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Learn the fundamentals of sales tax
Do you need to collect sales tax in Hawaii?
It’s important to note that Hawaii doesn’t have what we think of as traditional U.S. sales tax. They have a general excise tax (GET).
Rather than a tax on a sale paid by the buyer, GET is a tax for “the privilege of doing business” in the state of Hawaii and levied on the seller. According to the Hawaii Department of Taxation, “Activities subject to GET include wholesaling, retailing, farming, services, construction contracting, rental of personal or real property, business interest income, and royalties.”
In Hawaii, a seller is responsible for remitting GET whether or not they actually collect GET on a transaction. However, sellers are allowed to pass GET on to customers, and that’s why, if you make a purchase in Hawaii, you’ll likely see a small percentage of the sale tacked on to your receipt to cover GET.
Last but not least, while sales tax is due on retail sales of tangible personal property, GET is due on all business transactions, even if you are selling to another business (a transaction that would generally not be taxable in other U.S. states with a sales and use tax.)
With all that in mind, GET is treated similarly to sales tax in Hawaii, and a lot of the same sales tax rules apply. We’ll refer to GET as sales tax within this guide as a result.
So how do you know if you need to collect sales tax in Hawaii? It’s all based on whether or not you have nexus there. There are two ways that sellers can be tied to a state when it comes to nexus: physical or economic. Physical nexus means having enough tangible presence or activity in a state to merit paying sales tax in that state. Economic nexus means passing a states’ economic threshold for total revenue or the number of transactions in that state.
Do you have physical nexus in Hawaii?
Most businesses with any kind of presence in Hawaii, including providing services, will likely be subject to the general excise tax. Hawaii defines doing business in their General Excise Tax law, chapter 237-2 (Starts on p. 4 of this link).
Visit the Hawaii Department of Taxation to read more about Hawaii’s General Excise Tax.
Do you have economic nexus in Hawaii?
Effective July 1, 2018, Hawaii considers vendors who make more than $100,000 in sales annually or more than 200 transactions in the state in the previous or current calendar year to have economic nexus. This means the state considers these vendors obligated to collect sales tax from buyers in the state. You can read Hawaii’s economic nexus guidance for sellers here.
Is what you’re selling taxable?
In Hawaii, most tangible products are subject to their general excise tax. There are tax-exempt items such as for medical devices and prescription medicine.
Services in Hawaii are also generally subject to general excise tax.
Is SaaS taxable in Hawaii?
SaaS (and computer services) is taxable in Hawaii. Hawaii’s general excise tax applies to every good and service not tax exempt. (Source)
How to get a sales tax permit in Hawaii
If you need to collect sales tax in Hawaii, you would need to register for your Hawaii GET permit.
To register online, visit the Hawaii Tax Online website. You can also apply in person at any Hawaii Department of Taxation District Offices.
You need this information to register for a sales tax permit in Hawaii:
- Personal identification info (SSN, address, etc.)
- Business identification info (EIN, address, etc.)
- Corporate entity type (S-Corp, sole-prop, etc.)
- Your accounting period (calendar or fiscal year)
- Your accounting method (cash or accrual)
- Other miscellaneous info depending on your business
It costs $20 to apply for a Hawaii GET permit. Other Hawaii business registration fees may apply, depending on your business.
How to Collect Sales Tax in Hawaii
Hawaii is a destination-based sales tax state. So if you live in Hawaii, collect sales tax based on the sales tax rate at your buyer’s address.
You can look up your local sales tax rate with TaxJar’s Sales Tax Calculator.
The Hawaii general excise tax rate is 4.00%
Should you collect sales tax on shipping charges in Hawaii?
If you are shipping to someone within Hawaii, then you would be responsible for GET on the total gross proceeds of the sale. This includes any shipping or delivery charges. (I.e. Unless you want to pay out of pocket, charge the GET on shipping charges to your buyers.) Learn more about how to handle shipping charges in Hawaii here.
When are Returns Due?
When you file and pay Hawaii general excise tax depends on two things: your assigned filing frequency and the state’s due dates.
How often will you file general excise tax returns in Hawaii?
States assign you a filing frequency when you register for your general excise tax permit. In most states, how often you file general excise tax is based on the amount of general excise tax you collect from buyers in the state.
In Hawaii, you will be required to file and remit general excise tax either monthly, quarterly or annually.
Hawaii general excise tax returns are always due the 20th of the month following the reporting period. If the filing due date falls on a weekend or holiday, general excise tax is generally due the next business day.
Filing Sales Tax
When it comes time to file sales tax in Hawaii you must do three things:
- Calculate how much sales tax you owe
- File a sales tax return
- Make a payment
How to Calculate How Much Sales Tax You Owe in Hawaii
Calculating how much sales tax you should remit to the state of Hawaii is easy with TaxJar’s Hawaii state sales tax report.
All you do is connect the channels through which you sell – including Amazon, eBay, Shopify, Square and more – and we’ll calculate exactly how much sales tax you collected. All the information you need to file your Hawaii sales tax return will be waiting for you in TaxJar. All you have to do is login.
How to File and Pay Sales Tax in Hawaii
You have two options for filing and paying your Hawaii sales tax:
- File online at the Hawaii Tax Online. You can remit your payment through their online system.
- AutoFile – Let TaxJar file your sales tax for you. We take care of the payments, too. You’ll never have to worry about spreadsheets, calculations or filling out complex sales tax returns.