Does Hawaii Tax Social Security and Retirement Income?

Hawaii does not tax Social Security

Hawaii does not tax Social Security or first tier Railroad Retirement Act benefits. The Hawaii resident return, Form N-11, starts from federal adjusted gross income, and the amount of benefits taxed on the federal return (Form 1040, line 6b) is entered on line 14 and subtracted. There is no income limit and no age test. (Hawaii Department of Taxation, 2025 Form N-11 Individual Income Tax Return (Resident) instructions: residency, lines 9, 13, 14, 23 and 25, Tax Table, Tax Rate Schedules, Tax on Capital Gains Worksheet)

The exemption comes from a 1984 law, Act 99, which added section 235-2.3(b)(3) to the Hawaii Revised Statutes. When the pension rules were rewritten in the 1990s, the Department confirmed in Tax Information Release No. 96-5 that Social Security Act and first tier Railroad Retirement Act benefits continue to be exempt and that their treatment had not changed. (Hawaii Department of Taxation, Tax Information Release No. 96-5: Taxation of Pensions Under the Hawaii Net Income Tax Law (deferred compensation, rollover IRAs, sub-accounts, Social Security))

For the example households on this page the subtraction is $25,500 for the single retiree, $46,750 for the couple and $59,500 for the couple with the larger portfolio, which is every dollar of Social Security that reached their federal AGI. (Hawaii Department of Taxation, 2025 Form N-11 Individual Income Tax Return (Resident) instructions: residency, lines 9, 13, 14, 23 and 25, Tax Table, Tax Rate Schedules, Tax on Capital Gains Worksheet)

The federal government is a separate matter. Up to 85% of a benefit can be taxed on a federal return once other income passes fixed thresholds, wherever you live. Our taxable Social Security calculator shows how much of yours is counted.

Employer-funded pensions are exempt; the employee’s own contributions are not

Hawaii does not tax qualifying distributions from an employer-funded pension plan. The amount is entered on Form N-11, line 13, and covers employer-funded profit sharing, defined contribution and defined benefit plans as well as government retirement systems. To qualify, the payment must be made by a pension plan by reason of retirement, disability or death. The plan does not have to be a qualified plan under the Internal Revenue Code. (Hawaii Department of Taxation, 2025 Form N-11 Individual Income Tax Return (Resident) instructions: residency, lines 9, 13, 14, 23 and 25, Tax Table, Tax Rate Schedules, Tax on Capital Gains Worksheet)

Government pensions are exempt in full: federal civil service annuities, military pensions and state or county retirement system pensions all go on line 13, unless the employee made voluntary contributions under an elective right. There is no dollar cap and no income limit. (Hawaii Department of Taxation, 2025 Form N-11 Individual Income Tax Return (Resident) instructions: residency, lines 9, 13, 14, 23 and 25, Tax Table, Tax Rate Schedules, Tax on Capital Gains Worksheet)

A private employer pension received on retirement, including early retirement and disability retirement, is exempt in full if the employee did not contribute to the plan. If the employee did contribute, the pension is partly taxed, and Schedule J is used to work out the taxable part. Early distributions that are subject to the 10% federal penalty do not qualify at all. (Hawaii Department of Taxation, 2025 Form N-11 Individual Income Tax Return (Resident) instructions: residency, lines 9, 13, 14, 23 and 25, Tax Table, Tax Rate Schedules, Tax on Capital Gains Worksheet)

Where a 401(k) plan also receives employer matching contributions, part of the plan counts as employer-funded. An exclusion ratio set out in the administrative rules splits each distribution between the exempt employer share and the taxable employee share. A plan may also keep separate sub-accounts: in the Department’s example, a profit sharing sub-account funded only by the employer has an exclusion ratio of one and the 401(k) sub-account a ratio of zero. (Hawaii Department of Taxation, Tax Information Release No. 96-5: Taxation of Pensions Under the Hawaii Net Income Tax Law (deferred compensation, rollover IRAs, sub-accounts, Social Security))

