Hawaii’s General Excise Tax (GET) is a privilege tax that businesses owe on their gross income from almost any commercial activity in the state. It is not a sales tax. The customer never legally owes it; the business does, calculated on everything it brings in before expenses. Most retail sales, services, rentals, and construction work are taxed at a 4.0% base rate plus a 0.5% county surcharge, for an effective 4.5% in every Hawaii county.
How GET Differs From a Sales Tax
The GET is authorized under Hawaii Revised Statutes (HRS) Chapter 237 as a tax on the privilege of doing business, not on any particular purchase. In states with a traditional sales tax, the buyer owes the tax and the business collects it on the government’s behalf. In Hawaii the business itself owes the tax, measured against its gross income from commercial activity.1State of Hawaii Department of Taxation. An Introduction to the General Excise Tax
You can pass the cost along to customers as a line item on receipts, but you aren’t required to. If you absorb it, you still cannot advertise “no tax,” because the tax still exists and you still owe it.1State of Hawaii Department of Taxation. An Introduction to the General Excise Tax
Because the GET is a tax on gross receipts, there are no deductions for ordinary business expenses like payroll, rent, or materials. A business that earns $100,000 and spends $90,000 running itself still owes GET on the full $100,000. A narrow subcontractor deduction and a handful of other carve-outs exist, but the general rule is: tax the top line.
Who Has to Pay
The GET reaches almost every kind of money-making activity: retailing, wholesaling, manufacturing, farming, construction contracting, services, renting real or personal property, commissions, business interest income, and royalties.2Department of Taxation. Licensing Information Consultants, freelancers, attorneys, and medical practitioners are taxed the same way a storefront retailer is.
Business structure doesn’t change the obligation. Sole proprietors, partnerships, LLCs, and corporations all owe GET on Hawaii gross income. Nonprofits and religious organizations are generally subject to GET on goods and services they sell, because the tax falls on the seller rather than the buyer. A church bookstore owes GET on its sales even though the church is exempt from income tax.1State of Hawaii Department of Taxation. An Introduction to the General Excise Tax Qualifying nonprofits can apply for an exemption on their exempt activities under HRS Section 237-23 by filing Form G-6, but the exemption does not reach unrelated commercial revenue.3Justia Law. Hawaii Revised Statutes 237-23 – Exemptions, Persons Exempt, Applications for Exemption
Rates and the County Surcharge
Hawaii applies three main GET rates depending on the activity:
- 0.15% on insurance commissions.4Department of Taxation. General Excise Tax (GET) Information
- 0.5% on wholesaling, manufacturing, producing, and certain sublease arrangements.5State of Hawaii Department of Taxation. Tax Facts 2022-1 – General Excise and Use Tax Information for Manufacturers and Producers
- 4.0% on retailing, services, construction contracting, renting real property, and most other business activities.5State of Hawaii Department of Taxation. Tax Facts 2022-1 – General Excise and Use Tax Information for Manufacturers and Producers
All four counties (Honolulu, Maui, Hawaii, and Kauai) impose an additional 0.5% surcharge on top of the 4.0% base rate, which brings the effective rate for most retail and service transactions to 4.5%. The surcharge does not apply to activities taxed at the 0.5% or 0.15% rates, and every county’s surcharge is authorized through December 31, 2030.6Department of Taxation. County Surcharge on General Excise and Use Tax
The 4.712% Pass-On Cap
If you choose to pass the GET on to customers, the maximum rate you may visibly charge is 4.712%, not 4.5%. The passed-on tax itself becomes part of your gross receipts and is taxable in turn, and the 4.712% figure accounts for that tax-on-tax effect (4.5% divided by 95.5% is roughly 4.712%).7State of Hawaii Department of Taxation. Tax Announcement 2019-04 – Hawaii County Surcharge on General Excise and Use Tax This cap applies in all four counties through 2030.6Department of Taxation. County Surcharge on General Excise and Use Tax
Getting a GET License
Before doing any business in Hawaii, you need a General Excise Tax license. You apply using Form BB-1 (the Basic Business Application), either through Hawaii Tax Online or on paper. The application asks for your Federal Employer Identification Number or Social Security Number, your legal business name, and your physical business address.8State of Hawaii Department of Taxation. Form BB-1 – State of Hawaii Basic Business Application
The license is a one-time $20 fee.2Department of Taxation. Licensing Information Once you have it, you must file returns for every period the license is active, even periods with no income. A quiet month still requires a return showing $0.9Department of Taxation. Mandatory Electronic Filing
Filing Returns
You report gross income and any applicable exemptions on Form G-45, the periodic return. At year end you file Form G-49, an annual reconciliation that makes sure your periodic returns add up to your yearly revenue. Both forms require you to categorize income by activity type so each dollar is taxed at the right rate.10State of Hawaii Department of Taxation. General Excise and Use Tax Forms
How often you file Form G-45 depends on how much GET you expect to owe for the year:
- Monthly if your annual GET will exceed $4,000.
