Entrepreneurs in Hawaii: taxes and retirement for 2026
For solo founders and small-business owners in Hawaii. Hawaii has a graduated state income tax for 2026: 1.4% to 11% (top rate starts at $325,000 for single filers). Here are the 2026 rules, a worked example and the official sources.
Hawaii rules for entrepreneurs
- State income tax (2026)
- Hawaii has a graduated state income tax for 2026: 1.4% to 11% (top rate starts at $325,000 for single filers). Rates are percentages. Act 46 (2024) widened the brackets for 2025, and the 2026 brackets are the same as 2025. Single filers: 1.4% up to $9,600, rising through 12 brackets in all to 11% on taxable income over $325,000. The single standard deduction rises to $8,000 in 2026, and the brackets widen again in 2027 and 2029.
- State estimated tax
- You generally must pay estimated tax if you expect to owe at least $500 after withholding and credits, and your withholding and credits will be less than the smaller of 60% of this year's tax or 100% of last year's tax. April 20, June 20 and September 20, 2026, and January 20, 2027 (the 20th, not the 15th). The current-year safe harbor is 60%, not the federal 90%. Form N-200V.
- Hawaii general excise tax (GET)
- GET applies to gross income from all business activities, including independent contractors and freelancers. The rate is 4% for most services and retail sales, 0.5% for wholesaling and manufacturing, and 0.15% for insurance commissions. Honolulu, Kauai, Hawaii and Maui counties each add a 0.5% surcharge on 4%-rate activity through 2030. A GET license costs a one-time $20, and periodic returns are due on the 20th of the month after each period.
- ABC test for unemployment insurance (HRS 383-6)
- Services for wages are treated as employment unless the Department of Labor and Industrial Relations is shown that the worker is free from control or direction, the service is outside the usual course or places of the business, and the worker is customarily engaged in an independently established trade of the same nature.
- State retirement program
- Hawaiʻi Retirement Savings Program is launching. It is built around W-2 employers and does not cover 1099 contractors through the employer mandate.
Federal rules for 2026
Entity choice changes your taxes
A single-member LLC is taxed like a sole proprietorship unless it elects S-corp status. The S-corp can lower payroll tax but adds payroll, a separate return and a reasonable-salary requirement.
Retirement as a tax lever
With no employees, a Solo 401(k) allows up to $72,000 in 2026. With employees, a SEP IRA or a 401(k) must generally cover eligible staff too.
Quarterly estimated taxes
No one withholds tax from self-employment income, so you generally pay estimates four times a year if you expect to owe $1,000 or more. For 2026 income the federal dates are April 15, June 15 and September 15, 2026, and January 15, 2027. Paying 100% of last year's tax (110% if your AGI was over $150,000) in four equal installments avoids the underpayment penalty.
Self-employment tax
On top of income tax, self-employed people pay 15.3% on 92.35% of net profit: 12.4% Social Security up to the 2026 wage base of $184,500, plus 2.9% Medicare with no cap. Half of it is deductible.
A worked example
| Self-employment tax as a sole proprietor | $28,234 |
|---|---|
| Solo 401(k) maximum as a sole proprietor | $61,677 |
| Payroll tax saved as an S-corp on a $100,000 salary | $12,934 |
| Solo 401(k) maximum as that S-corp | $49,500 |
Federal figures only. S-corps add running costs (payroll, an 1120-S return, state fees) not shown here. Computed from 2026 IRS limits (Notice 2025-67, Rev. Proc. 2025-32) and the SSA wage base.
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Questions
Do entrepreneurs in Hawaii pay state income tax?
Hawaii has a graduated state income tax for 2026: 1.4% to 11% (top rate starts at $325,000 for single filers). Rates are percentages. Act 46 (2024) widened the brackets for 2025, and the 2026 brackets are the same as 2025. Single filers: 1.4% up to $9,600, rising through 12 brackets in all to 11% on taxable income over $325,000. The single standard deduction rises to $8,000 in 2026, and the brackets widen again in 2027 and 2029.
When are Hawaii estimated tax payments due for 2026?
You generally must pay estimated tax if you expect to owe at least $500 after withholding and credits, and your withholding and credits will be less than the smaller of 60% of this year's tax or 100% of last year's tax. April 20, June 20 and September 20, 2026, and January 20, 2027 (the 20th, not the 15th). The current-year safe harbor is 60%, not the federal 90%. The state form is N-200V.
Are there other Hawaii taxes for self-employed entrepreneurs?
Hawaii general excise tax (GET): GET applies to gross income from all business activities, including independent contractors and freelancers. The rate is 4% for most services and retail sales, 0.5% for wholesaling and manufacturing, and 0.15% for insurance commissions. Honolulu, Kauai, Hawaii and Maui counties each add a 0.5% surcharge on 4%-rate activity through 2030. A GET license costs a one-time $20, and periodic returns are due on the 20th of the month after each period.
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Sources
- files.hawaii.gov/tax/news/announce/ann24-03.pdf
- files.hawaii.gov/tax/forms/current/n11ins.pdf
- labor.hawaii.gov/wsd/files/2022/06/HWHL-1_MW-Poster_Rev_6-22.pdf
- tax.hawaii.gov/geninfo/get/
- data.capitol.hawaii.gov/hrscurrent/Vol07_Ch0346-0398/HRS0383/HRS_0383-0006.htm
State and local facts researched from official sources and independently re-checked; last verified October 2026, next scheduled review 2027-01-02. Educational information for 2026, not tax, legal or investment advice. Rules change; check the official sources listed and a tax professional for your situation. Gigaverse AI, Inc. is a financial technology company, not a bank, and not itself a registered investment adviser or broker-dealer.