Hawaii — Sales & Use Tax

Hawaii does not impose a traditional retail sales tax. Instead, Hawaii levies a general excise tax (GET) under Chapter 237, Hawaii Revised Statutes, which is a privilege tax on business activity rather than a tax on consumers. The GET is imposed on the gross income or gross proceeds received by persons engaged in business in Hawaii, covering virtually all business activities including sales of goods, services, rentals, and professional services. Unlike a sales tax, which typically applies only at the final retail sale of tangible personal property, the GET applies to multiple stages of production and distribution and is legally imposed on the business, not the purchaser. Businesses may pass the GET on to customers, but this is a contractual matter, not a legal requirement.

Hawaii also imposes a complementary use tax under Chapter 238 on property, services, and contracting imported into Hawaii from unlicensed sellers not subject to the GET.

Source: Haw. Rev. Stat. § 237-13 | Haw. Rev. Stat. § 238-2

Hawaii's general excise tax is imposed at multiple rates depending on the business activity. The standard retail rate is 4% of gross income, applied to most business activities including retail sales, services, and rentals. The wholesale rate is 0.5% and applies to income from manufacturing, producing, wholesaling, and certain specified business-to-business transactions. A special rate of 0.15% applies to commissions earned by licensed insurance producers under chapter 431.

Source: Haw. Rev. Stat. § 237-13

Counties may adopt by ordinance a surcharge of up to 0.5% on transactions subject to the 4% general excise tax rate. The surcharge does not apply to transactions taxed at the 0.5% wholesale rate or the 0.15% insurance commission rate. All four Hawaii counties have adopted the maximum 0.5% surcharge: City and County of Honolulu (effective January 1, 2007), County of Kauai (effective January 1, 2019), County of Hawaii (effective January 1, 2020), and County of Maui (effective January 1, 2024). All current county surcharges are scheduled to expire December 31, 2030, the same date on which Haw. Rev. Stat. § 237-8.6—the statutory authority for county surcharges—is itself set to repeal. The combined state and county rate for most retail transactions is 4.5%.

Source: Haw. Rev. Stat. § 237-8.6 | Hawaii Dept. of Taxation, County Surcharge Information

A business without physical presence in Hawaii is engaged in business and subject to general excise tax if, in the current or immediately preceding calendar year, it has $100,000 or more in gross income from sales of tangible personal property delivered in Hawaii, services used or consumed in Hawaii, or intangible property used in Hawaii, OR conducts 200 or more separate transactions involving such sales. The thresholds are disjunctive; meeting either triggers nexus. This economic nexus provision applies to taxable years beginning after December 31, 2017.

Source: Haw. Rev. Stat. § 237-2.5

Any person who receives gross income or gross proceeds of sales subject to the general excise tax must obtain a license from the Hawaii Department of Taxation before engaging in or continuing that business. The license is issued upon payment of a one-time $20 fee. Businesses apply using Form BB-1, the State of Hawaii Basic Business Application. The license is not transferable and is valid only for the person and business location designated on the license; it must be conspicuously displayed at the place for which it is issued.

Source: Haw. Rev. Stat. § 237-9

General excise tax licensees must file periodic returns (Form G-45) on a monthly, quarterly, or semiannual basis depending on their annual GET liability, with all returns and payments due on the 20th day of the month following the close of the filing period.

Default filing frequency: monthly

Under Haw. Rev. Stat. § 237-30(a), the general rule requires taxpayers to file monthly returns on or before the twentieth day of the calendar month following the month in which the taxes accrue. This applies unless the Department of Taxation grants a permit for less frequent filing.

Quarterly filing

The Director of Taxation may permit quarterly filing if the taxpayer's annual GET liability will not exceed $4,000 for the calendar or fiscal year. Quarterly returns are due on or before the twentieth day of the calendar month after the close of each quarter. For calendar year taxpayers, the quarterly due dates are April 20, July 20, October 20, and January 20. For fiscal year taxpayers, returns are due on or before the twentieth day of the fourth month, seventh month, and tenth month following the beginning of the fiscal year, and on or before the last day of the month following the close of the fiscal year.

Semiannual filing

The Director may permit semiannual filing if the taxpayer's annual GET liability will not exceed $2,000 for the calendar or fiscal year. Semiannual returns are due on or before the twentieth day of the calendar month after the close of each six-month period. For calendar year taxpayers, the semiannual due dates are July 20 and January 20. For fiscal year taxpayers, returns are due on or before the twentieth day of the seventh month following the beginning of the fiscal year and on or before the last day of the month following the close of the fiscal year.

