Sales Tax in Hawaii: Rates, Rules & Collection Guide

Getting a Handle on Hawaii’s General Excise Tax

Hawaii doesn’t do sales tax the way most states do. Instead, there’s the General Excise Tax, or GET, which works a bit differently. Instead of taxing the sale itself, Hawaii taxes businesses on almost all their income, no matter what they do—retail, services, rentals, contracting, you name it. Even though businesses pay the tax, they often just add it to their prices, so in the end, customers still feel it. In practice, it’s a lot like sales tax, just hidden in the business side of things.

How Rates and Structure Actually Work

Rates aren’t one-size-fits-all. They change depending on what kind of business you’re running, and sometimes there are local add-ons. Retail, wholesale, services—they all might get taxed at different rates. A few industries even have special rules. Since GET hits gross receipts, you end up paying tax on the full sales amount, not just profit. That’s something to keep in mind, especially if your margins are already tight.

Who Needs to Register and Collect GET

Basically, if you’re doing business in Hawaii, you probably need a GET account. Registering is step one. Even if you’re running something part-time or just starting out, you need to check if you’ve crossed the line where registration’s required. Once you’re set up, you’ll get an account number. That number needs to go on your invoices when necessary.

Collecting and Showing the Tax

Businesses pay the GET, but most of them either build it into their prices or add it as a separate line on invoices. If you decide to show it separately, make sure you clearly state the amount and how you calculated it. If you just include it in your prices, double-check that your math covers the tax so you’re not losing money after you pay the state.

Exemptions and Special Cases

Not everything is taxed. Some sales for resale, certain financial services, and a handful of transfers within the same company can be exempt. Nonprofits, government agencies, and a few types of agriculture or low-income housing might also get a break. But don’t just assume—get the right paperwork. Keep certificates, contracts, or anything else that proves you don’t owe tax on those receipts, just in case the state asks.

When and How to File

How often you file depends on how much tax you owe. New businesses usually file more often at first, and after you’ve got some history, the state might let you file less frequently. Either way, file on time or you’ll get hit with penalties. Hawaii lets you file and pay online, which makes life a lot easier.

Keeping Records

Since GET covers gross income, you need solid records—sales, invoices, receipts, exemption paperwork, all of it. Hang onto everything for as long as the law says, because if there’s an audit, the state can look back several years. Good records make filing easier and protect you if the tax office comes knocking.

Special Situations to Watch

Remote sellers and out-of-state businesses still have to pay attention, even if they don’t have a physical office in Hawaii. If you sell enough or deliver taxable products or services into the state, you might need to register. Look at what you’re selling and how you’re selling it—don’t just assume you’re off the hook because you’re not based on the islands.

Short-term rentals and lodging come with their own set of rules. These aren’t taxed the same way as everyday retail sales. There are extra excise taxes meant just for accommodations, so if you’re offering places to stay—Airbnb, hotels, vacation rentals—read up on how those taxes work.

Contractors and construction work? That’s a different animal, too. The tax treatment can change depending on whether you’re talking about materials, labor, or the whole job. Make sure you know what counts as taxable and how to handle payments to subcontractors. Documentation matters here.

Audit Exposure and How to Avoid Penalties

Tax authorities don’t need much reason to take a closer look—they’ll audit if they spot something weird or sometimes just at random. The best way to stay out of trouble is to register and file on time, keep solid records, and only use exemptions if you have the paperwork to back them up. Check your sales and the tax you’ve collected regularly, so nothing’s out of sync. If you do find a mistake, don’t wait—fix it and let the state know. Voluntary disclosure usually softens the blow.

Practical Tips for Smooth Compliance

Register as soon as your business gets off the ground. Don’t wait. Set up a simple invoicing system. Either show the tax separately or make sure your prices cover what you owe. Keep a separate list for tax-exempt sales and hang on to those exemption certificates. Automate wherever you can—let your accounting system sort taxable from non-taxable sales, so you’re not guessing. Every so often, check if your filing frequency or account settings need an update, especially if your revenue changes. If your business involves something unusual—like short-term rentals or construction—don’t guess. Ask a tax pro for advice, especially when it comes to keeping records straight.

Conclusion

Getting sales tax right in Hawaii means wrapping your head around the General Excise Tax, which isn’t quite like the retail sales tax you might see elsewhere. Focus on registering, collecting or pricing correctly, keeping good records, and filing on time. Even though the GET falls on businesses, smart invoicing and compliance help you manage the costs and steer clear of penalties. Stay organized, know your filing and exemption rules, and you’ll have a much easier time avoiding trouble when the state comes knocking.