Hawaii 2023 Sales Tax Guide

Hawaii Sales Tax in a Word

Hawaii Sales Tax Contacts

The illustrious Hawaii Department of Taxation, our captains on this Hawaiian tax voyage, are the folks you'll want to get in touch with for all your sales tax needs. Just like the reliable lighthouse guiding ships safely ashore, they are the beacon of knowledge and expertise for anything tax-related in the Aloha State.

Eager to chat with them? You bet they're just as excited to help you navigate these tropical tax waters. You can reach out to them through their website, or if you're more of an old-school, pick-up-the-phone type, you can dial them at 808-587-4242. They also have a toll-free line at 1-800-222-3229, specially made for all of us not lucky enough to already be in Hawaii.

And if you're more of a pen-to-paper kind of person, you can write them a traditional letter addressed to:

Hawaii Department of Taxation

P.O. Box 259

Honolulu, HI 96809

Remember, they are here to help, just like your steadfast surf instructor, ready to help you master the waves of the Hawaiian tax seas. Let's paddle out to those tax breaks together!

Do You Have Nexus in Hawaii?

Hawaii Sales Tax Registration

How to Register for Sales Tax in Hawaii

Oh, the thrill of starting a new adventure! Registering for sales tax in Hawaii is like embarking on a scenic island hike, and guess what? We've got the perfect trail map to guide you. So, fasten your seatbelts, it's time to fly!

Step 1: Gather Your Essentials: Just like packing your beach bag before a sun-soaked day on the sands, you'll need to have some information handy. This includes your Federal Employer Identification Number (FEIN), Social Security Number (SSN), and details about your business such as the structure, ownership, and the nature of your sales.

Step 2: Visit the Hawaii Department of Taxation Website: It's like your personal travel portal to all things tax-related in the Aloha State! Navigate to the business registration section to start your journey.

Step 3: Complete the BB-1 Packet: This is your golden ticket, your application for a Hawaii Tax ID. Think of it as filling out a postcard to the state, sharing the story of your business. It's an online form, making it easier than ordering a tropical smoothie!

Step 4: Get Your License: Once your application is approved (hooray!), you'll receive your Hawaii General Excise Tax (GET) license, which is Hawaii's version of a sales tax license. It's like getting your very own Hawaiian lei, symbolizing your welcome into the business community.

Step 5: Celebrate and Get Ready: Celebrate your success! You've just climbed the majestic peak of Mauna Kea! Once you have your license, it's time to start collecting sales tax. Remember, the Hawaii GET is a pass-through tax, which means it's collected from your customers and then passed on to the state.

Just like a friendly tour guide, we're here to help you navigate every twist and turn of this journey. With each step, you're not just getting closer to registering for sales tax in Hawaii, you're also laying a solid foundation for your business success in the beautiful Aloha State. Ready to continue our adventure together? Let's go!

How Much Does it Cost to Register for a Hawaii Sales Tax License?

It costs $20 to register for a sales tax license in Hawaii. This fee is non-refundable.

If you are a new business, you may be eligible for a waiver of the registration fee. To qualify for the waiver, you must meet the following criteria:

• You must be a new business that has not been in operation for more than one year.

• You must have gross receipts of less than $50,000 in the previous year.

• You must be a sole proprietorship, partnership, or limited liability company.

To apply for the waiver, you must complete the Sales Tax License Application form and check the box indicating that you are requesting a waiver of the registration fee. You must also attach a copy of your business tax identification number (TIN) and a copy of your most recent income statement.

The Hawaii Department of Taxation will review your application and notify you of their decision within 30 days.

Do I Need a Federal Tax ID Number or EIN to Register for a Hawaii Sales Tax License?

Which Agencies in Hawaii Might I Need to Register With Additionally?

Collecting Sales Tax in Hawaii

Now that we've navigated the tropical trails of sales tax registration in Hawaii, it's time to embark on our next adventure—collecting sales tax! Think of it as weaving your own traditional Hawaiian lei. Each flower represents a transaction, and as you string them together, you're creating something beautiful, while also following the traditions (or tax laws) of the land.

In Hawaii, the process is a bit unique. Instead of the typical sales tax you find in many states, we have the General Excise Tax (GET), which is a bit like the state's own version of a hula dance—it has its own rhythm and steps.

Just like the warm Hawaiian sun that touches everyone on the islands, GET applies to virtually all business activities. And it's not just for the locals, oh no! Whether your business is based on the sandy beaches of Maui, or you're riding the waves of economic nexus from a distant shore, once you've established nexus, it's time to collect.