Revocation of less-frequent filing privileges

Under § 237-30(c), the Director may revoke a taxpayer's permit to file quarterly or semiannually if the taxpayer becomes delinquent in filing or payment, if the taxpayer's GET liability exceeds the applicable threshold ($2,000 for semiannual filers or $4,000 for quarterly filers), or if the Director determines that less-frequent filing would unduly jeopardize proper tax administration. Upon revocation, the taxpayer must revert to monthly filing.

Annual reconciliation return required

Haw. Rev. Stat. § 237-33 requires every taxpayer subject to GET to file an annual return and reconciliation (Form G-49) in addition to the periodic returns. This annual return reconciles the taxpayer's account for the entire calendar or fiscal year and is due on or before the twentieth day of the fourth month following the close of the taxable year (April 20 for calendar-year filers).

Source: Haw. Rev. Stat. § 237-30 | Haw. Rev. Stat. § 237-33

Hawaii's general excise tax exemptions are codified primarily in Haw. Rev. Stat. §§ 237-23 through 237-29, along with several supplemental "amounts not taxable" provisions in §§ 237-24.3, 237-24.5, 237-24.7, 237-24.75, and related sections. Unlike traditional sales tax exemptions that typically focus on product categories, Hawaii's GET exemptions reflect the tax's broad application to business activities and include entity-based, transaction-based, and activity-specific carve-outs.

Nonprofit and exempt-entity exemptions (§ 237-23)

Section 237-23(a) exempts the gross income of specified categories of nonprofit and governmental entities, including: the United States and its instrumentalities (except national banks); the State of Hawaii and its political subdivisions; churches and religious societies for their exempt activities; charitable, educational, and scientific organizations described in Internal Revenue Code § 501(c)(3); fraternal societies; hospitals, infirmaries, and sanitaria; potable water companies serving communities without public utility water access that are tax-exempt under IRC § 501(c)(12); cooperative associations incorporated under Hawaii chapter 421 or IRC § 521 for income from authorized cooperative activities; persons with Hansen's disease and kokuas in Kalawao County; and cemetery corporations operated without private financial benefit.

The exemptions for entities listed in subsection (a)(3) through (7)—which include most nonprofits—are conditional. Under § 237-23(b), these exemptions apply only when: (1) the entity has registered with the Department of Taxation, paid a $20 registration fee, and received approval of the exemption; (2) no profit inures to any private stockholder or individual (except death or other benefits to fraternal society members); and (3) the exemption applies only to the fraternal, religious, charitable, scientific, educational, communal, or social welfare activities of the entity, or to the activities of hospitals, infirmaries, sanitaria, and potable water companies as such—and not to any activity whose primary purpose is to produce income, even if that income funds exempt activities. The statute states explicitly that activities whose primary purpose is producing income remain taxable even when conducted by an otherwise exempt organization.

Sales to the federal government and credit unions (§ 237-25)

Section 237-25(a) exempts from GET all sales, and the gross proceeds of all sales, of intoxicating liquor, tobacco products, and cigarettes to the United States (including wholly owned agencies and instrumentalities immune from the levy of use tax or liquor tax, but excluding national banks) or to qualifying organizations on military reservations. The exemption under § 237-25(d) applies both to the privilege of selling and to the privilege of manufacturing or producing; the value or gross proceeds of products sold under this exemption are excluded from the measure of the GET imposed on the seller as manufacturer or producer.

Industry-specific exemptions (§§ 237-26 through 237-29)

Hawaii Revised Statutes contain several narrower exemptions for specific industries. Section 237-26 exempts certain scientific contracts with the United States. Section 237-27 exempts certain petroleum refiners. Section 237-27.5 exempts air pollution control facilities. Section 237-27.6 exempts certain amounts received by solid waste processing, disposal, and electric generating facilities. Section 237-28.1 exempts certain shipbuilding and ship repair business income. Section 237-29 exempts gross income received by qualified persons for the planning, design, financing, construction, sale, or lease of housing projects certified or approved under Haw. Rev. Stat. § 201H-36, and exempts gross income received by nonprofit or limited distribution mortgagors for low- and moderate-income housing projects similarly certified or approved.

