Rental income from a Hawaii property is taxed at several layers at once: the state’s General Excise Tax on gross receipts, the Transient Accommodations Tax on stays under 180 days, Hawaii income tax on net rental profit, federal income tax, and county real property tax at rates that depend on how the property is classified. The combined Hawaii rental tax burden on a short-term rental can exceed 25% of gross receipts before property tax enters the picture, and each piece has its own registration, filing schedule, and penalty regime.
General Excise Tax on Every Rental
Every Hawaii rental owes GET. The tax is imposed on you as the business, not on the guest, and it applies to gross rental income at 4%, with all four counties adding a 0.5% surcharge for a combined rate of 4.5% through December 31, 2030.1Department of Taxation. General Excise Tax (GET) Information2Department of Taxation. County Surcharge on General Excise and Use Tax Gross income means everything you collect: nightly rate, cleaning fees, service charges, resort fees.
There is no deduction for expenses in the GET base. Collect $5,000 in rent and spend $3,000 on the mortgage, maintenance, and insurance, and you still owe GET on the full $5,000.3State of Hawaii Department of Taxation. An Introduction to Renting Residential Real Property This is the biggest surprise for owners used to federal rules.
GET is reported on Form G-45, filed monthly, quarterly, or semiannually depending on volume, with an annual reconciliation on Form G-49. Each periodic return is due by the 20th of the month after the period closes. Late filing draws a 5% per month penalty capped at 25%, plus interest at two-thirds of one percent per month starting the day after the due date.1Department of Taxation. General Excise Tax (GET) Information
Transient Accommodations Tax on Short-Term Rentals
If your rental term is fewer than 180 consecutive days to the same tenant, TAT applies on top of GET. The statewide TAT rate is 10.25% of gross rental proceeds, and every county adds a 3% county TAT, bringing the combined rate to 13.25%.4State of Hawaii, Department of Taxation. Tax Facts 96-2, Transient Accommodations Tax Gross rental proceeds include mandatory fees such as resort charges and cleaning fees, not just the room rate.
Report TAT on Form TA-1, filed monthly if you owe more than $4,000 in TAT per year, otherwise quarterly or semiannually. Form TA-2 is the annual reconciliation. Late filing triggers the same 5% per month up to 25%. A separate 20% penalty hits the unpaid balance if you file on time but leave the tax unpaid past 60 days.5Hawaii Department of Taxation. An Introduction to the Transient Accommodations Tax
Rentals of 180 consecutive days or more to the same tenant are exempt from TAT entirely.4State of Hawaii, Department of Taxation. Tax Facts 96-2, Transient Accommodations Tax Long-term leases still owe GET, but skipping the 13.25% TAT is why many owners write leases at six months or longer when the economics permit.
Passing GET and TAT On to Guests
Hawaii lets you visibly pass the GET and TAT on to guests, and how you do it affects your own tax base. Separately itemize both taxes on every invoice, and the passed-on TAT is excluded from your gross rental proceeds for TAT and from your taxable GET income. Fold everything into a single flat rate with no breakout, and the whole amount becomes gross income for both taxes.
One quirk: the GET you pass on is itself subject to GET. Charge $100 and pass on 4% GET of $4.00, and your taxable GET base becomes $104.00, so you owe $4.16.6Hawaii Department of Taxation. An Introduction to the Transient Accommodations Tax Small per booking, meaningful over a year. If you pass GET on to a long-term tenant, the pass-on has to be spelled out in the lease.
Hawaii and Federal Income Tax
Rental profit is also subject to Hawaii income tax. Residents file Form N-11; nonresidents and part-year residents file Form N-15, and a return is required even if expenses exceed gross income.7Hawaii Department of Taxation. Renting Residential Real Property Individual rates run from 1.4% to 11%, among the highest in the country.8Hawaii Department of Taxation. Outline of the Hawaii Tax System Nonresidents are taxed only on Hawaii-source income, which covers all rent from Hawaii property. Hawaii returns are due April 20, not April 15.9Hawaii.gov. Instructions for Form N-15
Unlike GET and TAT, state income tax is calculated on net rental profit. Mortgage interest, insurance, repairs, depreciation, and management fees are all deductible.
Federal reporting for individual owners goes on Schedule E of Form 1040.10Internal Revenue Service. About Schedule E (Form 1040), Supplemental Income and Loss Deductible expenses include mortgage interest, property taxes, insurance, repairs, management fees, and travel to the property, while improvements that add value or extend the property’s life must be capitalized.11Internal Revenue Service. Publication 527, Residential Rental Property Residential rental property is depreciated over 27.5 years.12Internal Revenue Service. Publication 946, How To Depreciate Property
The Section 199A qualified business income deduction, which allows up to 20% of qualified business income from an eligible rental activity to be deducted, was permanently extended by the One Big Beautiful Bill Act signed in July 2025.13Internal Revenue Service. Qualified Business Income Deduction The rental generally must rise to the level of a trade or business, with a safe harbor available for owners meeting hours-of-service and recordkeeping conditions.
