How to File Your Hawaii Income Tax Return

Filing your Hawaii income tax return is a responsibility for residents and nonresidents earning income in the state. Understanding the process helps avoid penalties, maximize deductions, and comply with tax laws. While Hawaii’s tax system shares similarities with federal taxes, key differences affect how returns are prepared.

Filing Requirements

Individuals must file a state income tax return if their gross income exceeds specific thresholds, which depend on filing status and age. In 2024, single filers under 65 must file if they earn at least $3,344, while those 65 or older have a higher threshold of $4,488. Married couples filing jointly must file if their combined income reaches $6,688 if both are under 65, or $7,832 if one spouse is 65 or older. These thresholds are lower than federal requirements, meaning some taxpayers who don’t need to file federally may still need to file in Hawaii.

Hawaii’s tax system does not fully conform to federal adjusted gross income (AGI) calculations. Certain pension income taxable federally may be excluded from Hawaii taxation, lowering taxable income. Conversely, some federal deductions are not recognized in Hawaii, potentially increasing taxable income.

Filing may still be beneficial even if income falls below the threshold. Taxpayers who had Hawaii income tax withheld or made estimated payments could be eligible for a refund. Refundable credits like the Earned Income Tax Credit (EITC) and the Food/Excise Tax Credit are only available to those who file.

Residency Considerations

Hawaii classifies taxpayers as residents, nonresidents, or part-year residents, affecting how income is taxed. Residents pay taxes on all income, regardless of where it is earned, while nonresidents are taxed only on Hawaii-sourced income. Part-year residents must file as both a resident and a nonresident for the respective periods they lived in Hawaii.

Residency is determined by more than physical presence. Factors include voter registration, homeownership, and employment location. A taxpayer can be considered a resident even if they spend part of the year elsewhere, as long as Hawaii remains their primary domicile. Military personnel stationed in Hawaii are generally not considered residents unless they take steps to establish domicile, such as obtaining a Hawaii driver’s license or filing as a resident.

Nonresidents earning Hawaii income—through wages, rental income, or business earnings—must file a return. Remote workers living in Hawaii may also have tax liabilities depending on their residency status and income source. Part-year residents allocate income based on time spent in the state, using Form N-15 to report earnings for the nonresident portion of the year.

Types of Taxable Income

Hawaii taxes wages, self-employment earnings, rental income, interest, dividends, and capital gains. Rental income from Hawaii properties is taxable, even if the owner lives elsewhere. Landlords must report rental payments, deduct allowable expenses like maintenance and property taxes, and may be subject to the state’s General Excise Tax (GET) if renting short-term properties.

Interest and dividends from banks, brokerage accounts, and other financial institutions are taxable, but interest from Hawaii municipal bonds is exempt. Capital gains are taxable, but the state offers a preferential tax rate of 7.25%, lower than the highest marginal income tax rate of 11%.

Self-employed individuals must pay taxes on net earnings after deducting business expenses. Unlike employees, they cover both the employee and employer portions of Social Security and Medicare taxes. Hawaii does not impose a separate state-level self-employment tax, but estimated quarterly payments may be required to avoid penalties.

Filing Statuses

Filing status affects tax rates, standard deductions, and credit eligibility. Hawaii recognizes five statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household, and Qualifying Surviving Spouse. While these mirror federal classifications, Hawaii has distinct rules that impact the best choice.

Married couples often file jointly for higher income thresholds and additional deductions. However, Hawaii’s progressive tax structure, with 12 brackets ranging from 1.4% to 11%, means that in some cases, filing separately may lower tax liability. Unlike federal rules, Hawaii allows separate filers to itemize deductions even if one spouse claims the standard deduction.

Head of Household filers receive more favorable tax treatment than Single filers, with a higher standard deduction and lower tax rates. To qualify, a taxpayer must have paid more than half the cost of maintaining a home for a dependent. Noncustodial parents who meet specific support requirements may also qualify, provided they meet residency and dependency conditions under state law.

Deductions and Credits

Hawaii allows either the standard deduction or itemized deductions, but amounts differ from federal levels. In 2024, the standard deduction is $2,200 for Single filers, $4,400 for Married Filing Jointly, and $3,212 for Head of Household. Those who itemize can deduct mortgage interest, medical expenses exceeding 7.5% of AGI, and charitable contributions. Unlike federal rules, Hawaii does not allow a deduction for state income taxes paid but permits a deduction for general sales tax in certain cases.

Tax credits reduce tax liability, with some being refundable, meaning they can generate a refund even if no tax is owed. Hawaii’s Earned Income Tax Credit (EITC) is 40% of the federal credit, benefiting low- to moderate-income workers. The Food/Excise Tax Credit offsets the impact of the General Excise Tax on groceries, with amounts based on income and household size. Homeowners installing solar panels or other renewable energy systems may qualify for the Renewable Energy Technologies Credit.

Extensions

Taxpayers unable to file by the April 22, 2024, deadline can request a six-month extension, moving the due date to October 20, 2024. Unlike the federal extension, which only requires filing Form 4868, Hawaii’s extension is conditional—taxpayers must pay at least 90% of their estimated tax liability by the original deadline to avoid penalties.

To obtain an extension, taxpayers file Form N-101A if they owe taxes or submit their return by the extended deadline if no payment is required. Interest accrues on any unpaid balance from April 22, even if an extension is granted. Those expecting a refund do not need to file an extension request, as there is no penalty for late filing when no tax is due. However, delays can affect refunds and limit credit eligibility.

Payment and Refund Methods

Hawaii offers multiple payment options, including electronic payments through the Hawaii Tax Online portal, credit card payments, and paper checks. Electronic payments provide immediate confirmation and faster processing. Credit card payments may include processing fees.

Refunds typically take eight weeks for paper returns and four weeks for e-filed returns. Direct deposit is the fastest method, while paper checks take longer, especially during peak filing season. Taxpayers can check refund status using the “Where’s My Refund?” tool on the Department of Taxation’s website.

Penalties

Failing to file or pay taxes on time results in penalties and interest charges. The late filing penalty is 5% per month, up to 25% of unpaid tax. If a return is filed but payment is late, a separate late payment penalty of 0.5% per month applies, also capped at 25%. Interest accrues at 8% per year on unpaid balances.

Underpayment penalties apply if estimated tax payments are insufficient. Taxpayers expecting to owe $500 or more must make quarterly estimated payments to avoid penalties. Those facing financial hardship may request a payment plan through the Department of Taxation, which allows installment payments but does not eliminate interest charges.