Hawaii: 4th Least Tax-Friendly

From Kiplinger Report, September, 2015

The Aloha State, one of Kiplinger's top ten least tax-friendly states, is known for its high cost of living. It also has one of the highest top income tax rates in the U.S.: 11%. It imposes a 4% sales tax on virtually all transactions. A ray of sunshine: While property values are high, property taxes as a percentage of home value are the lowest in the U.S.

State Sales Tax

4%. Hawaii employs a General Excise Tax that applies to a wide range of goods and services. Since it's levied on the vendor rather than the buyer, the actual rate paid is closer to 4.2%. Only prescription drugs and prostheses are exempt. Oahu has a county surcharge tax of 0.5% to pay for a mass transit system.

Income Tax Range

Low: 1.4% (on taxable income up to $4,800 for married couples filing jointly; on up to $2,400 for married couples filing separately and individual filers)

High: 11% (on taxable income over $400,000 for married couples filing jointly and surviving spouses; on over $300,000 for married couples filing separately and individual filers)

See Kiplinger.com’s Retiree Tax Map to learn how Hawaii taxes Social Security income and other forms of retirement income.

Motor Fuel Taxes

Gasoline: $0.45 per gallon.

Diesel: $0.42 per gallon.

Property Taxes

The median property tax on the state's median home value of $500,000 is $1,389, according to the Tax Foundation.

See Kiplinger.com’s Retiree Tax Map for details on tax breaks for seniors in Hawaii.

Vehicle Taxes

Sales tax is due on vehicle sales. Vehicles are also taxed by weight at registration. (Example: A 4,000-pound vehicle registered in Honolulu County would owe $200 to the county and $75 to the state.)

Sin Taxes

Cigarettes and little cigars: $3.20 per pack

Large cigars: 50% of the wholesale price

Other tobacco products: 70% of the wholesale price

Beer: $0.93 per gallon ($0.54 for draft beer)

Wine: $1.38 per gallon ($2.12 if sparkling)

Liquor: $5.98 per gallon

Travel Taxes

Hotel: 9.25% state lodging tax. Sales tax is also due. In Honolulu, this adds up to 13.75%.

Rental cars: $3 per day, plus sales tax.

Taxes On Wireless Service

6.5%

Inheritance and Estate Taxes

The estate and transfer tax is imposed on Hawaii property owners with estates worth $3.6 million or more, and tax rates range from less than 1% to 16%. There is no inheritance tax.

Oddball Tax

Not a tax, but a deduction: The "Exceptional Tree" act allows homeowners and others to deduct up to $3,000 in expenses per tree for a tree that's big, old, rare or some combination thereof. The work must be done by a certified arborist, the tree itself has to be certified, and the deduction can be claimed only every third year.

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