Hawaii Tax Exemption: GET, Property, Income, and Estate

A Hawaii tax exemption can apply to the general excise tax, property tax, income tax, or the state estate tax, and each one has its own eligibility rules, forms, and deadlines. Nonprofits pursue the GET exemption through Form G-6. Homeowners claim a property tax home exemption through their county. Individuals get automatic income tax breaks on Social Security and certain pension income, and may qualify for the low-income renter’s credit or the renewable energy technologies credit. Estates above $5,490,000 owe Hawaii estate tax even when they owe nothing federally. What follows is what each exemption covers, who qualifies, and how to claim it.

General Excise Tax Exemptions for Nonprofits and Other Entities

The GET reaches nearly every business transaction in Hawaii at a base rate of 4%, with a county surcharge of 0.5% on top in every county (Maui’s surcharge took effect in 2024).¹ Because it taxes gross receipts rather than sales, an exemption can be worth a lot.

Under HRS 237-23, the following organizations qualify for a full GET exemption:

Religious, charitable, scientific, and educational organizations organized and operated exclusively for those purposes, with no net earnings benefiting private individuals
Hospitals, infirmaries, and sanitaria
Fraternal benefit societies operating under the lodge system and providing death, sick, accident, or similar benefits to members
Business leagues, chambers of commerce, and civic organizations operating exclusively for community benefit
Cooperative associations incorporated under HRS Chapter 421 or qualifying as Code section 521 cooperatives, but only for income from authorized cooperative activities
Public utilities owned and operated by the state or a county

The single most common mistake: assuming the exemption covers everything the organization earns. It doesn’t. The GET exemption reaches only income tied to the organization’s exempt purpose. A school’s tuition and sale of learning materials are exempt; the same school’s bake sale or merchandise fair is taxable, even though the proceeds fund the school.³

A separate exemption in HRS 237-25 turns on who buys, not who sells. Sales of tangible property to the U.S. government (including federal agencies, instrumentalities, and federal credit unions, but not national banks) and to state-chartered credit unions are exempt. The seller still needs a GET license, but those gross proceeds fall outside the tax.⁴

How To Apply for a GET Exemption

File Form G-6 electronically through Hawaii Tax Online at hitax.hawaii.gov. Paper applications have not been accepted since August 2020.⁵

Attach the following:

A signed copy of your articles of incorporation, articles of association, constitution, or trust instrument, plus any amendments
A signed copy of current bylaws and amendments, or a written statement explaining why the organization has none
Your IRS determination letter if you have one; if the federal application is pending, provide the date you filed. Churches, their integrated auxiliaries, and organizations with annual gross receipts normally under $5,000 don’t need to have applied federally.
A full description of why the organization was formed and what it actually does in Hawaii

⁵

The Department of Taxation warns applicants not to just copy the purpose clause from their articles. They want specific programs, who runs them, when and where they happen, how they relate to the exempt purpose, and how the organization is funded. Vague descriptions generate follow-up requests. If you do any fundraising, describe those activities separately so the Department can identify which revenue is exempt and which stays taxable.

How 501(c)(3) Status Fits In

Federal 501(c)(3) status is not always technically required, but the Hawaii Department of Taxation asks for the IRS determination letter on the Form G-6 filing, and the state’s charitable exemption closely tracks the federal test. To qualify federally, the organization must be organized and operated exclusively for exempt purposes, no earnings can benefit private individuals, and it cannot devote a substantial part of its activities to lobbying or take part in political campaigns.⁶

You apply on Form 1023 ($600 user fee) or, for smaller organizations, the streamlined Form 1023-EZ ($275).⁷ Form 1023-EZ is limited to organizations that have not had more than $50,000 in annual gross receipts in any of the past three years and don’t expect to exceed that in any of the next three.⁸ Federal recognition also lets donors deduct contributions under Internal Revenue Code section 170.⁶

Property Tax Exemptions

Property tax in Hawaii is run by the counties, not the state, so exemption amounts, deadlines, and procedures differ across Honolulu, Maui, Hawaii County, and Kauai. The categories below exist in every county, but the numbers here are Honolulu’s.

