Does Hawaii Have a Sales Tax? Understanding the General Excise Tax

Jan 29, 2025 | Sales Tax, Tax Compliance

In the U.S., it’s common to see prices that exclude sales tax, creating a surprise at checkout. This practice stems from the complexity of varying state and local tax rates. For instance, people might wonder, “Does Hawaii have a sales tax?” While it doesn’t, Hawaii has a General Excise Tax (GET), which is similar. These hidden costs can lead to confusion for shoppers.

At Hands Off Sales Tax (HOST), we simplify tax compliance so businesses can focus on delivering a transparent shopping experience. Our services ensure accuracy, helping you tackle even the trickiest tax scenarios with ease.

Understanding the General Excise Tax (GET) in Hawaii

What is the General Excise Tax (GET)?

The General Excise Tax (GET) is Hawaii’s unique taxation system designed to replace a traditional sales tax. Rather than being a direct consumer tax, the GET is levied on businesses for the privilege of operating within the state. It applies to nearly all forms of revenue-generating activities, including retail sales, professional services, and rentals. This tax is a cornerstone of Hawaii’s economy, providing funds for state operations and public services.

Unlike a sales tax collected at the point of purchase, the GET targets businesses’ gross receipts. Businesses can include this tax in their pricing or absorb it as part of their operating expenses. This system ensures that tax collection happens consistently, even for transactions that might otherwise slip through a traditional sales tax system.

How Hands Off Sales Tax Can Help: We specialize in helping businesses navigate complex tax environments, including Hawaii’s GET. From registration to filing, we ensure compliance so you can focus on your business.

GET vs. Traditional Sales Tax: Key Differences

Traditional sales taxes are applied directly to the consumer at checkout, while the GET targets the business’s gross income. In states with sales tax, customers often see a specific percentage added to their bill, which businesses then remit to the government. Conversely, the GET is a charge businesses face on their total revenue, whether or not they pass it on to their customers.

Another difference lies in the scope. Traditional sales tax usually applies only to goods, whereas the GET encompasses both goods and services, making it broader in application. This unique structure simplifies tax collection but places responsibility on businesses to manage compliance effectively.

How We Add Value: At Hands Off Sales Tax, we provide the expertise to manage these differences. Our team ensures your business handles Hawaii’s GET requirements seamlessly.

The Broad Scope of GET

Taxing Beyond Goods

Hawaii’s GET applies to an extensive range of activities. Retail sales, professional services, rentals, commissions, and even contracting are all subject to this tax. This comprehensive scope ensures the state collects revenue from nearly every business transaction within its borders.

For example, if you own a store in Hawaii, your retail sales are taxed. Similarly, if you provide professional services or rent property, those activities are also subject to the GET. This differs significantly from most states, where services might be exempt from taxation.

How We Help Businesses Stay Compliant: We guide businesses through understanding which activities fall under GET regulations. Our tailored solutions simplify compliance, ensuring nothing gets overlooked.

Covering Goods and Services

The GET’s application to both goods and services makes it unique. Businesses in industries like tourism, healthcare, and construction must consider how this tax impacts their pricing strategies. Since the tax applies broadly, understanding its nuances is critical for financial planning.

Why Choose Us: Hands Off Sales Tax helps businesses analyze how GET affects their operations. We’ll help you adapt and strategize for long-term success.

GET Rates and County Surcharges

Standard GET Rate

The standard GET rate in Hawaii is 4%. This rate applies across the state and forms the foundation of Hawaii’s taxation system. For businesses, understanding this rate and how it applies to their transactions is essential for accurate pricing and tax filing.

County-Specific Surcharges

Some counties in Hawaii add a 0.5% county surcharge to the standard rate, making the total tax 4.5%. These surcharges fund county-specific projects like transportation infrastructure. For instance, businesses in Honolulu County must account for this additional tax when pricing their goods or services.

