How Much Money Does Hawaii Make a Year?

Hawaii’s financial landscape involves two distinct but related aspects: its overall economic output and the revenue collected by its state government. Economic output reflects the total value of goods and services produced within the state, indicating its economic strength. State revenue represents the funds the government collects to operate and provide public services.

Understanding both dimensions is important for a comprehensive picture of Hawaii’s financial health. A robust economic output suggests a dynamic private sector and a broad tax base, while substantial state revenue ensures the government has resources for its programs. This distinction clarifies how the state generates wealth and how those funds are managed for the public good.

Understanding Hawaii’s Economic Output

Hawaii’s overall economic production is primarily measured by its Gross State Product (GSP), the state-level equivalent of Gross Domestic Product (GDP). GSP represents the total market value of all goods and services produced within Hawaii’s borders over a specific period, encompassing everything from services to manufacturing. It serves as a broad indicator of the state’s economic activity and productivity, reflecting the health of its diverse industries.

As of the fourth quarter of 2024, Hawaii’s real GSP had rebounded to 1.9 percent above its pre-pandemic level from the fourth quarter of 2019. While tourism-related sectors were still reaching 94.3 percent of their pre-pandemic GSP levels by the end of 2024, non-tourism sectors experienced a 4.4 percent growth over the same period, highlighting a diversifying economy.

The state’s economic resilience is supported by sectors such as construction, real estate, healthcare, and professional services. During the first four months of 2025, Hawaii’s labor market demonstrated strength, with its unemployment rate ranking among the lowest nationally. The state also experienced high payroll job growth during this period, ranking fourth highest in the nation, reflecting widespread economic engagement.

In 2025, Hawaii’s GSP reached approximately $91.6 billion, reflecting a growth of 2.8% over the preceding five years. Construction continues to drive economic growth, with the contracting tax base increasing 43.8 percent in January 2025 compared to the same month a year prior. The number of residential units authorized statewide also saw a substantial increase of 89.8 percent during the first quarter of 2025, with all counties reporting increases, signaling investment and development.

Primary Sources of State Revenue

Hawaii’s state government primarily generates income through various tax categories and federal grants. The General Excise Tax (GET) stands as the largest single source of tax revenue for the state. In fiscal year (FY) 2024, net GET collections amounted to $4.48 billion, accounting for 40.5% of total tax collections.

The GET is levied on the gross income of businesses derived from most business activities conducted within the state, including sales of goods, services, and rentals, making it a broad-based tax. The statewide GET rate is 4%, with counties having the authority to impose an additional surcharge of up to 0.5%. Businesses may choose to visibly pass on the GET and any applicable county surcharge to customers.

Individual income tax is the second largest contributor to state revenue. In FY 2024, net collections from individual income tax were $3.28 billion, representing 29.6% of total tax collections. Hawaii has a progressive individual income tax system, with rates ranging from 1.40% to 11.00%. The highest rate applies to the highest income brackets, ensuring those with greater earnings contribute a larger proportion of their income.

The Transient Accommodations Tax (TAT) is another significant revenue source, imposed on gross rental proceeds from transient accommodations. The TAT rate is 10.25%, and it is collected in addition to any GET liability on the same income.

Property taxes in Hawaii are collected by the counties, not the state government. Each of the four counties sets its own tax rates and regulations, leading to variations across the state. While Hawaii generally has one of the lowest effective property tax rates in the nation, around 0.27% of owner-occupied housing value, the state’s high property values can still result in substantial tax bills. Federal grants also contribute substantially to Hawaii’s state revenue, supporting various programs across the islands. These funds are allocated for areas such as education, housing assistance, and infrastructure projects. Federal funds constituted approximately 11% of the Department of Education’s funding in FY 2024-25.

Major Contributors to Hawaii’s Economy

Hawaii’s economy is shaped by several sectors that contribute to its overall output, driving job creation and economic vitality. Tourism stands as a primary economic engine, encompassing a broad array of related services like hospitality, air transportation, retail trade, recreation, and food services. This sector’s performance directly influences a substantial portion of the state’s economic activity.

The accommodation and food services sector, intrinsically linked to tourism, is a major employer in Hawaii, supporting over 95,000 individuals in 2025. Its continued rebound is central to the state’s economic health and overall prosperity.

Federal government spending, particularly related to the substantial military presence, represents another foundational economic contributor. This spending fuels various local industries through contracts for goods and services, as well as direct employment at military bases and installations. Federal funds also support community development, housing initiatives, and infrastructure projects. For example, federal funding supports Native Hawaiian education programs and affordable housing efforts.

The real estate sector also plays a significant role in Hawaii’s economy, driven by both residential and commercial property markets. While home sales experienced a decrease in the first quarter of 2025 after an increase in 2024, the sector, along with construction, continues to drive economic growth through new developments and property transactions. Real estate and rental and leasing contributed notably to Hawaii’s GSP in 2025, being one of the top three sectors by GDP contribution.

Agriculture, encompassing diverse crops like coffee, macadamia nuts, and tropical fruits, alongside aquaculture, contributes to the local economy and food security. Agriculture is a foundational industry, providing local produce and supporting agricultural exports, which amounted to $296 million in 2023.

Healthcare, technology, and education are also showing promise in diversifying Hawaii’s economic base. Healthcare and social assistance are significant employers, with over 83,000 individuals employed in 2025, and are notable contributors to GSP, reflecting a growing demand for services. These sectors foster a more varied economic landscape.

Allocation of State Funds

The revenue collected by the State of Hawaii government is allocated across various sectors to serve its residents. Education consistently represents a substantial portion of the state’s expenditures. The Hawaii State Department of Education (HIDOE) had an operating budget of $2.18 billion for the fiscal year 2024-25, primarily funded by state tax revenue.

This funding supports the day-to-day operations of schools, including teacher salaries and classroom resources, for over 167,000 students across 295 schools. Additionally, the state allocates funds for capital improvements in school facilities, which cover new construction, renovation, and maintenance. Higher education also receives significant state and local government funding, totaling $874 million in fiscal year 2024.

Healthcare and social services are another major area of expenditure. In fiscal year 2022, Hawaii’s largest spending area per capita was public welfare, which includes most Medicaid spending. The state is investing in healthcare workforce development and hospital sustainability, with hundreds of millions earmarked for related initiatives.

Public safety initiatives receive funding for various programs, including correctional facilities and emergency services. The state budget includes allocations for enhancing the emergency siren system and replacing aging correctional centers.

Infrastructure development is a significant focus for capital improvement funding. The state budget for fiscal years 2026-2027 includes substantial appropriations for infrastructure projects, such as airports and highways. The Bipartisan Infrastructure Law is expected to deliver approximately $1.5 billion over five years for federal highway formula funding for highways and bridges. Over half of the state’s capital improvement program budget goes to funding transportation infrastructure projects, with nearly $2.6 billion allocated to the Hawaii State Department of Transportation in FY 2025.

General government administration and other services account for the remaining allocations. The state’s enacted budget for fiscal years 2026-2027 provides for total spending of approximately $19.8 billion in fiscal year 2026 and $19.7 billion in fiscal year 2027. These allocations reflect the state’s priorities in supporting its population and maintaining essential services.