General Excise Tax
Manufacturers, processors, milliners, refiners, packers and canners are taxed 0.5 percent of product value; retailers are taxed 4% of gross proceeds of sales; wholesalers, in general, business transactions will be reduced to 0.5% over six years. The reduction applies to all business expenses, except overhead.

Property Tax
Counties impose tax on all real property, buildings and improvements to property. As of FY 2005, there are ten classes that property is assessed at 100 percent of fee simple market value and taxes vary from 3.5 percent for homeowners to 14 percent for timeshares, depending upon the type of property. Homeowner exemptions are currently at $80,000.

Property Tax Abatement
Manufacturers of paper and pulp products made from bagasse are currently exempt from real property taxes for a five-year period, beginning January 1 of the year that construction of the manufacturing plant commences. Owners of taxable real property in an urban district can dedicate the land for landscaping, open spaces, public recreation and similar uses for a property tax exemption. It may later be returned to private hands.

State Individual Taxes
Residents are taxed on their entire gross income; nonresidents are taxed only on their Hawaii-source income. A nonresident’s taxable income does not include income from intangibles (interest, dividends, etc.) unless derived from a trade or business carried on in the state.

Taxable income in excess of $40,000 for single taxpayers and $80,000 for married taxpayers filing a joint return is taxed at 8.75 percent for tax year 1999, dropping to 8.25% for tax year 2000.

Long-term capital gains maximum tax rate is 7.25 percent.

For more information on state and real property taxes, visit the State tax page and the Maui County tax page.

Hawaii Tax News a publication by the State of Hawaii is also available for updated information.

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