Hawaii’s use tax is what you owe when you buy goods, services, or digital products from an out-of-state seller that doesn’t collect Hawaii’s general excise tax (GET). The rate matches GET: 4% statewide, plus a 0.5% county surcharge that now applies in every county through at least 2030, for an effective rate of 4.5%. If a mainland retailer, foreign vendor, or out-of-state consultant sold you something used in Hawaii and didn’t charge GET at checkout, the tax falls on you.
When You Owe the Tax
The tax applies whenever you import tangible property, services, contracting, or intangible property from an unlicensed out-of-state seller for use in Hawaii and GET wasn’t already collected on the transaction.1Hawaii Department of Taxation. Hawaii Revised Statutes Chapter 238 – Use Tax Law “Use” is defined broadly and covers keeping the property in the state for personal or business purposes, consuming it, or holding it for resale.
Situations that commonly trigger the tax:
- Online and mail-order purchases from a mainland or foreign retailer that doesn’t charge GET.
- Business equipment, machinery, tools, or inventory imported for commercial operations.
- Consulting, software development, design, or other services performed outside Hawaii but used here.
- E-books, software downloads, and streaming subscriptions from vendors that don’t collect GET.
One important carve-out: if the seller already collected and remitted GET on your purchase, you don’t owe use tax separately on the same transaction. Many large online retailers now collect at checkout because Hawaii requires out-of-state sellers with $100,000 or more in Hawaii gross income (or 200 or more Hawaii transactions) to register and collect.2State of Hawaii Department of Taxation. Tax Information Release No. 2020-05 Your receipt tells you which situation you’re in.
Rates and Landed Value
The base rate is 4% for personal purchases and most business imports.3Hawaii Department of Taxation. Tax Facts 95-1 – Use Tax Every Hawaii county now adds a 0.5% surcharge on transactions taxed at 4%, so the effective rate is 4.5% statewide. The county surcharges are authorized through December 31, 2030.4Hawaii Department of Taxation. County Surcharge on General Excise and Use Tax
A reduced rate of 0.5% applies to businesses that hold a GET license and import property to resell at retail. Wholesalers and manufacturers importing materials that will be incorporated into a finished product and taxed again on sale may owe no use tax at all.1Hawaii Department of Taxation. Hawaii Revised Statutes Chapter 238 – Use Tax Law The 0.5% county surcharge does not apply to the 0.5% wholesale rate.4Hawaii Department of Taxation. County Surcharge on General Excise and Use Tax
Use tax isn’t calculated on the sticker price alone. The base is the item’s “landed value,” which includes the purchase price plus shipping, handling, insurance, customs duties, and any other cost to get the item to Hawaii.5Hawaii Department of Taxation. An Introduction to the Use Tax Sales or use tax you’ve already paid to another state is excluded from the landed value calculation.
Credit for Tax Paid to Another State
If you paid sales or use tax to another state on the same item, you get a dollar-for-dollar credit against your Hawaii use tax, up to the amount of Hawaii tax due on that transaction. The credit covers the combined amount paid to any other state and its subdivisions, but can never exceed what Hawaii would charge.6Justia. Hawaii Code 238-3 – Application of Tax
A worked example: you buy a $1,000 item and pay 6% sales tax to another state. Your Hawaii use tax at 4.5% would be $45, and the credit wipes out the entire balance. If the other state charged only 2%, you’d still owe the difference. Keep the receipt showing tax paid; the Department of Taxation can require proof before allowing the credit.
What’s Exempt
Several categories of property don’t trigger use tax.
Temporary Use
Property that isn’t perishable or quickly consumed and is imported only for temporary use doesn’t count as “use” under the statute, provided you intend to remove it and actually do.1Hawaii Department of Taxation. Hawaii Revised Statutes Chapter 238 – Use Tax Law A contractor who ships heavy equipment in for one project and back out afterward fits; so does a visitor who drives a car around the islands and takes it home.
Household Goods Brought by New Residents
If you’re moving to Hawaii with household goods, personal effects, or a private automobile, those items are exempt as long as four conditions are met: you acquired the property in another state, you were a resident of that state when you bought it, you bought it for use outside Hawaii, and you actually used it outside Hawaii.1Hawaii Department of Taxation. Hawaii Revised Statutes Chapter 238 – Use Tax Law Any item acquired less than three months before you import it is presumed to have been bought for use in Hawaii, and you’d need clear evidence to overcome that presumption.
Gifts and Returns
Property received purely as a gift is excluded. So is property you return to the seller promptly after a trial period or without using it.1Hawaii Department of Taxation. Hawaii Revised Statutes Chapter 238 – Use Tax Law
Resale, Nonprofits, and Government
Goods imported to resell qualify for the 0.5% reduced rate rather than a full exemption. To claim it, you need a valid GET license and must give the seller Form G-17, the Resale Certificate for Goods, which stays in effect for all purchases from that seller until you revoke it in writing.7Hawaii Department of Taxation. Resale Certificate for Goods – Form G-17 Religious, charitable, scientific, or educational organizations can qualify for a GET exemption that affects use tax exposure.8Justia. Hawaii Code 237-23 – Exemptions, Persons Exempt, Applications for Exemption Federal, state, and county agencies are also exempt on official purchases.