Commonly relied-upon "amounts not taxable" provisions

In addition to entity and industry exemptions, Hawaii law excludes numerous categories of receipts from the GET base via the "amounts not taxable" sections. Businesses frequently rely on these exclusions:

• Interisland agricultural shipping (§ 237-24.3(1)): amounts received from loading, transportation, and unloading of agricultural commodities shipped for a producer or produce dealer from one island to another within Hawaii.
• Condominium and homeowners association reimbursements (§ 237-24.3(2)): amounts received by the manager, submanager, or board of directors of condominium property regimes or nonprofit homeowners/community associations in reimbursement of sums paid for common expenses.
• Employee benefit plan income (§ 237-24.3(4)): amounts received by an employee benefit plan by way of contributions, dividends, interest, and other income, and amounts received by nonprofit organizations as payments for costs of administering an employee benefit plan (subject to exceptions for post-June 1994 gross rental income from investments in real property).
• Hotel operator wage reimbursements (§ 237-24.7(1)): amounts received by hotel operators and suboperators from owners or time share associations equal to amounts disbursed for employee wages, salaries, payroll taxes, insurance premiums, and benefits.
• County transportation system operator reimbursements (§ 237-24.7(2)): amounts received by operators of county mass transit systems under operating contracts with political subdivisions where the subdivision exercises substantial control, controls transit policy, and prescribes the budget format.
• Beverage container deposits (§ 237-24.75(1)): amounts received as beverage container deposits collected under chapter 342G, part VIII.

Because the general excise tax applies broadly to all business activity in Hawaii unless expressly exempt, taxpayers bear the burden of demonstrating that a claimed exemption applies to their specific facts. Many exemptions require advance registration, ongoing compliance with statutory conditions (such as the "primary purpose" test for nonprofits), and specific recordkeeping.

Source: Haw. Rev. Stat. § 237-23 | Haw. Rev. Stat. § 237-25 | Haw. Rev. Stat. § 237-24.7 | Haw. Rev. Stat. § 237-24.75

Hawaii's use tax under Chapter 238, Hawaii Revised Statutes, complements the general excise tax (GET) by imposing an excise tax on the use in Hawaii of tangible personal property, services, or contracting that is imported from an out-of-state unlicensed seller—that is, a seller who is not subject to Hawaii GET on the particular transaction. The use tax prevents businesses and individuals from avoiding Hawaii taxation by purchasing from out-of-state vendors who do not collect GET.

When the use tax applies

The use tax applies to three categories of imported items purchased from unlicensed sellers:

Tangible personal property (HRS § 238-2). Hawaii imposes a use tax on tangible personal property imported into the state for use, whether owned, purchased from an unlicensed seller, or however acquired. An "unlicensed seller" means any seller who, with respect to the particular sale, is not subject to the tax imposed by Chapter 237 (the GET), whether or not the seller holds a license under that chapter. The tax accrues when the property is acquired by the importer or purchaser and becomes subject to the taxing jurisdiction of the State.

Services (HRS § 238-2.3). The use tax also applies to services imported into Hawaii and used or consumed in the state when purchased from an unlicensed seller.

Contracting (HRS § 238-2.3). The use tax applies to contracting imported into Hawaii and used in the state when purchased from an unlicensed seller.

The use tax does not apply if the transfer of the property, services, or contracting to the purchaser has actually been or actually is taxed under Chapter 237 (the GET). HRS § 238-3(b) provides that the use tax does not apply to any use of property, services, or contracting the transfer or acquisition of which has actually been or actually is taxed under the GET, preventing double taxation.

Who pays the use tax

HRS § 238-1 defines "purchaser" as any person purchasing property, services, or contracting, and "importer" as any person importing property, services, or contracting, regardless of whether the item is owned by the importer, purchased from an unlicensed seller, or however acquired at the time of importation. The terms exclude the State, its political subdivisions, wholly owned agencies or instrumentalities of the State or a political subdivision, the United States, its wholly owned agencies or instrumentalities, and any person immune from the tax under the Constitution and laws of the United States—but the terms expressly include national banks.

Use tax rates

Use tax rates mirror the GET rates and depend on the taxpayer's status and use of the imported item. HRS § 238-2 sets the following rates for tangible personal property:

• Exempt (0%): If the importer or purchaser is licensed under Chapter 237 and is a wholesaler or jobber importing or purchasing tangible personal property exclusively for purposes of resale at wholesale, or a manufacturer importing or purchasing material to be incorporated into a finished product which, when sold, will result in a further tax on the manufacturer as a wholesaler, the property is exempt from use tax.

• 0.5% rate: If the importer or purchaser is licensed under Chapter 237 and is (1) a retailer or other person importing or purchasing for purposes of resale and not exempted above, (2) a manufacturer who sells products at retail, or (3) a contractor incorporating imported or purchased material into a finished work or project, the tax is 0.5% of the purchase price (if the purchase and sale are consummated in Hawaii) or 0.5% of the value of the property (if the purchase or sale is consummated outside Hawaii or there is no applicable purchase price).

• 4% rate: In all other cases, the tax is 4% of the value of the property.

