Running a business in Hawaii comes with plenty of rewards and a few unique tax rules. Unlike most states with a traditional sales tax, Hawaii imposes a General Excise Tax (GET) on businesses for the privilege of doing business in the islands. Whether you operate a plate lunch spot on Oahu, a boutique in Waikiki, or a rental shop near Haleakalā, understanding how GET works is essential for staying compliant (and stress-free). This guide breaks down what’s taxable, how to calculate GET correctly, and how to stay on top of your filing and payment requirements.
Does Hawaii have sales tax?
No, Hawaii does not impose a traditional statewide sales tax. Instead, the state levies a General Excise Tax (GET) on businesses for the privilege of doing business in Hawaii. While the tax is technically paid by the business, many companies simply pass the cost on to customers, so you’ll often see the charge at checkout in a way that resembles a sales tax. Visit Hawaii’s Department of Taxation for frequently asked questions on GET.
How much is Hawaii sales tax?
The statewide General Excise Tax rate in Hawaii is 4%. However, certain counties apply an additional 0.5% surcharge on top of the state rate. That means your total GET rate may vary depending on where your business operates. For example, in Honolulu County, the total rate comes to 4.5% with the local surcharge included. For a list of surcharge rates by county, visit the State of Hawaii’s Department of Taxation website.
Unlike sales tax, GET is a tax on a business’s total gross revenue, meaning everything the business receives is taxable. That includes the GET amount collected from customers. Because the tax itself becomes part of a business’s taxable income, this creates a tax-on-tax effect.
To help offset that added cost, the State allows businesses to charge customers a maximum pass-on rate of 4.712%. This higher rate ensures that once GET is applied to the total receipt, the business isn’t left paying additional tax out of pocket.
How to calculate Hawaii sales tax?
Calculating GET in Hawaii takes a little extra attention because the tax applies to your total gross receipts, not just the retail price of taxable goods. This means GET is calculated on the full amount a business earns, including income from services, rentals, and even some wholesale transactions.
Another important detail is that many businesses choose to pass GET on to customers. When that happens, the tax itself becomes part of the taxable amount, making the effective rate slightly higher than the posted rate. For example, if you’re applying the standard 4% GET rate and the 0.5% surcharge directly to a customer sale, the effective rate becomes 4.712% once the tax is included in the total receipt. To calculate the GET rate with the maximum pass-on rate, you multiply the retail price by 0.04712. Therefore, if the retail price is $100, the total amount your customer would pay, including the GET and the maximum pass-on rate, would be $104.71.
Use our sales tax calculator
If you prefer to display clean, tax-included pricing, like rounded menu prices or flat retail amounts, our reverse sales tax calculator makes it easy. Just enter the tax rate you plan to charge (whether the standard GET rate or the 4.712% pass-on rate) along with the final price you want the customer to pay. The calculator will determine the pre-tax amount, so you can enter accurate, GET-inclusive pricing into your POS system without doing the math yourself.
What is subject to sales tax in Hawaii?
Nearly all business activity in Hawaii is subject to the General Excise Tax. Rather than taxing only final consumer purchases, the GET applies to the gross income a business earns, regardless of the type of transaction. This includes selling goods or services, leases, commissions, contracting, and more.
Different activities are taxed at different rates. For example, wholesaling goods, manufacturing products, producing items, or providing wholesale services are taxed at a reduced 0.5% rate. Retail sales of goods and services, rental income from real property, construction contracting, and commissions are typically taxed at 4%, before any county surcharge is added. Meanwhile, insurance commissions are subject to an even lower 0.15% rate.
Hawaii sales tax on clothing
Unlike some U.S. states that exempt essential clothing from tax, Hawaii taxes clothing under the General Excise Tax. Retail sales of clothing are subject to the standard 4% GET, and in counties that assess a 0.5% surcharge, the total tax rate increases to 4.5%. So whether you’re buying everyday apparel or luxury items, clothing purchases in Hawaii are generally fully taxable.
Does Hawaii have sales tax on food?
Food is also subject to GET in Hawaii, including groceries and unprepared items sold in supermarkets. Unlike many states that offer reduced rates or exemptions for groceries, Hawaii applies its standard GET rate to these purchases. Prepared food, such as meals from restaurants or takeout, follows the same rule. There’s no separate or higher tax rate for dining in or ordering to-go.
If you’re a restaurant, convenience store, or any business that sells retail goods or food, managing tax in Hawaii can get complicated since the state imposes an excise tax rather than sales tax. With the different rates from the general tax, surcharges, and pass-on tax, it’s easy for things to be confusing. That’s where DAVO by Avalara comes in. DAVO automatically sets aside the GET you collect each day, files your returns, and makes payments on time. You never have to worry about missing a deadline or having enough cash for your tax owed. It works seamlessly with popular POS systems, taking general excise tax management completely off your plate.
What is exempt from Hawaii sales tax?
Because the General Excise Tax is a tax on the business for the privilege of doing business in Hawaii, most products and services are taxable. However, some types of transactions are taxed at a lower rate or may qualify for specific exemptions. For example, prescription drugs and prosthetic devices are exempt from GET, as long as these items are listed separately from any administrative or service fee. As for wholesale transactions, these are taxed at 0.5% instead of the standard 4% since this is not the final sale of the item.
There are also special rules around sales to tax-exempt organizations and government agencies. Even though many nonprofits, including religious institutions, universities, and charities, are exempt from federal and state income tax, their purchases are still subject to GET. That’s because GET applies to the business, not the customer.