IRA and 401(k) money is taxable to the extent the employee funded it

Deferred compensation plans are taxable because the employee chose to put pay into the plan instead of taking it in cash. The instructions name 401(k) plans, salary reduction SEP plans, the federal Thrift Savings Plan and section 457 plans such as the State of Hawaii Deferred Compensation Plan. An IRA a person funds directly is treated as a personal investment, taxable in full or in part depending on whether the contributions were deductible. (Hawaii Department of Taxation, 2025 Form N-11 Individual Income Tax Return (Resident) instructions: residency, lines 9, 13, 14, 23 and 25, Tax Table, Tax Rate Schedules, Tax on Capital Gains Worksheet)

A rollover IRA is treated as a continuation of the plan the money came from. If a lump sum from an employer-funded plan was received on retirement and rolled into an IRA, later withdrawals from that IRA keep the exemption. If the lump sum was taken on leaving a job before retirement, it was never a pension payment and the withdrawals are taxable. A pension plan distribution made at age 73 to satisfy the federal mandatory payout rule counts as a retirement payment even if the person is still working full time. (Hawaii Department of Taxation, 2025 Form N-11 Individual Income Tax Return (Resident) instructions: residency, lines 9, 13, 14, 23 and 25, Tax Table, Tax Rate Schedules, Tax on Capital Gains Worksheet)

Roth conversions follow the same tracing. In the instructions’ example, $50,000 converted from a rollover IRA that holds an employer-funded retirement lump sum is exempt from Hawaii tax, while the same conversion from an IRA holding a pre-retirement lump sum is taxable. A conversion of an ordinary contributory IRA or of 401(k) deferrals is taxed at Hawaii’s regular rates. (Hawaii Department of Taxation, 2025 Form N-11 Individual Income Tax Return (Resident) instructions: residency, lines 9, 13, 14, 23 and 25, Tax Table, Tax Rate Schedules, Tax on Capital Gains Worksheet)

The example households on this page treat the pension as an employer-funded defined benefit pension, fully exempt, and the IRA withdrawals as fully taxable. (Hawaii Department of Taxation, 2025 Form N-11 Individual Income Tax Return (Resident) instructions: residency, lines 9, 13, 14, 23 and 25, Tax Table, Tax Rate Schedules, Tax on Capital Gains Worksheet)

To size a conversion against federal brackets and Medicare surcharges, see the Roth conversion calculator; for required withdrawals, the RMD calculator.

Interest and dividends are taxed at ordinary rates; long-term gains at no more than 7.25%

Interest, dividends and capital gains are part of federal AGI and are taxed on the regular schedule. A filer with a net capital gain uses the Tax on Capital Gains Worksheet when taxable income is over $24,000 (single) or $48,000 (joint). The worksheet taxes the net capital gain at 7.25% and the rest of the income at regular rates, and the filer pays whichever total is smaller. (Hawaii Department of Taxation, 2025 Form N-11 Individual Income Tax Return (Resident) instructions: residency, lines 9, 13, 14, 23 and 25, Tax Table, Tax Rate Schedules, Tax on Capital Gains Worksheet)

The worksheet starts from the federal net capital gain on Schedule D, which is long-term gain less short-term loss. Qualified dividends are not part of that figure, so in Hawaii they are taxed as ordinary income. The 7.25% rate only helps where the gain would otherwise fall in the 7.6% bracket or higher, which begins at $48,000 of taxable income for single filers and $96,000 for joint filers in 2026. (Hawaii Department of Taxation, 2025 Form N-11 Individual Income Tax Return (Resident) instructions: residency, lines 9, 13, 14, 23 and 25, Tax Table, Tax Rate Schedules, Tax on Capital Gains Worksheet)

Interest on federal obligations, including Treasury bills and notes and U.S. savings bonds, is subtracted from Hawaii income. Interest on bonds issued by another state or its counties and cities, tax-free federally, is added back on line 9, including the share distributed by a mutual fund. Interest on Hawaii state and municipal bonds, and on bonds of Puerto Rico, the U.S. Virgin Islands, Guam and American Samoa, is not added back. (Hawaii Department of Taxation, 2025 Form N-11 Individual Income Tax Return (Resident) instructions: residency, lines 9, 13, 14, 23 and 25, Tax Table, Tax Rate Schedules, Tax on Capital Gains Worksheet)