Home Exemption for Owner-Occupants

The home exemption reduces the assessed value of your primary residence. In the City and County of Honolulu, the basic home exemption is $120,000 for homeowners under 65 and $160,000 for homeowners who are 65 or older by June 30 preceding the tax year.⁹ Those are reductions in assessed value, so the tax savings depend on your rate classification.

You have to own and occupy the property as your primary residence, and you have to apply through the county assessment division. The exemption is not automatic, and you may need to reconfirm periodically. Owners outside Honolulu should check with their own county for amounts and deadlines.

Nonprofit-Owned Property

Property used for nonprofit purposes may qualify for exemption under HRS 246-36 if it satisfies both a use test and an ownership test: the property must be actively used for the exempt purpose, and the exempt organization must hold the title.¹⁰ A nonprofit that leases its space generally cannot claim this exemption, though specifics vary by county.

Agricultural and Historic Properties

Agricultural land can receive favorable treatment through dedication programs that assess it on agricultural use value instead of market value. Historic residential and commercial properties dedicated to preservation can also qualify for reduced assessments.¹¹ Separately, farms working Important Agricultural Land can claim a state income tax credit for qualifying costs, certified through the Hawaii Department of Agriculture on Form N-344.¹²

Income Tax Exemptions for Individuals

Hawaii’s income tax rates run from 1.4% to 11%, among the highest in the country, so the individual exemptions matter.

Standard Deduction

Hawaii’s 2025 standard deduction is $4,400 for single filers and married filing separately, $6,424 for head of household, and $8,800 for joint filers and surviving spouses.¹³ These are considerably lower than the federal amounts, which surprises many first-time Hawaii filers.

Social Security and Pension Income

Hawaii does not tax Social Security retirement benefits. The exemption has been in place since 1984 under HRS 235-2.3(b)(3). First-tier Railroad Retirement Act benefits are also exempt.¹⁴

Pension income is trickier. A pension distribution is fully exempt only if you made no contributions to the plan, meaning it was entirely employer-funded. If you contributed, only the growth attributable to your contributions is taxable, because you already paid tax on the contributions themselves. Distributions from 401(k) plans and IRAs are fully taxable at Hawaii’s regular rates. That distinction shapes retirement withdrawal strategy in Hawaii more than most people expect.

Low-Income Renter’s Credit

Renters with adjusted gross income below $40,000 who paid more than $1,000 in rent during the tax year can claim a credit of $187 per qualified exemption. Filers 65 or older claim double. It’s refundable, so residents with no taxable income can still claim it.

Renewable Energy Technologies Income Tax Credit

Under HRS 235-12.5, Hawaii offers a 35% credit for the total cost of solar PV, solar space heating, and solar thermal water heating systems, and 20% for wind systems, subject to per-system caps.¹⁵¹⁶

Solar water heating: $2,250 per system for single-family residential; $350 per unit for multi-family; $250,000 per system for commercial
Other solar systems, including PV: $5,000 per system for single-family residential; $350 per unit for multi-family; $500,000 per system for commercial
Wind: $1,500 per system for single-family residential; $200 per unit for multi-family; $500,000 per system for commercial

Credit in excess of your tax liability carries forward, and under certain conditions the credit may be refundable.¹⁷ The federal residential clean energy credit expired for property placed in service after December 31, 2025, so for systems installed in 2026 and beyond the Hawaii credit is the primary tax incentive.¹⁸

Hawaii Estate Tax Exemption

Hawaii is one of the roughly dozen states that imposes its own estate tax. The Hawaii exclusion amount is $5,490,000, reduced by taxable gifts the decedent made that reduced the federal exclusion. The Hawaii taxable estate is the federal taxable estate, with adjustments for nonresidents.¹⁹

The federal exemption is $15,000,000 per individual for 2026, following passage of the One, Big, Beautiful Bill.²⁰ The gap matters. An $8 million estate owes nothing federally but is subject to Hawaii estate tax on the amount above $5,490,000. Hawaii’s exclusion has not been indexed to inflation at the federal pace, so estate planning here has to account for both thresholds.

