Hawaii does not have a sales tax. It has a General Excise Tax, or GET, which is charged to businesses rather than buyers but is almost always passed through to the customer as a line on the receipt. The base state rate is 4%, every county adds a 0.5% surcharge, and because the pass-through is itself taxable, the figure you actually see on a retail receipt is typically 4.712%.
Why Your Receipt Shows 4.712%
The rate looks odd because it corrects for a quirk in how the tax works. When a business collects the passed-on GET from you, that collected amount becomes part of the business’s gross income, which is also subject to GET. To account for this tax-on-tax effect, businesses are allowed to pass on a slightly inflated rate.
In any county with the 0.5% surcharge, which is all four of them right now, the maximum visible pass-on rate is 4.712%. In the rare case where no surcharge applied, the pass-on rate would be about 4.166%.1Hawaii.gov. Tax Facts 98-1 – General Excise Tax on Medical and Dental Services So the 4.712% on a restaurant bill on Oahu is not a mistake and not a tip suggestion. It’s the GET.
Businesses are not required to pass the tax through, and they don’t have to itemize it, but most do. Legally the tax stays with the business either way. If you refuse to pay the passed-on amount, the business still owes the state the full tax on the sale.
What the GET Covers That a Sales Tax Wouldn’t
A traditional sales tax generally applies only to the final retail sale of tangible goods. The GET applies to nearly every commercial transaction in the state: retail sales, wholesale transactions, services, rentals, contracting, interest income, royalties, and commissions.
The practical effect for a consumer is that things you might not expect to be taxed elsewhere are taxed here. A haircut, a doctor’s visit, rent on an apartment, a plumber’s labor charge, a legal fee: all of it flows through the GET. There is no separate carve-out for services or for necessities like groceries at the state rate. If a business is earning gross income from you, the GET is in the price.
Rates by Type of Sale
The state sets three tiers based on the type of activity:
- 0.15% on commissions from insurance sales.
- 0.5% on wholesaling (sales to another business for resale) and on manufacturing or producing.
- 4% on everything else, including retail sales of goods and services, construction contracting, renting or leasing property, business interest income, non-insurance commissions, and entertainment.
As a consumer, the rate that touches you is almost always the 4% retail rate, plus the county surcharge on top.
County Surcharges
Every county in Hawaii has adopted a 0.5% surcharge, and each is currently set to run through December 31, 2030:
- City and County of Honolulu (Oahu): 0.5%
- County of Maui: 0.5%
- County of Kauai: 0.5%
- County of Hawaii (Big Island): 0.5%
The surcharge only applies to activities taxed at the 4% state rate, and no county may set it higher than 0.5%.2Department of Taxation. General Excise Tax (GET) Information3Justia Law. Hawaii Code 237-8.6 – County Surcharge on State Tax; Administration The upshot is that the effective retail rate is 4.5% statewide, and the visible pass-through is 4.712% statewide.
Buying From the Mainland or Online
Ordering something from a seller outside Hawaii does not get you out of the tax. Hawaii imposes a Use Tax under Chapter 238 of the Hawaii Revised Statutes, designed as the GET’s companion so that out-of-state purchases carry the same load as in-state ones.
The Use Tax applies when you bring tangible personal property, intangible property, or services into Hawaii for use in the state and the seller did not collect GET. For a consumer or a business not reselling the item, the rate is 4%, and the county surcharge applies the same way it does to GET.4Hawaii.gov. Hawaii Revised Statutes Chapter 238 – Use Tax Law If a mainland retailer ships you equipment without collecting Hawaii tax, you owe the Use Tax yourself.
Most of the time you won’t have to think about it. Out-of-state sellers must collect GET once they cross an economic nexus threshold of $100,000 in sales delivered to Hawaii customers or 200 separate transactions with Hawaii customers in the current or prior calendar year. And under HRS 237-4.5, marketplace facilitators like Amazon, eBay, and Etsy are treated as the seller on transactions they facilitate, so the platform collects and remits the tax on the third-party seller’s behalf.5Justia Law. Hawaii Code 237-4.5 – Marketplace Facilitators For most online orders shipped to Hawaii, the tax is already in the checkout total.
Why Prices Feel Higher Than 4.712%
The GET applies at every stage of production and distribution, not just the final sale. Each business in the chain pays GET on its gross receipts, and those receipts already include the GET costs its suppliers passed along. This is called tax pyramiding.
A farmer pays GET when selling produce to a distributor. The distributor pays GET when selling to a grocery store. The grocery store pays GET when selling to you. At each step, the tax compounds. The 0.5% wholesale rate softens the effect for business-to-business sales but does not eliminate it. The nominal 4.5% you see on the receipt is only part of what’s actually built into the price.
If You’re Running a Business
The GET is charged to the business, so if you sell anything in Hawaii, register anything for rent, or provide services here, the compliance side is yours. Any person or business conducting commercial activity in the state must obtain a GET license before starting operations. Registration is available online through Hawaii Tax Online at hitax.hawaii.gov or in person at any Department of Taxation district office. The one-time registration fee is $20.2Department of Taxation. General Excise Tax (GET) Information
Sales made directly to the federal government are deductible from gross income before GET is calculated, which effectively zeros out the tax on those transactions.6GSA SmartPay. Hawaii Tax Information Wholesalers and manufacturers pay the reduced 0.5% rate rather than the retail 4%, provided the buyer is a licensed business purchasing for resale or for incorporation into another product.7Hawaii Department of Taxation. An Introduction to the General Excise Tax Other exemption categories are listed across HRS 237-24 and its companion sections.8Justia. Hawaii Code Title 14 – 237 General Excise Tax Law