For 2026 a single filer pays 1.4% on the first $9,600 of taxable income, then 3.2% to $14,400, 5.5% to $19,200, 6.4% to $24,000, 6.8% to $36,000, 7.2% to $48,000, 7.6% to $125,000, 7.9% to $175,000, 8.25% to $225,000, 9% to $275,000, 10% to $325,000 and 11% above. Joint filers have brackets exactly twice as wide, so the 7.6% rate runs from $96,000 to $250,000 and the 11% rate starts at $650,000. These are the brackets Act 46 of 2024 set for tax year 2025, and the Department’s announcement states that 2026 uses the same ones. (Hawaii Department of Taxation, Announcement No. 2024-03: Act 46, Session Laws of Hawaii 2024, Relating to Income Tax (standard deduction and brackets by tax year))

The standard deduction for 2026 is $8,000 for single filers and married people filing separately, $12,000 for heads of household and $16,000 for joint filers and surviving spouses. For 2024 and 2025 it was $4,400, $6,424 and $8,800. These are Hawaii’s own amounts, set by Act 46 of 2024, and the Act leaves them unchanged for 2027. (Hawaii Department of Taxation, Announcement No. 2024-03: Act 46, Session Laws of Hawaii 2024, Relating to Income Tax (standard deduction and brackets by tax year))

Residents are allowed a personal exemption of $1,144 for each exemption claimed, a deduction Hawaii kept when the federal one was suspended. A person 65 or older claims an additional exemption, $2,288 in all, so a couple who are both 65 or older subtract $4,576. A person certified as blind, deaf or totally disabled can take a $7,000 disability exemption in place of the regular and age exemptions. (Hawaii Department of Taxation, 2025 Form N-11 Individual Income Tax Return (Resident) instructions: residency, lines 9, 13, 14, 23 and 25, Tax Table, Tax Rate Schedules, Tax on Capital Gains Worksheet)

On the return, taxable income under $100,000 is looked up in a Tax Table built in $50 bands, and taxable income of $100,000 or more uses the Tax Rate Schedules. The example households are priced that way. The 2026 forms had not been published on the review date, so the worksheet’s $24,000 and $48,000 thresholds for the capital gains alternative are those of the 2025 instructions. (Hawaii Department of Taxation, 2025 Form N-11 Individual Income Tax Return (Resident) instructions: residency, lines 9, 13, 14, 23 and 25, Tax Table, Tax Rate Schedules, Tax on Capital Gains Worksheet)

The examples treat the household figure for long-term gains and qualified dividends as net long-term capital gain. That makes no difference to the couple with $39,424 of taxable income, which is under the worksheet’s $48,000 threshold. For the couple with $199,424 of taxable income the 7.25% rate on $40,000 of gain saves $140, bringing the tax from $12,938 to $12,798; if the $40,000 were all qualified dividends they would owe $12,938. (Hawaii Department of Taxation, 2025 Form N-11 Individual Income Tax Return (Resident) instructions: residency, lines 9, 13, 14, 23 and 25, Tax Table, Tax Rate Schedules, Tax on Capital Gains Worksheet)

Extra personal exemption at 65: each person 65 or older claims two exemptions of $1,144 in place of one, worth $2,288 per person. There is no additional standard deduction for age. (Hawaii Department of Taxation, 2025 Form N-11 Individual Income Tax Return (Resident) instructions: residency, lines 9, 13, 14, 23 and 25, Tax Table, Tax Rate Schedules, Tax on Capital Gains Worksheet)

Pension exclusion: distributions from employer-funded pension plans and from federal, military, state and county retirement systems are excluded on Form N-11, line 13, with no dollar limit. Social Security and first tier Railroad Retirement benefits are excluded on line 14. (Hawaii Department of Taxation, 2025 Form N-11 Individual Income Tax Return (Resident) instructions: residency, lines 9, 13, 14, 23 and 25, Tax Table, Tax Rate Schedules, Tax on Capital Gains Worksheet)