Hawaii does not issue tax exemption certificates for purchasing organizations, so businesses should charge GET on most sales to nonprofits. The only exception is the direct sales of goods to the federal government or a credit union can be exempt, and businesses may claim a deduction for those transactions.
How to get a Hawaii general excise tax license?
Before applying for a Hawaii General Excise Tax license, you’ll need to make sure your business is properly registered with the required state and federal agencies. Depending on your business structure and activities, this process may include applying with:
- Hawaii Department of Commerce & Consumer Affairs (DCCA): Most businesses must register with the DCCA, though sole proprietorships are exempt.
- Internal Revenue Service (IRS): You’ll need to obtain an Employer Identification Number (EIN) if you have employees or operate as anything other than a sole proprietor.
- Hawaii Department of Taxation (DOTAX): This is where you’ll register for a Hawaii tax identification number and obtain your GET license, along with other necessary licenses. There is a $20 registration fee, and additional fees may apply for other tax licenses. The process takes approximately 5 days if you file online or 4 weeks by mail.
- Hawaii Department of Labor & Industrial Relations (DLIR): Required if you plan to have employees, as defined by DLIR.
Some businesses, such as restaurants, childcare providers, and others in regulated industries, may also need additional permits or certifications. Depending on the nature of your business, you might need to contact other state agencies, such as the Hawaii Department of Health or the Public Utilities Commission. Finally, you’ll also need to register with the county you operate in.
How to file general excise tax in Hawaii?
Hawaii businesses can file their general excise tax returns either online through the Hawaii Tax Online portal or by mailing paper forms. However, if your annual GET liability exceeds $4,000, you are required to file electronically; paper returns will not be accepted in that case.
Most businesses file periodically throughout the year using Form G-45 (Periodic Return). Your filing frequency is assigned based on your expected annual tax liability:
- Monthly: If you’ll owe more than $4,000 per year
- Quarterly: If you’ll owe $4,000 or less per year
- Semiannually: If you’ll owe $2,000 or less per year
Hawaii also requires an annual reconciliation, which is completed using Form G-49. This form ensures that all GET has been properly reported and paid for the entire year. Even if you file Form G-45 monthly, quarterly, or semiannually, you must still file the annual G-49.
Make your sales tax less taxing with DAVO.
How to pay general excise tax in Hawaii?
When it’s time to pay your General Excise Tax, you can choose between paying online or mailing a payment, depending on how you filed.
If you pay through the Hawaii Tax Online portal, you can submit payment via ACH-enabled bank account or by credit card, where service fees apply. Online filing is the most efficient method, and as a friendly reminder, if your annual GET liability exceeds $4,000, you are required to file and pay electronically.
If you’re filing by paper form, payments must be made using a check or money order and mailed along with your form to the Hawaii Department of Taxation. Be sure to include your Hawaii Tax ID on the check so your payment is properly credited.
Whether filing online or by mail, you must submit payment by the due date to avoid penalties and interest.
Hawaii sales tax due dates
Hawaii General Excise Tax returns and payments are due depending on your assigned filing frequency. For periodic returns (Form G-45), the deadline is the 20th day of the month following the end of the tax period. Here’s an example for each type of filing frequency:
- Monthly filers: January tax is due February 20
- Quarterly filers: Q1 (Jan–Mar) tax is due April 20
- Semi-annual filers: First half-year (Jan–Jun) tax is due July 20
For Form G-49, your return is due the 20th day of the fourth month after the taxable year ends, typically April 20 for calendar-year businesses. If a due date falls on a weekend or holiday, the deadline moves to the next business day.
Since the general excise tax is a tax on businesses, there is no vendor discount for filing or paying GET on time. However, if you operate in multiple states, check out our vendor compensation guide to see if you qualify for a sales tax discount in other areas. With DAVO, this collection allowance is returned to the business in full, sometimes covering the full subscription cost to DAVO.
What is the Hawaii general excise tax late filing penalty?
In Hawaii, filing late as well as filing incorrectly can trigger penalties and interest. If you file late, there is a 5% penalty of the tax due per month (or part of a month), up to 25%. For late payments, the penalty is 20% of the unpaid tax if it’s not paid within 60 days after the deadline. If you are required to pay by EFT or required to file electronically, and fail to do so, there is a 2% penalty of the total tax due. There is also a 10% penalty on both state and county taxes if you fail to assign the taxes by district (Part V of the tax return). On top of these penalties, interest is also charged at ⅔ of 1% per month on unpaid taxes, including penalties. The longer you wait, the more these charges snowball.
How DAVO can help with Hawaii sales tax
Staying compliant with Hawaii’s general excise tax rules can feel complicated, especially with tax-on-tax calculations, different county rates, and strict filing deadlines. That’s where DAVO can help manage your tax obligations. DAVO automatically sets aside the GET you collect daily, files, and pays it for you, on time and in full, guaranteed.
Whether you’re pouring Kona coffee in Kailua, running a food truck in Hilo, or selling surf gear on Kauaʻi, DAVO keeps you compliant in the background while you focus on serving customers. No more worrying about whether you set aside enough tax or whether a deadline slipped by. With DAVO handling GET end-to-end, you can run your business with confidence and enjoy a little more of that island aloha.
Choose your POS system to get started with DAVO.
Hawaii Department of Taxation Information:
https://tax.hawaii.gov/
1-800-222-3229
