. For example, if January is your filing month, the return is due by February 20th.
  • Quarterly Filers: The due date is the 20th day of the month following the close of the quarter. For instance, a return for the quarter ending in March would be due by April 20th.
  • Semi-Annual Filers: The due date is the 20th day of the month following the close of the six-month period.
  • Annual Filers: The due date is the 20th day of the fourth month following the close of the taxable year. For calendar-year filers (common for businesses), this means the return is due by April 20th of the following year.

Important Note: If the due date falls on a weekend or holiday, the filing deadline is pushed to the next business day.

How to file sales tax in Hawaii?

General Steps for Filing:

  1. Gather your records: You’ll need your total sales figures, taxable sales amounts, any GET collected from customers (if applicable), and your Hawaii Tax ID number.
  2. Choose your filing frequency: This was determined when you registered for your GET license (monthly, quarterly, etc.).
  3. Complete your return: Fill out the appropriate form (electronically or by hand) according to the instructions.
  4. Calculate your GET owed: This depends on your total sales and the GET rate for your location (check the Hawaii Department of Taxation website for specific rates).
  5. Submit your return and payment:
    • Electronically: File your return and pay any GET owed directly through the website.
    • Paper Forms: Mail the completed forms with your check or money order made payable to the “Director of Taxation” to the address provided on the form.
Is anyone exempt from sales tax in Hawaii?

There are exemptions for certain goods and services, not for the customer making the purchase. Here are some examples:

  • Prescription drugs and medical devices
  • Groceries purchased with food stamps
  • Sales between wholesalers and retailers (for resale)

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