HRS § 238-2.3 imposes tax on imported services and contracting at the same rate structure. County surcharges on use tax are authorized under HRS § 238-2.6; the surcharge may not exceed 0.5% and does not apply to use taxable at the 0.5% rate or to exempt use.

Filing forms and payment timing

HRS § 238-5(a) requires any person who becomes liable for use tax during a calendar month to file a return on or before the twentieth day of the following calendar month. The return must set forth a description of the property, services, or contracting and the character and quantity in sufficient detail to identify it, and state the purchase price or value. The return must be accompanied by a remittance in full of the tax computed at the rate specified in § 238-2 or § 238-2.3. Any tax remaining unpaid after the twentieth day following the end of the month during which the tax first became payable becomes delinquent.

Periodic use tax returns are filed on Form G-45, the same form used for periodic GET returns; businesses report both GET and use tax liability on the same monthly, quarterly, or semiannual return.

HRS § 238-5(b) allows less-frequent filing (quarterly or semiannual) for eligible taxpayers during the calendar or fiscal year, with returns and payment due on or before the twentieth day of the calendar month after the close of each quarter or semiannual period. For calendar year taxpayers filing quarterly, the due dates are April 20, July 20, October 20, and January 20; for semiannual filers, July 20 and January 20. Eligibility for less-frequent filing is subject to Director of Taxation approval and typically tracks the taxpayer's GET filing frequency.

HRS § 238-5(c) requires every person subject to both use tax and GET to file an annual return summarizing liability under Chapter 238 for the taxable year, on or before the twentieth day of the fourth month following the close of the taxable year, filed together with the annual GET return. The annual return is Form G-49, which reconciles both GET and use tax for the year; for calendar year taxpayers, Form G-49 is due April 20.

Credit for tax paid to other states

HRS § 238-3(i) provides that each taxpayer liable for Hawaii use tax on tangible personal property, services, or contracting is entitled to a full credit for the combined amount of legally imposed sales or use taxes paid by the taxpayer to another state (and any subdivision thereof) with respect to the same transaction and property, services, or contracting. The credit may not exceed the amount of Hawaii use tax imposed on the transaction. The Director of Taxation may require the taxpayer to produce receipts or vouchers indicating payment of sales or use tax to another state as a condition for allowing the credit. This credit is claimed on Schedule GE (Form G-45/G-49), the exemptions and deductions schedule attached to the periodic or annual return.

Interplay with GET liability

A business that imports property, services, or contracting from an unlicensed seller and pays Hawaii use tax on that import does not receive a credit against its own separate GET liability for the use tax paid. The use tax is a tax on the use of the imported item; GET is a tax on the business's own sales and receipts. The two taxes apply at different stages and are not offset against each other.

However, HRS § 238-3(b) prevents double taxation when the same transaction is subject to both GET and use tax: if a Hawaii-licensed seller has already paid GET on the transfer of property, services, or contracting, the purchaser's use of that item is not subject to use tax. In other words, use tax applies only when the seller is not subject to GET on the particular transaction (i.e., the seller is an "unlicensed seller" for purposes of that sale).

If a business imports goods or services subject to use tax and then resells them in Hawaii, the business pays use tax on the import and separately pays GET on its own resale; the Hawaii use tax paid on the import is part of the business's cost of goods, not a credit against GET due on the resale.

Source: Haw. Rev. Stat. § 238-1 | Haw. Rev. Stat. § 238-2 | Haw. Rev. Stat. § 238-2.3 | Haw. Rev. Stat. § 238-2.6 | Haw. Rev. Stat. § 238-3 | Haw. Rev. Stat. § 238-5 | Hawaii Dept. of Taxation, Form G-45 instructions

Hawaii requires marketplace facilitators to collect and remit general excise tax (GET) on behalf of third-party sellers for sales made through their platforms. This regime became effective January 1, 2020, under Act 2, Session Laws of Hawaii 2019, which added Haw. Rev. Stat. § 237-4.5 to the General Excise Tax Law.

Marketplace facilitator defined

Under Haw. Rev. Stat. § 237-1, "marketplace facilitator" means any person who sells or assists in the sale of tangible personal property, intangible property, or services on behalf of another seller by: (1) providing a forum, whether physical or electronic, in which sellers list or advertise tangible personal property, intangible property, or services for sale; and (2) collecting payment from the purchaser, either directly or indirectly through an agreement with a third party. The definition is not limited to any particular industry or platform type; it encompasses any person meeting both the forum-provision and payment-collection criteria.