Reduced Rates for Specific Activities

Certain activities, such as wholesaling, manufacturing, and export services, are taxed at reduced rates. These rates, often as low as 0.5%, provide some relief to businesses engaging in these specific transactions. However, determining eligibility for reduced rates requires careful attention to detail.

Simplify Your Tax Strategy: Our team at Hands Off Sales Tax ensures your business correctly applies these rates and surcharges. We’ll help you understand the nuances so you can focus on growing your business.

Passing on the GET to Consumers

A Choice, Not a Requirement

Businesses in Hawaii have the option to pass the GET onto consumers, but it’s not mandatory. Some businesses include the tax in their prices, while others add it as a separate line item. Transparency is critical, especially when customers see higher prices than expected.

Passing on the GET can help businesses offset their tax burden, but it requires clear communication with customers to maintain trust. Displaying the tax as part of the final price or a distinct addition helps consumers understand its inclusion.

How We Can Assist: Hands Off Sales Tax advises businesses on best practices for passing on the GET. We ensure your strategies align with regulations and support customer satisfaction.

The Importance of Transparency

When businesses choose to pass on the GET, transparency becomes vital. Providing clear receipts and explanations helps avoid customer confusion. Educating staff to address questions about the tax is equally important.

Partner With Us: We help businesses develop transparent practices that foster trust and compliance. Our solutions ensure your customers remain informed and your operations stay streamlined.

Exemptions and Deductions in Hawaii’s General Excise Tax

Federal Government and Out-of-State Sales Exemptions 

Hawaii doesn’t have a traditional sales tax, but its General Excise Tax (GET) applies to nearly all transactions. However, certain sales tax exemptions reduce the tax burden for businesses. Sales made to the federal government and credit unions are exempt, helping businesses maintain operations without additional tax implications. Similarly, out-of-state sales are exempt from GET, a benefit for businesses engaging in interstate commerce. If you’re navigating these exemptions, we at Hands Off Sales Tax provide tailored support to identify and apply these rules effectively, ensuring compliance without overpaying.

What Doesn’t Count as Deductible Under GET

Does Hawaii have a sales tax that allows deductions for business expenses? No, GET is applied to gross income, meaning most expenses aren’t deductible. Businesses cannot subtract costs like rent, wages, or materials before calculating their tax liability. This approach differs from tax systems in other states and requires a proactive strategy to minimize the impact. Our team at Hands Off Sales Tax helps you understand the implications and works to optimize your tax position under Hawaii’s strict GET rules.

Special Cases in GET Exemptions

While GET exemptions are limited, certain specific cases exist. For example, wholesale transactions are taxed at a reduced rate of 0.5%, providing relief for manufacturers and distributors. Exports and transactions involving nonprofits may also qualify for reduced rates or exemptions. Understanding these niche opportunities can significantly impact your tax liabilities. At Hands Off Sales Tax, we ensure your business benefits from all applicable exemptions and deductions while staying compliant.

Compliance and Filing Requirements

GET Registration: A Must for Businesses in Hawaii

Businesses in Hawaii must register for a GET license to operate legally. Unlike a sales tax registration, GET requires businesses to account for all gross income, even if some of it qualifies for exemptions. The process includes completing the BB-1 form and ensuring compliance from the outset. Does Hawaii have a sales tax requiring similar processes? No, GET is unique in its scope. Hands Off Sales Tax simplifies this process, helping you register and manage your tax obligations efficiently.

Filing Frequency and Deadlines

GET filings can be monthly, quarterly, or annual, depending on your business’s gross income. Monthly filings are required for businesses earning more than $4,000 monthly, while quarterly filings apply to those earning between $2,000 and $4,000. Missing these deadlines can lead to penalties and interest. We at Hands Off Sales Tax monitor these requirements, ensuring you meet every deadline without stress.

Penalties for Non-Compliance

Failing to comply with GET requirements can result in penalties, including late filing fees and interest on unpaid taxes. For businesses unfamiliar with Hawaii’s unique tax system, these penalties can accumulate quickly and harm cash flow. Does Hawaii have a sales tax with comparable consequences? Not exactly, but the financial risks of GET non-compliance are just as severe. Hands Off Sales Tax proactively manages your filings, preventing costly mistakes and ensuring compliance.