So, grab your sunscreen, put on your shades, and let's dive into the sparkling ocean of information about collecting sales tax in Hawaii. Together, we'll ride the waves of GET, and make sure your business stays as balanced as a seasoned surfer! Ready? Let's catch this wave!

How to collect sales tax in Hawaii

Ready for a lesson in the art of collecting sales tax, Hawaiian-style? Great! Here's your step-by-step guide to becoming a pro at collecting the General Excise Tax (GET) in Hawaii. Remember, each step is like a new hula move, and once you've got them all down, you'll be dancing like a local in no time.

Step 1: Know Your Rates: The first rule of Hawaiian tax collection is to know your rates, just as a surfer knows the tides. The state GET rate is 4%, but in Oahu, there's a county surcharge of 0.5%, making the total rate 4.5%. It's like adding a little extra pineapple to your Hawaiian pizza – it's just how things are done here.

Step 2: Apply GET to Sales: Remember that GET is applied to virtually all business activities. Whether you're selling handmade ukuleles or providing surf lessons, you're likely subject to the GET. It's as all-encompassing as the Pacific Ocean that surrounds these beautiful islands.

Step 3: Include GET in Pricing: GET is a 'gross' tax, meaning it's applied to the gross income of the business. Many businesses choose to pass this cost on to customers by including it in the sales price – like folding in a dollop of coconut cream into a tropical dessert.

Step 4: Collect at Point of Sale: Whenever you make a sale, ensure you're collecting the appropriate amount of GET. It's as crucial as a lifeguard keeping a watchful eye on beachgoers.

Step 5: Keep Accurate Records: Keep track of what you collect like a treasured map marking where you've buried your pirate gold. This is crucial for when it's time to file your taxes.

Step 6: File and Pay On Time: Once you've collected the tax, make sure to file your tax returns and remit the tax on time. It's like catching the perfect wave – timing is everything!

Collecting sales tax in Hawaii is an important part of doing business in the Aloha State. But with a little practice (and maybe some tropical music playing in the background), you'll be dancing the hula of Hawaii's GET in no time. Remember, we're here to dance along with you every step of the way! So, keep those questions coming, and let's continue this adventure together!

What Sales are Subject to Sales Tax in Hawaii?

Just like a lei is made up of many different types of flowers, the General Excise Tax (GET) in Hawaii applies to a colorful assortment of transactions. In the spirit of 'ohana, or family, Hawaii's GET is all-inclusive, hugging just about every business activity in its warm, tropical embrace.

Here are some of the key types of sales subject to GET:

1. Goods: Selling a vibrant Hawaiian shirt or a hand-carved ukulele? From retail items to wholesale goods, the sale of most tangible products is subject to GET, much like how every grain of sand counts on Hawaii's beautiful beaches.

2. Services: If you're providing a service, from spa treatments to surf lessons, your earnings are also part of the GET 'ohana.

3. Rentals: Whether you're renting out a beachfront bungalow or a moped for tourists to explore the island, these transactions are under the GET umbrella, too!

4. Digital Products: Yes, even in paradise, the digital world is embraced. If you're selling digital products like e-books, online courses, or software, you're part of the GET family.

5. Commissions: Whether you're a real estate agent closing a deal on a dreamy Hawaiian home, or an artist selling your tropical paintings on commission, these earnings are also subject to GET.

But remember, just like Hawaii's diverse ecosystem, there are exceptions and unique cases. Certain transactions, like the sale of prescription medicine and certain types of food, for example, might not be subject to the GET or could be taxed at a different rate. So, always consult with a trusted tax advisor or professional to ensure your hula dance with GET is in perfect rhythm.

Still have questions or want to learn more? No worries! We're here to navigate these tropical tax waters with you, ensuring your journey is as smooth as a sail across Waikiki Beach. Let's keep the adventure going!

Is Software as a Service (SaaS) taxed in Hawaii?

What is Exempt from Hawaii Sales Tax?

Just like the islands of Hawaii each have their unique charm, not all sales are treated the same under the General Excise Tax (GET). In the spirit of aloha, let's uncover those lucky few transactions that get to slip off their sandals and enjoy the sunset without the GET tagging along.

Here's a glimpse at some of the types of transactions commonly exempt from Hawaii's GET:

1. Prescription Medicine and Prosthetic Devices: Just like a healthful breeze coming off the Pacific, prescription medicines and prosthetic devices are exempt from the GET, taking a bit of the financial sting out of healthcare needs.