Registration, Licensing, and Advertising
Before collecting rent, get the paperwork right. Every Hawaii rental owner must obtain a GET license by filing Form BB-1 and paying a one-time $20 fee.1Department of Taxation. General Excise Tax (GET) Information
Short-term rental operators also need a separate TAT license, filed on the same Form BB-1 but issued as its own tax ID. The TAT registration fee is $5 for one to five units, $15 for six or more. Each rental unit must display the TAT registration certificate (or a notice pointing guests to it) along with a local contact name, phone number, and email.4State of Hawaii, Department of Taxation. Tax Facts 96-2, Transient Accommodations Tax
Every ad for a transient accommodation, on any platform, must show your registration ID or an electronic link to it.14State of Hawaii, Department of Taxation. Advertising and Display Requirements for Operators of Transient Accommodations That covers Airbnb, VRBO, Craigslist, social posts, print flyers, all of it. Fines for display or advertising violations run $500 per day for a first offense, $1,000 per day for a second, and $5,000 per day for a third or later violation.5Hawaii Department of Taxation. An Introduction to the Transient Accommodations Tax
County Permits and Property Tax Classification
State registration alone does not authorize a short-term rental to operate. Each county runs its own zoning and permitting regime, and those rules are often stricter than the state’s. Honolulu defines short-term rentals as stays under 30 days (not the state’s 180) and permits them only in resort-zoned areas and a handful of apartment-zoned areas, with mandatory registration through the Department of Planning and Permitting.15Department of Planning and Permitting. Short-Term Rentals Maui County requires a Short-Term Rental Home permit, and operating without it carries an initial fine of up to $20,000 plus up to $10,000 per day the violation continues.16Maui County. Ordinance No. 5001 – Amending Section 19.530.030, Maui County Code, Relating to Civil Fines for Unpermitted Transient Accommodations Hawaii County and Kauai have their own frameworks. Check the county rules before you list.
Counties also set real property tax rates, and classification changes the bill dramatically. In Maui County, a long-term rental valued under $1 million pays $3.00 per $1,000 of assessed value, while a short-term vacation rental of the same value pays $12.50 per $1,000. Kauai’s vacation rental rate reaches $11.30 per $1,000 at the lowest tier and $12.20 per $1,000 above $2.5 million. Converting a property from owner-occupied to short-term rental use can multiply your property tax bill several times over, so confirm the new classification with your county’s real property tax office before you make the switch.
Common Exemptions
The 180-day rule for TAT is the exemption most owners use. Beyond that, affordable housing projects certified by the Hawaii Housing Finance and Development Corporation may qualify for GET exemptions on newly constructed or substantially rehabilitated units under a regulatory agreement with HHFDC. Owners file Form G-37 and pay application fees currently ranging from $355 to $591 depending on the certification type.17Hawaiʻi Housing Finance and Development Corporation. General Excise Tax (GET) Exemption
Government entities and certain nonprofits are exempt from GET on their own activities under HRS §237-23, but that exemption applies to the exempt organization, not automatically to a landlord renting to it.18Justia Law. Hawaii Code 237-23 – Exemptions, Persons Exempt, Applications for Exemption Renting to a nonprofit does not by itself exempt your rental income from GET.
Penalties, Audits, and Enforcement
Late filing for GET or TAT triggers a 5% per month penalty capped at 25%, plus interest at two-thirds of one percent per month from the day after the deadline.1Department of Taxation. General Excise Tax (GET) Information TAT adds a 20% penalty for balances unpaid more than 60 days after a timely-filed return.5Hawaii Department of Taxation. An Introduction to the Transient Accommodations Tax
Willful tax evasion is a Class C felony under Hawaii law, carrying up to five years in prison, fines up to $100,000 for individuals or $500,000 for corporations, or probation.19Justia Law. Hawaii Code 231-34 – Attempt to Evade or Defeat Tax The state can also place a lien on the property for unpaid tax, which will complicate any refinance or sale until it is cleared.20Justia Law. Hawaii Code 231-33 – Tax Debt Due the State
The Department of Taxation has stepped up enforcement against unregistered short-term rentals, using data from booking platforms, tenant complaints, and online listings cross-referenced against TAT registration records. If a listing appears on a booking platform without a valid registration number, it has effectively advertised its own noncompliance. During an audit, expect to produce lease agreements, tax filings, bank statements, and payment records; unreported income can be assessed with penalties and interest going back through the audit period, and willful violations can escalate to cease-and-desist orders and criminal referral.