11% top rate plus the General Excise Tax on all revenue. Hawaii business owners face one of the heaviest state tax burdens anywhere.
Hawaii's GET taxes gross receipts (not profits), stacking on top of an 11% income tax. Entity structure and PTET elections are critical.
PTET election available since 2023.
The PTET election allows pass-through entities (S-Corps, partnerships, LLCs taxed as partnerships) to pay state income tax at the entity level rather than the individual level. This effectively converts the state tax payment into a business deduction that bypasses the $10,000 federal SALT deduction cap.
For Hawaii business owners with significant state tax liability, this election can save thousands to tens of thousands in federal taxes annually.
Learn About SALT Planning →Without the election, your state taxes are limited to the $10,000 SALT deduction cap on your personal return. With the PTET election, the entity pays the tax and deducts it as a business expense with no cap. You receive a credit on your state return to avoid double taxation.
Beyond income tax, Hawaii business owners need to account for these additional tax obligations and structures.
These state-level incentives can meaningfully reduce your tax liability when properly claimed.
R&D tax credit (20%, fully refundable)
High Technology Business Investment Tax Credit
Enterprise Zone credits
Film production credits
Opportunity Zones
Based on Hawaii's tax profile, these are the strategies with the highest impact for business owners.
Hawaii offers a Pass-Through Entity Tax (PTET) election, allowing business owners to deduct state taxes at the entity level and work around the $10K State and Local Tax (SALT) cap.
Learn more →Multi-entity structures can split income across favorable tax brackets and jurisdictions, reducing your effective rate.
Learn more →High earners in high-tax states can shelter $200K+ annually through properly designed defined benefit retirement plans.
Learn more →Proper S-Corp salary vs. distribution splits can save five figures annually on self-employment and state taxes.
Learn more →If you own commercial real estate or rental property, accelerated depreciation can generate massive year-one deductions.
Learn more →We work with Hawaii business owners across these industries, each with unique tax planning opportunities.
Hawaii has a progressive income tax structure with a top marginal rate of 11%. Top rate of 11% on income over $200K (single). 12 tax brackets. Second-highest top rate in the nation. Effective planning can significantly reduce your actual tax burden.
Yes. PTET election available since 2023. The PTET election is a powerful workaround for the $10,000 federal SALT deduction cap, allowing the business itself to pay and deduct state taxes.
In a high-tax state like Hawaii, the most impactful strategies include the PTET election, entity restructuring, defined benefit retirement plans, cost segregation for real estate, and careful income timing. Most business owners are leaving $50K-$200K+ on the table.
Hawaii offers several valuable credits and incentives: R&D tax credit (20%, fully refundable), High Technology Business Investment Tax Credit, Enterprise Zone credits, and more. The state R&D credit is particularly valuable for businesses investing in innovation. Many of these go unclaimed because business owners don't know they qualify.
Our Tax Intelligence Framework engagement starts with a free assessment to identify your specific opportunities. Implementation pricing depends on complexity, but our clients typically see 5-10x return on their investment. A Hawaii business owner doing $1M+ in revenue commonly saves $50K-$200K+ in the first year alone.
Get a free assessment and we'll identify the state-specific opportunities hiding in your numbers.
Tell us about your business and we'll identify every savings opportunity available to you.