Payroll tax in Hawaii: What employers need to know [2024]

Employers have many responsibilities when it comes to running a business, one of which is paying taxes. If you’re hiring in the state of Hawaii, dealing with this obligation can be daunting. In addition to federal income tax and the FICA taxes levied by the IRS, such as Medicare taxes and Social Security contributions, business owners are also responsible for paying state payroll taxes.

The Aloha State has a progressive tax rate, which means the higher an employee’s gross wages, the more taxes they pay. And similarly, if your business is growing and you’re adding new hires to the team, your tax contributions will increase, as will the amount you take out of employees’ paychecks.

It’s crucial to understand the tax laws in the states where your employees live so you can avoid penalties. Whether you’re running a mom-and-pop shop or a global company, if you have employees in Hawaii, you must master Hawaii payroll taxes, their rates, who owes what, and the deadlines to pay. Let’s get started.

The 2 Hawaii payroll taxes

The state of Hawaii has two types of payroll taxes: state unemployment insurance tax and state income tax. The Hawaii Department of Labor and Industrial Relations (DLIR) administers the former, while the Hawaii Department of Taxation oversees the latter. According to the state’s new hire reporting requirements, all employers must report each new hire as soon as possible and no later than 20 days after that employee’s start date. 

Below, we’ll discuss each kind of Hawaii state payroll tax in more detail.

State unemployment insurance tax

Hawaii unemployment insurance (SUI) tax pays for the unemployment benefits of workers who lost their jobs due to layoffs or other circumstances beyond their control. The Hawaii Department of Labor and Industrial Relations manages the collection of SUI tax and determines the annual SUI tax rate. New employers pay 3.0%, the tax rate for 2024, until the DLIR assigns them an experience rate and a new tax rate. The maximum SUI tax rate for 2024 for all other employers is 5.8%. The taxable wage base for 2024 is $59,100 per employee per calendar year.

Under the terms of the Federal Unemployment Tax Act (FUTA), most Hawaii employers must also contribute to federal unemployment taxes as well as state ones.

Hawaii state income tax

State residents are also responsible for paying a Hawaii income tax. Unfortunately, the Aloha State is known for being pricey regarding state income taxes (although it makes up for it by not charging sales tax). Hawaii employers must ensure they are withholding the right amount of tax from each employee’s paycheck. The Hawaii Department of Taxation is responsible for collecting and enforcing Hawaii’s income tax. The tax rates are based on the information in each employee’s withholding tax return form HW-4, not their filing status.

Because Hawaii has a progressive income tax, its tax rates can vary widely. In 2024, the income tax rates range from 1.4% to 11.0% of an employee’s wages.
Navigating payroll tax laws can be challenging. This is especially true in Hawaii, with its progressive tax system and different types of state payroll taxes. But Rippling’s payroll compliance software makes it easy, calculating and submitting your tax forms and payments on your behalf—and monitoring tax laws at the federal and Hawaii state levels to ensure you’re always compliant. And if you’re looking for even more support, Rippling PEO can register and maintain your state tax accounts for you, creating an even more seamless payroll tax process.

Payroll tax due dates in Hawaii

Hawaii employers must pay SUI taxes to the Hawaii Department of Labor and Industrial Relations (DLIR) on a quarterly basis. The deadlines are below:

• First quarter (January-March): Due April 30
• Second quarter (April-June): Due July 31
• Third quarter (July-September): Due October 31
• Fourth quarter (October-December): Due January 31

If one of these dates falls on a weekend or a legally recognized holiday, you must file your taxes by the next business day. 

Hawaii state income tax due dates are based on the amount of an employer’s annual tax withholding liability. If the amount of your annual tax withholding liability is under $5,000, you should make state income tax payments quarterly. If it’s between $5,000 and $40,000, you should make them monthly. If it’s above $40,000, you’ll make them semi-monthly.  Remember, you’ll need to pay your state income taxes to the Hawaii Department of Taxation, not the DLIR.

How to submit payroll taxes in Hawaii

So far, we’ve covered the types of state payroll taxes and tax due dates. Now, we’ll help you complete your tax filing responsibilities by reviewing how to submit your payroll taxes in the Aloha State.

Enroll in e-Services 

Employers who are looking for a simple and secure way to manage their payroll taxes should check out the Hawaii Department of Taxation’s convenient online portal, Hawaii Tax Online, where you can remit tax payments and manage your tax forms. You can even make ACH debit payments online using this portal without having to set up an account.

Rippling’s full-service payroll software

Want an even simpler payment option? Check out Rippling’s payroll software. Rippling automatically calculates your payroll taxes, files them, and ensures you’re always compliant with federal, state, and local regulations. Rest assured, your payroll taxes get paid at the right time with the IRS and the Hawaii Department of Taxation—every time.

FAQs about Hawaii payroll taxes

Are there local tax laws in Hawaii?

No, there are no local tax laws in the state of Hawaii.

Can your tax returns be audited in Hawaii?

Yes. The Hawaii Department of Taxation has the right to audit state income tax returns and other types of tax returns to ensure all Hawaii employers and individuals are paying the right amounts of taxes.

Are nonprofit organizations subject to payroll taxes in Hawaii?

According to Chapter 415B of the Hawaii Revised Statutes, even if a nonprofit organization is registered under Section 501(c)(3) with the IRS and is therefore exempt from paying federal income tax, it doesn’t automatically qualify for an exemption from state income tax. Nonprofits that wish to be granted an exemption from Hawaii income tax need to fill out Form N-70NP and submit it to the Hawaii Department of Taxation.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.