Even with a healthy tax return on the way, most of us don’t look forward to filing our taxes. Not only does filing taxes take time, but the tax code is almost incomprehensible. Luckily, the Aloha State’s tax scheme is pretty straightforward. This is a brief introduction to personal income tax laws in Hawaii.
Income Tax in Hawaii
States' personal income tax laws are in place to raise revenue for public services like schools, police budgets, and infrastructure construction and maintenance. Like federal income tax, state income taxes are assigned as a percentage of a citizen’s employment income. Like many states, Hawaii applies a variable tax rate depending on how much you earn. Hawaii’s personal income statutes are listed below.
| Code Section | Hawaii Revised Statutes 235-1, et seq.: Income tax Law |
| Who is Required to File | Resident individual, estate or trust, and nonresident individual estates or trusts on income derived from Hawaii sources |
| Rate | First $4,000, 1.4%; Next $4,000, 3.2%; Next $8,000, 5.5%; Next $8,000, 6.4%; Next $8,000, 6.8%; Next $8,000, 7.2%; Next $20,000, 7.6%; Next $20,000, 7.9%; Over $80,000, 8.25% |
| Federal Income Tax Deductible | No |
| Federal Income Used as Basis | Yes |
Under basic tax law, states are able to implement income tax laws and consumer tax laws while the federal government is permitted to enact federal tax laws that apply to both earned and unearned personal income. Earned income includes your salary from work, as well as wages, tips, commissions, and bonuses. Meanwhile, unearned income comes from sources other than your job, like interest, dividends, and profits from asset sales, royalties, and gambling winnings.
At the federal level, the Internal Revenue Service (IRS) implements federal income taxes nationwide and makes most IRS forms and publications available online. For assistance with your Hawaii taxes, you can find many state tax forms online along with resources regarding taxpayer assistance programs if you would like help with understanding or filing your state or federal taxes.
Related Resources for Personal Income Tax Laws in Hawaii
State tax laws, and where they overlap with the federal tax code, can seem impossible to understand, even with the help of a computer program or a tax accountant. You can consult with an experienced Hawaii tax law attorney in your area if you would like legal help with a tax matter. And FindLaw’s section on Tax Law can provide you with further reading and resources on this topic.