Deemed seller and wholesale treatment

Haw. Rev. Stat. § 237-4.5(a) deems a marketplace facilitator to be the seller of tangible personal property, intangible property, or services sold through the marketplace, and deems the seller on whose behalf the sale is made (the "marketplace seller") to be making a sale at wholesale pursuant to Haw. Rev. Stat. § 237-4. This statutory deeming means that the marketplace facilitator is subject to GET at the retail rate (4% under Haw. Rev. Stat. § 237-13(1), plus any applicable county surcharge of up to 0.5% under § 237-8.6) on the full sales price, and the marketplace seller pays GET at the wholesale rate (0.5% under § 237-13(3)) on the amount received from the marketplace facilitator.

Under § 237-4.5(b), the marketplace facilitator's gross income or gross proceeds of sale include receipts from sales on behalf of other sellers under subsection (a). This means the marketplace facilitator reports the full transaction value on its GET return and pays the retail rate, while the underlying marketplace seller reports the same transaction at the wholesale rate.

Registration and nexus requirements

All marketplace facilitators engaged in business in Hawaii must register for a GET license under Haw. Rev. Stat. § 237-9 before engaging in business. Hawaii Department of Taxation Tax Information Release No. 2019-03 (Revised), issued December 19, 2019, clarified that marketplace facilitators and marketplace sellers engaged in business in Hawaii must have registered for GET licenses prior to January 1, 2020, or before starting business activities, whichever is later.

A marketplace facilitator without physical presence in Hawaii is deemed engaged in business in the State—and thus required to register and collect GET—if the facilitator meets the economic nexus thresholds under Haw. Rev. Stat. § 237-2.5: gross income sourced to Hawaii of $100,000 or more, or 200 or more separate transactions with parties in Hawaii, in the current or immediately preceding calendar year. These thresholds apply to the marketplace facilitator's total activity, including sales on its own behalf and sales made on behalf of third-party marketplace sellers.

Impact on marketplace sellers

Under the marketplace facilitator framework, marketplace sellers engaged in business in Hawaii remain subject to GET but at different rates depending on the channel:

• Sales through a marketplace facilitator: The marketplace seller pays GET at the wholesale rate (0.5%) on amounts received from the marketplace facilitator for sales of tangible personal property, intangible property, or services delivered to Hawaii purchasers. The marketplace facilitator is responsible for collecting and remitting GET at the retail rate on the full sales price.

• Direct sales (not through a marketplace facilitator): The marketplace seller pays GET at the retail rate (4%, plus any county surcharge) on its own direct sales into Hawaii.

Because Hawaii's GET is a privilege tax on doing business—not a traditional sales tax—marketplace sellers that meet the nexus thresholds remain required to maintain an active GET license and file periodic returns even when all of their Hawaii sales are made through marketplace facilitators that collect and remit GET on their behalf. TIR 2019-03 (Revised) states that Hawaii "still requires any seller with nexus in the state to remain registered for the General Excise Tax" and that sellers must "charge the wholesale sales tax rate to the marketplace facilitator, and still remit that amount to the state." The marketplace seller may not cancel its GET license solely because a marketplace facilitator is collecting the retail GET.

Use tax application for sales on behalf of unlicensed sellers

Hawaii's use tax law interacts with the marketplace facilitator provisions when a marketplace facilitator makes sales on behalf of sellers that are not themselves licensed under Chapter 237. Under Haw. Rev. Stat. § 238-1 (as amended by Act 2, SLH 2019), the definition of "import" includes "the sale of tangible personal property, intangible property, or services by a marketplace facilitator with a valid license issued pursuant to section 237-9 on behalf of an unlicensed seller for delivery to or use by a purchaser" in Hawaii. The statute does not specify the rate or mechanics of use tax collection in this scenario; TIR 2019-03 (Revised) states that marketplace facilitators are "subject to use tax at the wholesale rate" for sales of tangible personal property through the marketplace where the marketplace seller is not engaged in business in Hawaii, for sales of tangible personal property delivered to the marketplace facilitator outside of Hawaii prior to the sale through the marketplace, and for sales of services through the marketplace where the marketplace seller is not engaged in business in Hawaii and the services are ultimately used and consumed in Hawaii.

Effective date

Act 2, Session Laws of Hawaii 2019, became effective January 1, 2020. All marketplace facilitators and marketplace sellers meeting the nexus thresholds were required to register for GET licenses by that date or before commencing business activities, whichever is later.

Source: Haw. Rev. Stat. § 237-4.5 | Haw. Rev. Stat. § 237-1 | Haw. Rev. Stat. § 237-2.5 | Haw. Rev. Stat. § 238-1 | Hawaii Dept. of Taxation Tax Information Release No. 2019-03 (Revised)