Standard deduction: $8,000 single and $16,000 joint for 2026, nearly double the 2025 amounts, with further increases scheduled for 2028, 2030 and 2031. (Hawaii Department of Taxation, Announcement No. 2024-03: Act 46, Session Laws of Hawaii 2024, Relating to Income Tax (standard deduction and brackets by tax year))

The same three households appear on every state page, so the figures can be compared across states. Each is a full-year resident taking the standard deduction, with no dependents. The figures are state income tax only: any county, city or school district income tax is described on this page but not added in. Pension income is from a private employer, and IRA figures are taxable withdrawals from traditional accounts. The state tax is our calculation from Hawaii's published 2026 rules; it is an illustration, not a return.

These households also owe federal income tax, which is the same wherever they live. The tax bracket calculator and the guide to taxes in retirement cover that side.

As a comparative figure, the Tax Foundation’s 2026 report, using 2024 Census data, puts the effective rate on owner-occupied homes at 0.29% of value, the lowest of the 50 states. Home values are high, so on a $1 million home that is still about $2,900 a year. (Tax Foundation, Property Taxes by State and County, 2026 (comparative figures from Census ACS data))

Real property tax is set by Hawaii’s four counties, and rates depend heavily on whether the owner lives in the home. For the tax year July 1, 2026 to June 30, 2027, Honolulu’s residential rate is $3.50 per $1,000 of net taxable value. Maui charges owner-occupied homes $1.65 per $1,000 up to $1.5 million of value and non-owner-occupied homes $6.25 up to $1 million. Kauai charges $2.59 for owner-occupied and $5.45 for non-owner-occupied homes up to $1.3 million. Hawaii County charges $5.75 in its homeowner class and $11.10 in its residential class up to $2 million. (City and County of Honolulu, Real Property Assessment Division: Real Property Tax Rates for Tax Year July 1, 2026 to June 30, 2027, all four counties (July 2026))

Each county takes a home exemption off the assessed value of an owner-occupied principal residence before the rate is applied. In Honolulu the exemption is $120,000, or $160,000 for an owner who is 65 or older by June 30 before the tax year. The claim must be filed by September 30 before the tax year begins on the following July 1, and once granted it continues without refiling until ownership or use changes. (City and County of Honolulu, Real Property Assessment Division: Understanding the Home Exemption Program (Revised December 2025))

The state conveyance tax is paid by the seller when real property changes hands. It is 10 cents per $100 of the price under $600,000, 20 cents from $600,000, 30 cents from $1 million, 50 cents from $2 million, 70 cents from $4 million, 90 cents from $6 million and $1 per $100 at $10 million or more. A higher scale, 15 cents rising to $1.25 per $100, applies to a condominium or single-family home when the buyer is not eligible for a county homeowner’s exemption. On a $1.2 million home sold to an owner-occupant the tax is $3,600. (Hawaii Revised Statutes chapter 247, Conveyance Tax (Department of Taxation compilation))

Hawaii has no sales tax. The general excise tax is a tax on the gross income of businesses, charged at 4% on retail sales of goods and services and on rent. It is levied on the business, not the customer, but businesses commonly pass it on as a visible charge. In the Department’s example, a business whose rate is 4.5% can charge its customer at most 4.712%, or $4.71 on a $100 sale. (Hawaii Department of Taxation, Tax Facts 37-1: General Excise Tax (Rev. May 2025))

All four counties add a surcharge of 0.5% to activities taxed at the 4% rate, making 4.5%. Honolulu has had its surcharge since 2007, Kauai since 2019, Hawaii County at the full 0.5% since 2020 and Maui since January 1, 2024. Each is authorized until December 31, 2030. (Hawaii Department of Taxation: County Surcharge on General Excise and Use Tax)