2. Certain Types of Food: Much like a local luau, there are many delicious dishes, but not all are treated equally. Some food products are exempt from the GET, such as those purchased with food stamps.

3. Some Agricultural Items: If you're selling unprocessed agricultural products that were grown in Hawaii, you're in luck. These items are often exempt from GET. It's as refreshing as finding a ripe mango in your own backyard!

4. Certain Nonprofit Organizations: Recognized nonprofit organizations often enjoy a GET exemption on their income, as long as it's related to their mission. It's Hawaii's way of saying "mahalo" for their contributions to the community.

5. Some Leases: Depending on the type and length, some leases are exempt from the GET, allowing for a bit more wiggle room in the budget.

6. Interstate and Foreign Commerce Sales: Just as Hawaii welcomes visitors from around the world, some transactions involving interstate or foreign commerce can be exempt from the GET.

While these exemptions might seem as clear as a Hawaiian bay on a calm day, remember that the waters of tax law can sometimes get a little choppy. It's always wise to consult with a tax professional to ensure you're navigating them correctly. So, grab your snorkel, and let's dive deeper into the world of Hawaii taxes together! We're here to make your journey as smooth as a peaceful Pacific swell.

Ready for the next wave of knowledge? Let's go!

Who is Eligible for Hawaii Sales Tax Exemptions?

Much like earning an invite to an exclusive luau, being eligible for Hawaii's sales tax exemptions requires certain criteria to be met. It's not an open beach party, but it sure is worth exploring!

1. Nonprofit Organizations: Much like a trusty lifeguard, nonprofits serve the community, and Hawaii gives back to them, too! Nonprofits that have a federal 501(c)(3) status may qualify for GET exemptions, but they must apply and be approved by the Hawaii Department of Taxation.

2. Certified or Licensed Health Professionals: Health professionals who provide prescription medications or prosthetic devices could be eligible for exemptions when these items are being used for treatments. It's like the relief of aloe on sunburn – a small break from the heat!

3. Agricultural Producers: If you're growing pineapples or raising shrimp, you might be in luck! Unprocessed agricultural products grown in Hawaii could be exempt from GET.

4. Certified Common Paymaster: If a group of related entities use a common paymaster for payroll, they might be able to dodge the GET on amounts paid to the common paymaster. It's all about keeping it in the family!

5. Qualified Businesses in Enterprise Zones: Businesses operating in designated Enterprise Zones can receive various benefits, including GET exemptions. It's like finding a hidden oasis in paradise!

Remember, this is a general guide, kind of like a map to the stars' homes. Your business is unique and may have different eligibility for exemptions. Always consult with a tax professional to make sure you're taking the right path down the palm-lined road of tax compliance.

As we navigate these Hawaiian tax waters together, keep those questions coming. We're here to make your journey as enjoyable as a sunset luau! What's next on our adventure? Let's find out!

What Should I Do If My Customer is Exempt from Sales Tax in Hawaii?

Here are the steps you should follow when dealing with a sales tax-exempt customer in Hawaii:

Step 1: Get Proof of Exemption: Just like you'd ask a parrot to say "Aloha" before believing it could talk, you'll want proof of exemption from your customer. This usually comes in the form of a Hawaii Department of Taxation Form G-17, the Tax Exemption Certificate.

Step 2: Verify the Exemption: Have a close look at that certificate like it's a treasure map. Make sure all the information is accurate and up to date. If it's expired or contains errors, the exemption won't be valid, much like a map leading to an empty treasure chest.

Step 3: Keep a Copy: Found a valid certificate? Great! Make a copy of it and keep it in your records. It's like keeping a shell from every beach you visit - a memento and proof of your journey.

Step 4: Do Not Collect Tax: When a customer presents a valid exemption certificate, you do not collect the General Excise Tax (GET) on their eligible purchases. It's like letting them enjoy the beach without kicking sand in their face.

Step 5: Report the Exemption: When filing your GET returns, you'll report these tax-exempt sales. They're part of the story of your business, like footprints in the sand, and they should be included.

Remember, handling tax exemptions correctly is as crucial to your business as a sturdy canoe is to a voyager. When in doubt, always consult a tax professional or trusted advisor. Your journey in the land of sales tax can be challenging, but don't worry! We're in the same canoe, paddling alongside you every step of the way.

What Happens If I Lose a Hawaii Sales Tax Exemption Certificate?

Losing a Hawaii sales tax exemption certificate can feel like misplacing your snorkel just as you're about to explore a vibrant coral reef. But, don't worry! There's a lifeline for this situation too.