Keeping Your Exemption Once You Have It

The exemption is only the start. Losing it is usually a paperwork problem or a mission-drift problem, and both are avoidable.

Records Hawaii Expects You To Keep

Hawaii Administrative Rules section 18-235-102 requires exempt organizations to maintain permanent books of account or records sufficient to show specific items of gross income, receipts, and disbursements. This covers organizations exempt under HRS 235-9 and any tax on unrelated business income under HRS 235-2.4.²¹ In practice: detailed financial records, board minutes, and documentation showing activities line up with the exempt purpose. The Department of Taxation can review them at any time.

The Form 990 Trap

Most tax-exempt organizations, other than churches and certain church-related entities, must file an annual information return with the IRS. Calendar-year organizations file Form 990 by May 15 of the following year.²² Miss three consecutive years and federal exemption is automatically revoked, effective on the filing due date of the third missed return.²³

Automatic revocation means the organization is no longer exempt federally, can no longer receive tax-deductible contributions, and is removed from the IRS’s public list. It also puts the Hawaii GET exemption at risk, because the state review relies on the IRS determination letter. Reinstatement means a new IRS application, another user fee, and filing every missed return, which takes months and creates a taxable gap.

Operational Drift

Beyond deadlines, the most common way organizations lose exempt status is by drifting from their stated purpose. An educational organization that becomes primarily commercial, or a charity whose insiders begin receiving outsized compensation, invites scrutiny from both the IRS and the Hawaii Department of Taxation. Excess benefit transactions, where someone with substantial influence receives an unreasonable economic benefit, can trigger excise taxes on the individual and on any managers who approved the transaction.⁶ An annual internal check that compares actual programs against the stated exempt purpose catches most of these problems before they become official ones.

1
Department of Taxation. General Excise Tax (GET) Information
2
Justia. Hawaii Revised Statutes Title 14 Chapter 237 Section 237-23
3
State of Hawaii, Department of Taxation. Tax Information for Nonprofit Organizations
4
Justia. Hawaii Revised Statutes Title 14 Chapter 237 Section 237-25
5
Hawaii.gov. Instructions to Apply for an Exemption From General Excise Taxes Form G-6A
6
Internal Revenue Service. Exemption Requirements – 501(c)(3) Organizations
7
Internal Revenue Service. Form 1023 and 1023-EZ – Amount of User Fee
8
Internal Revenue Service. Instructions for Form 1023-EZ
9
Department of Budget and Fiscal Services. Exemption FAQ
10
Justia. Hawaii Revised Statutes Title 14 Chapter 246 Section 246-36
11
Department of Budget and Fiscal Services. Home Exemption
12
Department of Agriculture & Biosecurity. IAL Tax Credit Information
13
Department of Taxation. Tax Year Information – 2025
14
State of Hawaii, Department of Taxation. TIR 96-5 – Taxation of Pensions Under the Hawaii Net Income Tax Law
15
Department of Taxation. Renewable Energy Technologies Income Tax Credit (RETITC) – HRS 235-12.5
16
Justia. Hawaii Revised Statutes Title 14 Chapter 235 Section 235-12-5
17
Hawaiʻi State Energy Office. State of Hawaiʻi and Federal Incentives
18
Internal Revenue Service. Residential Clean Energy Credit
19
Hawaii.gov. Outline of the Hawaii Tax System as of July 1, 2025
20
Internal Revenue Service. What’s New – Estate and Gift Tax
21
Cornell Law Institute. Hawaii Code R 18-235-102 – Records and Special Returns
22
Internal Revenue Service. Exempt Organization Filing Requirements – Form 990 Due Date
23
Internal Revenue Service. Automatic Revocation of Exemption