The exemptions are narrow. Food is exempt only when bought with federal food stamp or WIC benefits, so groceries are otherwise taxed. Sales of prescription drugs and prosthetic devices to individuals by hospitals, clinics and pharmacies are exempt, though glasses, hearing aids and dentures are not treated as prosthetic devices. There is no general exemption for services. (Hawaii Department of Taxation: General excise tax exemptions and deductions schedule)

From January 1, 2026, Act 47 of 2024 exempts amounts hospitals, clinics, pharmacies, physicians, dentists and other providers receive for goods and services covered by Medicare, Medicaid or TRICARE. The exemption includes what the patient pays as a deductible, copayment or coinsurance, as long as the goods or services are covered under one of the three programs. Care paid for privately or through commercial insurance is outside it. (Hawaii Department of Taxation, Tax Information Release No. 2025-02: general excise tax exemption for healthcare-related goods and services purchased under Medicare, Medicaid or TRICARE (Act 47, SLH 2024))

Short-stay lodging carries a second tax. The transient accommodations tax rose from 10.25% to 11% for the period January 1, 2026 to December 31, 2030 under Act 96 of 2025, which matters to an owner who rents a home or a room to visitors. (Hawaii Department of Taxation, Announcement No. 2026-01 (January 2, 2026): Act 96, Session Laws of Hawaii 2025, transient accommodations tax rate and cruise ship injunction)

As a comparative figure, the Tax Foundation counts the general excise tax as a 4% state sales tax with an average local rate of 0.5%, a combined 4.50% as of January 1, 2026, 45th among the states. (Tax Foundation, State and Local Sales Tax Rates, 2026 (comparative figures))

Hawaii taxes estates but has no gift tax and no inheritance tax. The exclusion is $5,490,000, the federal amount as it stood for a death on December 31, 2017, and it has not followed the later federal increases. The Department calls the difference between the two the gap: for 2025 the federal figure was $13,990,000. Taxable gifts made during life reduce the Hawaii exclusion even though the gifts themselves are not taxed. (Hawaii Department of Taxation, Instructions for Form M-6 Hawaii Estate Tax Return (Rev. 2025))

The tax is charged on the Hawaii net taxable estate, the amount above the exclusion. It is 10% on the first $1 million, 11% on the next million, 12%, 13% and 14% on the three after that, 15.7% from $5 million to $10 million and 20% above $10 million. A net taxable estate of $2 million owes $210,000 and one of $5 million owes $600,000. Property a nonresident owns in Hawaii is taxable too, with the exclusion scaled to the Hawaii share of the estate. (Hawaii Revised Statutes chapter 236E, Estate and Generation-Skipping Transfer Tax (Department of Taxation compilation as of December 31, 2025))

Hawaii allows portability between spouses. The unused exclusion of the first spouse to die, up to $5,490,000, passes to the survivor, but only if the first estate files a timely Form M-6 to elect it, even when that estate is too small to owe tax or to need a return otherwise. Form M-6 and any tax are due nine months after the date of death. (Hawaii Department of Taxation, Instructions for Form M-6 Hawaii Estate Tax Return (Rev. 2025))

The same chapter imposes a generation-skipping transfer tax of 2.25%, multiplied by the federal inclusion ratio, on transfers that are subject to the federal generation-skipping tax. (Hawaii Revised Statutes chapter 236E, Estate and Generation-Skipping Transfer Tax (Department of Taxation compilation as of December 31, 2025))

The federal estate tax applies in every state. The estate tax calculator estimates both the federal tax and any state tax.

