Sales Tax in Hawaii: A Complete Guide for Ecommerce Sellers

Hawaii’s General Excise Tax (GET) is one of the broadest-based taxes in the US, it applies to virtually all business gross receipts, including services, digital products, and SaaS that most states do not tax. The GET is technically a tax on the seller (not collected from the buyer), though sellers are permitted to visibly pass it through to customers. At 4% (4.5% on Oahu), the rate appears low, but the breadth of the tax base makes Hawaii GET a meaningful compliance obligation for any company selling goods or services into Hawaii.

Quick reference

Economic nexus

Hawaii’s threshold: $100,000 in gross receipts from Hawaii sales OR 200 or more separate transactions into Hawaii in the current or prior calendar year. Either condition triggers GET registration.

Hawaii enacted its economic nexus rules effective July 1, 2018, among the earliest states to do so, and before the Wayfair decision.

Physical nexus

Physical presence in Hawaii creates nexus without any threshold:

• Warehouse, office, or storage facility in Hawaii
• Employees, agents, or independent contractors in Hawaii
• Sales representatives in Hawaii

Registration

Register with the Hawaii Department of Taxation through the Hawaii Tax Online portal (hitax.hawaii.gov). There is a $20 registration fee. Hawaii issues a General Excise License.

Tax rates

GET rate: 4% statewide.

Oahu surcharge: Oahu (Honolulu County) has an additional 0.5% county surcharge, bringing the effective rate on Oahu to 4.5%.

Other island rates: Maui County (Maui, Molokai, Lanai), Hawaii County (Big Island), and Kauai County: 4%.

The rate applies to all taxable gross receipts, not just a sale price. When GET is visibly passed through to customers, the seller technically owes GET on the entire amount including the GET itself (the “pyramiding” effect), which means the effective pass-through rate is slightly higher than 4%/4.5% to make the seller whole.

What’s taxable

The GET applies to virtually all business gross receipts from Hawaii sources. Unlike most states where the question is “is this specifically taxable?”, in Hawaii the question is “is this specifically exempt?”

Generally taxable: Tangible personal property, services (most categories), digital products, SaaS, professional services, rental income, commissions.

Generally exempt:

• Certain insurance premiums
• Certain intercompany transactions
• Specific agricultural sales
• Some nonprofit activities

Notable Hawaii rules:

• Services: Taxable by default under GET, most services that are exempt in other states are taxable in Hawaii
• SaaS: Taxable, software delivered remotely is subject to GET
• Digital products: Taxable, downloaded software, digital content, digital audio, and digital audiovisual works are all subject to GET
• Food: Hawaii does not broadly exempt food from GET. Grocery sales are generally subject to GET at the standard rate. There is a low-income food tax credit available to residents, but it is a personal income tax credit, not an exemption at point of sale

Shipping taxability

Delivery and shipping charges are generally included in taxable gross receipts in Hawaii when associated with taxable transactions.

Marketplace facilitator rules

Hawaii enacted marketplace facilitator rules effective January 1, 2020. Qualifying marketplace facilitators collect and remit Hawaii GET on marketplace-facilitated sales.

Remote sellers with no Hawaii physical nexus whose only Hawaii sales are through marketplace facilitators may not need to separately register. Sellers with Hawaii physical nexus must register regardless.

State-specific notes

GET is a seller-side tax: Hawaii’s GET is imposed on the seller’s gross receipts, not on the buyer. Sellers are permitted (but not required) to pass the GET to customers as a visible line item. When passing through, the technically correct pass-through rate is slightly above 4%/4.5% because GET is owed on the total amount including the GET itself. Most sellers simply collect 4% or 4.5% as an approximation.

Virtually everything is taxable: The broad base of Hawaii’s GET means technology companies, service providers, consultants, and SaaS companies that have no sales tax obligations in most states may owe GET in Hawaii. Any company receiving payment from Hawaii customers for any business activity should evaluate GET registration.

$20 registration fee: Hawaii charges a one-time $20 GET license fee, one of the few states with a registration fee for remote sellers.

Early Wayfair actor: Hawaii enacted economic nexus rules in July 2018, before the Wayfair decision formalized the standard. Hawaii’s structure predates the $100K/$200 threshold norm but arrived at similar numbers.