Hawaii’s liquor tax is a per-gallon excise charged on every sale or use of alcohol in the state, ranging from $0.54 per gallon on draft beer to $5.98 per gallon on distilled spirits. Any business selling alcohol owes it, files a return every month on Form M-18 by the 20th of the following month, and needs a state tax permit on top of its county liquor license to do so legally.
Rates by Category
The tax is a gallonage tax, which means it is based on volume rather than price. It applies once to each unit of liquor and is collected at the point of sale or use. Six categories carry different per-gallon rates, all unchanged since July 1, 1998:
- Distilled spirits: $5.98 per wine gallon
- Sparkling wine: $2.12 per wine gallon
- Still wine: $1.38 per wine gallon
- Cooler beverages: $0.85 per wine gallon
- Beer other than draft: $0.93 per wine gallon
- Draft beer: $0.54 per wine gallon
Partial gallons are taxed proportionately.1Justia. Hawaii Code 244D-4 – Tax; Limitations A wine gallon is a standard U.S. gallon of 128 fluid ounces, regardless of the alcohol content inside it.
The liquor tax sits on top of every other tax that applies to selling alcohol. General excise tax, transient accommodations tax, and any other levy on the same transaction remain due. The gallonage tax doesn’t replace them.2Justia. Hawaii Code 244D-11 – Tax in Addition to Other Taxes
What’s Exempt
The statute is built so each unit of liquor is taxed only once, and several transactions fall outside the tax entirely:
- Liquor held by a permitted dealer but not yet sold.
- Sales from one permitted dealer to another permitted dealer.
- Liquor sold or used for sacramental purposes.
- Alcohol purchased under a permit or prescription for non-beverage use.
- Liquor manufactured or sold in Hawaii but shipped out of state for resale or consumption elsewhere.
These exemptions appear in Sections 244D-4(b) and 244D-4.3 of the Hawaii Revised Statutes.3Hawaii Department of Taxation. Hawaii Revised Statutes 244D – Liquor Tax Law The statute does not include an exemption for liquor produced at home for personal or family consumption. Home brewing and winemaking fall under federal rules and county liquor regulations rather than this chapter.
The State Tax Permit
Selling alcohol legally in Hawaii takes two separate approvals. A county liquor commission (Honolulu, Maui, Hawaii, or Kauai) issues the liquor license, and the state Department of Taxation issues the tax permit that lets you collect and remit the gallonage tax. Missing either one makes your sales illegal.
Once your county commission certifies your license to the Department of Taxation, the Department issues the tax permit for $2.50. The permit must be displayed on the licensed premises. It expires on the earlier of your county license expiration date or June 30, and you renew it annually before July 1 for another $2.50.4Justia. Hawaii Code 244D-2 – Permit
Monthly Filing on Form M-18
Liquor tax returns are filed every month on Form M-18. Each return covers one calendar month and is due by the 20th of the following month. The return for January 2026, for example, is due February 20, 2026.5Hawaii Department of Taxation. 2026 Important Hawaii Tax Deadlines Calendar The return documents liquor sold or used during the month, broken down by category, with the applicable rate and total tax calculated for each.
When the 20th falls on a weekend or state holiday, the due date shifts to the next business day. Don’t plan around that cushion. Late returns trigger penalties even one day past the deadline.
Records You Must Keep
Every dealer tracks sales by gallonage and dollar volume in each of the six liquor categories, using forms prescribed by the Department of Taxation. Licensees who aren’t manufacturers or wholesalers also track their purchases. The Department can require additional records beyond what the statute lists if it considers them necessary for enforcement.6Justia. Hawaii Code 244D-9 – Records to Be Kept
All records must be preserved for at least five years and made available for inspection on demand. The Department can consent in writing to earlier destruction, and it can also require you to keep records longer. If your records are too incomplete to let the Department calculate what you owe, it will estimate the tax from the best information available and assess you on that basis.6Justia. Hawaii Code 244D-9 – Records to Be Kept An estimated assessment almost always runs higher than one built from your own books.
Penalties and Interest
Hawaii’s general tax penalty provisions under Chapter 231 apply when you miss a liquor tax deadline. If you file a timely return but don’t pay the full balance within 60 days of the due date, the Department can add a penalty of up to 20 percent of the unpaid amount. Interest accrues at two-thirds of one percent per month (8 percent annualized) from the first day after the payment deadline, and it compounds.7Hawaii Department of Taxation. Hawaii Revised Statutes Chapter 231 – Administration of Taxes The longer the balance sits, the faster it grows.
Losing Your Tax Permit
Financial penalties are only part of the exposure. The Department of Taxation can suspend, revoke, or refuse to renew your tax permit for any failure to comply with Chapter 244D. The statute lists several grounds that count as good cause for revocation:
- Submitting a false or fraudulent permit application.
- Displaying a fake permit.
- Violating any federal, state, or county law related to the sale or distribution of liquor.
- Failing to maintain complete and accurate records.
If the Department moves to suspend or revoke, it must notify you and offer a hearing within at least 30 days.4Justia. Hawaii Code 244D-2 – Permit Losing the tax permit shuts down your ability to sell alcohol even if your county license is still active.
Federal Excise Tax Is Separate
Hawaii’s gallonage tax is a state obligation. Manufacturers, importers, and wholesalers also owe a separate federal excise tax administered by the Alcohol and Tobacco Tax and Trade Bureau (TTB), with its own rates, filing schedule, and penalty structure. Federal spirits tax runs $13.50 per proof gallon at the general rate, with reduced rates for small distillers; beer runs $18 per barrel generally, with a small-brewer rate of $3.50 per barrel on the first 60,000 barrels for producers of two million barrels or less annually; wine producers receive per-gallon credits that were made permanent in 2020.8Alcohol and Tobacco Tax and Trade Bureau. Craft Beverage Modernization Act (CBMA) Paying one tax doesn’t satisfy the other, and wholesalers, importers, and exporters need a federal Basic Permit from the TTB before beginning operations.9Alcohol and Tobacco Tax and Trade Bureau. Applying for a Permit