Step 1: Don't Panic! Losing an exemption certificate is like getting a little sand in your beach picnic - it's not ideal, but it's certainly manageable.

Step 2: Contact Your Customer: Much like calling a friend for a forgotten sunscreen, reach out to the customer who provided the certificate. Most will be understanding and able to provide a new copy of the exemption certificate for your records.

Step 3: Keep Good Records: Keep a record of your communication and efforts to retrieve a new copy. It's like leaving a trail of seashells, proof of your journey in case you're asked about it later.

Step 4: Consult with a Tax Professional: When dealing with tax matters, it's always a good idea to consult a tax professional, just like a reliable compass guiding you to the right path.

Remember, maintaining accurate records is as essential to your business as a sturdy surfboard is to a surfer. It helps you ride the waves smoothly and avoid wipeouts.

But hey, every adventurous explorer hits a bump once in a while, and that's why we're here - to make sure you're back on your board and catching those tax waves again in no time! So, keep that sunblock handy and your adventurous spirit high.

Filing and Paying Sales Taxes in Hawaii

What If a Hawaii Sales Tax Filing Date Falls on a Weekend or Holiday?

How Do I File a Hawaii Sales Tax Return?

Filing a Hawaii sales tax return, or more accurately, the General Excise Tax (GET) return, involves a series of steps that are as straightforward as following a well-marked hiking trail. Here's a step-by-step guide to ensure you're on the right path:

Step 1: Gather Your Information: Before you set out, make sure you have all your necessary information handy. This includes your gross sales, sales tax collected, and any tax-exempt sales you've made.

Step 2: Access the Hawaii Tax Online system: The Hawaii Department of Taxation makes it easy for you to file online through the Hawaii Tax Online system. It's like having a personal tour guide for your tax filing journey!

Step 3: Complete the Form: You'll be filling out Form G-45, the Periodic General Excise / Use Tax Return. Like filling out a postcard, make sure all your information is correct before you send it off.

(Need a little refresher on use tax? Check out our sales tax vs use tax blog here.)

Step 4: Submit Your Return: After double-checking your figures and ensuring everything is accurate, submit your return. It's as satisfying as reaching the end of a beautiful Hawaiian trail.

Step 5: Make Your Payment: Don't forget this crucial step. If you owe tax, be sure to make your payment. It's the final step, like taking off your hiking boots after a long, rewarding hike.

Remember, every business is unique, and these steps may vary based on your specific circumstances. It's always a good idea to consult with a tax professional or the Department of Taxation if you have any questions or concerns. No matter where you are in your tax journey, remember, we're here to support you!

Late Filing Penalty

A late filing penalty of 5% of the amount of sales tax due for each month that the return is late, up to a maximum of 25%.

Late Payment Penalty

A late payment penalty of 1% of the amount of sales tax due for each month that the payment is late, up to a maximum of 25%.

Interest is charged on any unpaid sales tax at a rate of 2/3 of 1% per month, or part of a month.

Hawaii Sales Tax Discounts

Yes, Hawaii offers discounts for businesses who file and pay sales tax on time or early.

The Hawaii Department of Taxation offers a 2% discount for businesses who file and pay their sales tax on time. The discount is available for both monthly and quarterly filers.

To qualify for the discount, businesses must:

• File their sales tax return on time.

• Pay their sales tax on time.

• Not owe any penalties or interest.

The discount is applied to the amount of sales tax due. For example, if a business owes $1,000 in sales tax, and they file and pay their return on time, they will only owe $980.

The Hawaii Department of Taxation also offers a 1% discount for businesses who file their sales tax return electronically. The discount is available for both monthly and quarterly filers.

To qualify for the discount, businesses must:

• File their sales tax return electronically.

• Pay their sales tax on time.

• Not owe any penalties or interest.

The discount is applied to the amount of sales tax due. For example, if a business owes $1,000 in sales tax, and they file and pay their return electronically, they will only owe $990.

Hawaii Sales Tax Holidays

No, Hawaii does not have sales tax holidays.

5 Tips to Avoid Common Mistakes When Filing Hawaii Sales Tax Returns

Have sales tax in more than one state?

Check out All of our Sales Tax Guides

And don't forget to check out our blog about Economic Nexus, which serves as an invaluable resource for businesses who have sales that are subject to sales tax. 

This blog is for informational purposes only and the information is accurate as of 2023-06-19. If you want legal advice on sales tax law for your business, please contact a State and Local Tax (SALT) professional. Keep in mind that sales tax regulations and laws are subject to change at any time. While we strive to keep our blog current, this blog possibly may be out of date by the time you review it.