Bringing a Vehicle to Hawaii
Importing a car or truck involves an extra step. Along with paying the tax itself, you need Form G-27 (Motor Vehicle Use Tax Certification) to prove to the county motor vehicle registration office that you’ve paid the tax or don’t owe it. Without it, you can’t register the vehicle.9Hawaii Department of Taxation. Motor Vehicle Use Tax Certification – Form G-27 Instructions
The vehicle’s landed value includes the purchase price, freight, insurance, customs duty, and any other charges to get it here. If you used the vehicle outside Hawaii before importing it, you can reduce the landed value by a depreciation allowance. The standard starting point is a 10% reduction for normal use, but the actual figure depends on mileage and condition. No depreciation is allowed if the vehicle arrives within 90 days of purchase, not counting shipping time or time in storage.10Cornell Law Institute. Hawaii Administrative Rules 18-238-2 – Imposition of Tax, Exemptions
A few groups skip Form G-27: licensed auto dealers who report under a separate provision, active-duty military stationed in Hawaii who aren’t Hawaii residents and already paid their home state’s tax, and federal, state, and county governments.9Hawaii Department of Taxation. Motor Vehicle Use Tax Certification – Form G-27 Instructions
How to File and When
Your filing path depends on whether you owe tax as a business or as an individual with a one-time purchase.
Individuals
If you don’t hold a GET license and owe tax on a personal purchase, file Form G-26 (Use Tax Return) with payment. You don’t need a tax identification number. The return and payment are due by the 20th day of the month after the item was imported. Ship a vehicle to Honolulu in March, and your Form G-26 is due April 20.11Hawaii Department of Taxation. Hawaii Use Tax Return Instructions
Businesses
Businesses need a Hawaii Tax Identification Number, obtained through Form BB-1 (Basic Business Application), which you can file through Hawaii Tax Online.12Hawaii.gov. Tax Services Use tax is reported on the same returns as GET: Form G-45 for periodic filings and Form G-49 for annual reconciliation.13Hawaii Department of Taxation. General Excise and Use Tax Forms The default filing frequency is monthly, with quarterly or semiannual filing available at lower liability levels; returns are due by the 20th of the month following the reporting period.14Hawaii Department of Taxation. Hawaii Revised Statutes 237-30 – Monthly, Quarterly, or Semiannual Return
Businesses with more than $4,000 in annual GET and use tax liability must file electronically through Hawaii Tax Online. Missing that mandate costs an extra 2% of the tax due on the return.15Hawaii Department of Taxation. Mandatory Electronic Filing Any taxpayer whose annual liability for a single tax type exceeds $100,000 must pay by electronic funds transfer.16Justia. Hawaii Code 231-9.9 – Filing and Payment of Taxes by Electronic Means
If You Can’t Pay in Full
The Department offers installment agreements. You can apply online through Hawaii Tax Online if your unpaid balance is more than $100, you don’t already have an active plan, and you aren’t in bankruptcy or referred to a collection agency. A nonrefundable $50 processing fee applies when the plan is approved.17Department of Taxation. Payment Plans
Plans running more than 12 installments require additional paperwork, including a financial disclosure form and three months of bank statements. Interest and penalties keep running on the balance for the full life of the plan, and any state or federal refund you receive is applied against the balance. If you can’t make a scheduled payment, contact your assigned collector at least seven business days before the due date to avoid default.17Department of Taxation. Payment Plans If you don’t qualify online, submit Form D-100 (Request for Installment Plan Agreement) by mail, fax, or email to the Collection Branch.
Penalties for Late or Missed Payments
Failure to file carries a penalty of 5% of the unpaid tax for each month you’re late, capped at 25%.18Hawaii Department of Taxation. Hawaii Civil Tax Penalty Matrix Interest accrues at two-thirds of 1% per month on unpaid tax and penalties, starting the day after the original due date.19Department of Taxation. Frequently Asked Questions
An underpayment caused by negligence or intentional disregard of the rules (short of fraud) can add up to 25% of the underpayment. Fraud pushes that to as much as 50%.18Hawaii Department of Taxation. Hawaii Civil Tax Penalty Matrix Beyond penalties, the Department can assess tax, file liens, and garnish bank accounts or wages, and business licenses can be suspended or revoked for failure to file on time.20Hawaii Department of Taxation. Licensing Information
Criminal exposure for use tax is narrower than for other Hawaii taxes. Willfully filing a false use tax return is a misdemeanor, punishable by a fine of up to $2,000, up to one year of imprisonment, or both. Willfully filing a false return under other Title 14 taxes is a class C felony, with fines reaching $100,000 for individuals and $500,000 for corporations.21Justia. Hawaii Code 231-36 – False and Fraudulent Statements
If You Disagree with an Assessment
You can challenge a use tax assessment through the Board of Review and, if needed, take it to Hawaii’s Tax Appeal Court. To appeal a Board of Review decision, file a notice of appeal within 30 days of the decision being filed.22The Judiciary, State of Hawai’i. Rules of the Tax Appeal Court of the State of Hawaii
Attorneys must file electronically through the Judiciary Electronic Filing and Service System. Self-represented taxpayers can file conventionally at the Tax Appeal Court. You’ll also need to serve copies of the notice on the Director of Taxation and pay the court costs required under HRS Section 232-22.22The Judiciary, State of Hawai’i. Rules of the Tax Appeal Court of the State of Hawaii
Records to Keep
Hold on to records of every transaction that could involve use tax for at least three years from the date the return was filed or the tax was due, whichever is later. That matches the general statute of limitations on tax assessments. Save purchase invoices, shipping receipts, freight bills, insurance records, and proof of any sales tax paid to other states.
If you regularly import goods for a business, organize records to show whether each purchase was for resale, personal use, or an exempt purpose. Keep copies of any Form G-17 resale certificates you’ve issued, and retain receipts supporting any credit you claimed for tax paid to another state; the Department can require this documentation before granting the credit.6Justia. Hawaii Code 238-3 – Application of Tax If your records are inadequate during an audit, the Department can estimate your liability from available information, and those estimates almost always run higher than what you’d owe with proper documentation.