- Quarterly if your annual GET will be $4,000 or less.
- Semiannually if your annual GET will be $2,000 or less.
Periodic returns are due the 20th day of the month after the close of each filing period. A January monthly return is due February 20; a first-quarter return is due April 20.4Department of Taxation. General Excise Tax (GET) Information The annual Form G-49 is due by April 20 of the following year for calendar-year taxpayers.11State of Hawaii Department of Taxation. General Instructions for Filing the General Excise/Use Tax Returns
You can file and pay through Hawaii Tax Online at no cost using direct debit or credit card. If your annual GET liability exceeds $4,000, electronic filing is mandatory and paper filing is not an option.9Department of Taxation. Mandatory Electronic Filing Smaller filers can still mail paper forms and checks to the Department of Taxation.12Department of Taxation. E-Services Information
Narrow Relief: Exemptions and the Subcontractor Deduction
Exemptions exist but are narrow. HRS Section 237-23 lists qualifying organizations such as religious, charitable, scientific, and educational entities operated exclusively for those purposes, hospitals, business leagues, fraternal benefit societies, cooperative associations under HRS Chapter 421, and nonprofit cemetery organizations. The exemption covers only exempt activities; a hospital gift shop run primarily for revenue remains taxable.3Justia Law. Hawaii Revised Statutes 237-23 – Exemptions, Persons Exempt, Applications for Exemption To claim an exemption, you file Form G-6 electronically through Hawaii Tax Online with a $20 registration fee, your IRS determination letter, articles of organization, and bylaws.
General contractors get a different kind of relief. When you pay a subcontractor who holds their own GET license, you can deduct those payments from your gross income on your GET return, avoiding double taxation on the same construction dollars. You claim the deduction on Parts I and III of Schedule GE, listing each subcontractor’s Hawaii Tax ID number, name, and amount paid. The subcontractor then reports and pays GET on that income on their own return.
Penalties and Interest
Late or short payments carry real costs. Under HRS Section 231-39, the Department of Taxation may assess:
- Up to 25% of the underpayment for negligence.
- Up to 50% of the underpayment for fraud.
- Up to 20% of the unpaid tax if the balance shown on a timely return isn’t paid within 60 days of the due date.
These are maximums, assessed at the director’s discretion.13Justia Law. Hawaii Revised Statutes 231-39 – Additions to Taxes for Failure to Pay Tax Interest accrues on unpaid tax and penalties at two-thirds of one percent per month (roughly 8% per year), starting the first calendar day after the due date.4Department of Taxation. General Excise Tax (GET) Information
Selling Into Hawaii From Outside
Online platforms that facilitate sales into Hawaii are treated as the seller for GET purposes. Under HRS Section 237-4.5, a marketplace facilitator’s gross income includes receipts from sales made on behalf of third-party sellers. The individual seller using the platform is treated as making a wholesale transaction, and the facilitator carries the retail GET obligation.14Justia Law. Hawaii Revised Statutes 237-4.5 – Marketplace Facilitators
Out-of-state businesses that sell into Hawaii and meet the state’s economic nexus standards must also register for and pay GET. If you are based outside Hawaii but regularly sell goods or services to Hawaii customers, check with the Department of Taxation to confirm whether your activity triggers a filing obligation.