Businesses must adhere to the tax laws of each state in which they have met the economic sales tax nexus. As each state sets its own sales tax rate, the tax process can feel overwhelming (especially for businesses that meet the economic nexus in many states). TaxJar simplifies the process of sales tax compliance for businesses that have met the economic nexus in Hawaii. We offer a calculator to help estimate the tax owed on all applicable sales in the Aloha State.
What is your tax estimate for sales in Hawaii? Use TaxJar’s calculator and tax guide below to assess the economic nexus requirements and estimate your Hawaii 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 US 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 is levied on the seller. According to the State of 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.” However, the Department of Taxation also notes that this is not a comprehensive list.
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.
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. Sellers may have either a physical or economic nexus in the state of Hawaii. Physical nexus means having enough tangible presence or activity in a state to merit paying sales tax. Economic nexus means passing a state’s 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. These vendors are obligated to collect sales tax from buyers in Hawaii. Read Hawaii’s economic nexus guidance for sellers.
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 Hawaii Tax Online. You can also apply in person at any Hawaii Department of Taxation District Offices. Or visit our registration page to request that TaxJar manage your Hawaii registration for you.
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
Applying for a Hawaii GET permit costs $20. Other Hawaii business registration fees may apply, depending on your business.
How to collect sales Ttx in Hawaii
Hawaii is a destination-based sales tax state. So iIf 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.
Should you collect sales tax on shipping charges in Hawaii?
If you are shipping to someone within Hawaii, you are 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.
When are Hawaii sales tax 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
There are three steps for filing sales tax in Hawaii:
- Calculate how much sales tax you owe
- File a sales tax return
- Make a payment
How to calculate the 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.
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.