The standard deduction rose for 2026 to $8,000, $12,000 and $16,000 under Act 46 of 2024. The same Act schedules further increases: $9,000 single and $18,000 joint for 2028, $10,000 and $20,000 for 2030, and $12,000 and $24,000 for 2031. (Hawaii Department of Taxation, Tax Review Commission legislative update, May 26, 2026: Act 46 (SLH 2024) standard deduction schedule and Act 24 (SLH 2026) tax schedules for 2027 onward)

Senate Bill 3125 became Act 24, Session Laws of Hawaii 2026, on May 21, 2026, and changes the rates from tax year 2027. The second and third rates drop from 3.2% and 5.5% to 2.5% and 5%, and a new 13% rate applies to taxable income over $500,000 for single filers and $1 million for joint filers. The bracket widening Act 46 had scheduled for 2027 and 2029 is repealed for taxable income above $175,000 single and $350,000 joint, and the standard deduction increases are left intact. (Hawaii Department of Taxation, Tax Review Commission legislative update, May 26, 2026: Act 46 (SLH 2024) standard deduction schedule and Act 24 (SLH 2026) tax schedules for 2027 onward)

Under the 2027 and 2028 schedule a joint filer pays 1.4% to $28,800, 2.5% to $38,400, 5% to $48,000, 6.4% to $72,000, 6.8% to $96,000, 7.2% to $250,000, 7.6% to $350,000, then 8.25%, 9% and 10% in $100,000 steps to $650,000, 11% to $1 million and 13% above. A couple with taxable income between $19,200 and $250,000 pays less on the same income in 2027 than in 2026. (Hawaii Department of Taxation, Tax Review Commission legislative update, May 26, 2026: Act 46 (SLH 2024) standard deduction schedule and Act 24 (SLH 2026) tax schedules for 2027 onward)

The general excise tax exemption for medical and dental services covered by Medicare, Medicaid and TRICARE took effect January 1, 2026. (Hawaii Department of Taxation, Tax Information Release No. 2025-02: general excise tax exemption for healthcare-related goods and services purchased under Medicare, Medicaid or TRICARE (Act 47, SLH 2024))

The transient accommodations tax is 11% from January 1, 2026 through December 31, 2030 under Act 96 of 2025. The part of the Act that extended the tax to cruise fares was enjoined by the federal appeals court, and the Department is not enforcing it. (Hawaii Department of Taxation, Announcement No. 2026-01 (January 2, 2026): Act 96, Session Laws of Hawaii 2025, transient accommodations tax rate and cruise ship injunction)

Honolulu’s home exemption rises on July 1, 2027 from $120,000 to $140,000, and from $160,000 to $180,000 for owners 65 or older. (City and County of Honolulu, Real Property Assessment Division: Understanding the Home Exemption Program (Revised December 2025))

Hawaii taxes residents on income from all sources. A resident is anyone domiciled in Hawaii, and anyone else who lives in Hawaii for other than a temporary or transitory purpose. A person domiciled elsewhere is presumed to be a resident after spending more than 200 days in Hawaii during the year. The presumption can be overcome by evidence that the person kept a permanent home outside the state and was in Hawaii for a temporary purpose. (Hawaii Department of Taxation, 2025 Form N-11 Individual Income Tax Return (Resident) instructions: residency, lines 9, 13, 14, 23 and 25, Tax Table, Tax Rate Schedules, Tax on Capital Gains Worksheet)

Changing domicile takes three things: abandoning the old domicile, intending to establish a new one, and being physically present in the new one. Intending to leave is not enough by itself, so a person who moves away from Hawaii remains a Hawaii resident until a new domicile is shown. (Hawaii Department of Taxation, 2025 Form N-11 Individual Income Tax Return (Resident) instructions: residency, lines 9, 13, 14, 23 and 25, Tax Table, Tax Rate Schedules, Tax on Capital Gains Worksheet)

Someone who moves to or from Hawaii during the year is a part-year resident and files Form N-15, not Form N-11. A nonresident is taxed only on income from Hawaii sources. (Hawaii Department of Taxation, 2025 Form N-11 Individual Income Tax Return (Resident) instructions: residency, lines 9, 13, 14, 23 and 25, Tax Table, Tax Rate Schedules, Tax on Capital Gains Worksheet)

Federal law bars a state from taxing the retirement income of someone who is no longer a resident or domiciliary. Pension, 401(k) and IRA payments earned in a Hawaii career are taxed only by the state where the retiree lives when they are paid. (4 U.S.C. 114, Limitation on State income taxation of certain pension income)