Amending Returns and Avoiding Errors

Errors in GET filings can trigger audits or additional fines. Amending returns to correct mistakes is possible, but it can be a complex and time-sensitive process. Our team at Hands Off Sales Tax provides expert guidance to correct filings and ensure accurate reporting, minimizing risks and safeguarding your business.

Impact of GET on Businesses and Consumers

Shifting GET Costs to Consumers

Many businesses in Hawaii choose to pass GET costs onto consumers by adding a visible surcharge to their prices. While this practice helps offset the financial burden, it can make pricing appear higher and affect customer perceptions. Does Hawaii have a sales tax that shifts directly to consumers? No, but this indirect cost transfer creates similar challenges. At Hands Off Sales Tax, we help you balance these pricing strategies while maintaining transparency with your customers.

Managing Competitive Pricing

For businesses operating in competitive markets, absorbing GET costs instead of passing them on may be necessary to remain price-competitive. This strategy requires careful financial planning to avoid cutting into profits. Our team at Hands Off Sales Tax works with you to develop pricing models that account for GET obligations without sacrificing your competitive edge.

Indirect Effects on Consumers

Consumers in Hawaii indirectly bear the cost of GET through higher prices on goods and services. While not a sales tax in the traditional sense, GET’s structure means it influences consumer spending habits. Businesses must navigate this impact carefully, balancing affordability with profitability. At Hands Off Sales Tax, we provide insights into managing these indirect effects, ensuring both compliance and customer satisfaction.

Optimizing Financial Strategies Under GET

To thrive under Hawaii’s GET system, businesses need optimized financial strategies. This includes accurately categorizing taxable and exempt income, ensuring transparent pricing, and managing compliance. Does Hawaii have a sales tax with similar complexities? Not quite, making expert guidance essential. Hands Off Sales Tax specializes in helping businesses navigate these challenges, providing tailored solutions to streamline operations and maximize profitability.

Wrapping Up the GET Puzzle

Understanding Hawaii’s General Excise Tax (GET) is crucial for both businesses and consumers. While Hawaii does not have a traditional sales tax, the GET applies broadly, impacting pricing and compliance. For businesses, clarity on GET rates, exemptions, and filing is vital. 

At Hands Off Sales Tax, we simplify compliance, handling registration, filings, and exemptions seamlessly. Whether you’re navigating GET or managing tax burdens, we’re here to make the process stress-free. Let us help you stay ahead with expert support, so you can focus on what matters—your business. Reach out today to see how we can assist!

FAQs about Hawaii’s General Excise Tax (GET):

What is the General Excise Tax (GET) in Hawaii?

Hawaii’s GET is a tax imposed on businesses for the privilege of conducting operations within the state. Unlike a traditional sales tax levied on consumers, the GET is applied to the gross income of businesses from nearly all activities, including retail sales, services, and rentals. 

How does GET differ from a sales tax?

While a sales tax is charged to consumers and collected by businesses at the point of sale, Hawaii’s GET is levied directly on businesses based on their gross receipts. Although businesses may choose to pass this tax onto consumers, it remains a tax on the business itself. 

What are the current GET rates in Hawaii?

The standard GET rate is 4% across the state. However, certain counties have adopted a 0.5% surcharge, making the total rate 4.5% in those areas. Additionally, specific activities like wholesaling and manufacturing are taxed at reduced rates, such as 0.5%. 

Are businesses required to pass on the GET to customers?

No, businesses are not mandated to pass on the GET to customers. The decision to visibly pass on the tax is at the discretion of the business. If they choose to do so, they must ensure transparency by informing customers of the exact amount or percentage being added. 

Are there any exemptions or deductions available under the GET?

Yes, certain exemptions and deductions exist. For instance, sales of tangible personal property to the federal government or credit unions, as well as out-of-state sales, may be exempt. However, most standard business expenses are not deductible under the GET.