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Hawaii Sales Tax? GET Real! It Doesn't Exist

  • Learn
  • October 28, 2015 | Katherine Gustafson

If you were to ask most Hawaiians whether they pay sales tax at the register, they'd probably say yes. Why else would the cost of their items suddenly jump when they get to the cashier?

Well, they may well be paying, but what they're paying isn't Hawaii sales tax. Instead of levying sales tax on customers, Hawaii institutes a General Excise Tax (GET) on businesses.

G.E.T. vs. Sales Tax

Sound like just a different name for the same thing? Not quite. One critical difference: Since the tax is levied on businesses and not customers, Hawaiian businesses can choose how to handle it. They can opt not to collect GET from their customers -- instead paying it themselves out of pocket. In places with sales tax, collection from customers is always required.

Of course businesses in Hawaii usually prefer to pass on the cost of GET to their customers -- in a visible way, of course. This is why it looks and feels like sales tax to customers.

But a HI sales tax it certainly ain't. For one thing, there are few exemptions. While most states have an eye-poppingly long and detailed list of sales tax-exempt items and institutions, Hawaii keeps it simple. All transactions that businesses make, whether for goods or services, are subject to GET.

2 Different Rates

There are, however, two GET rates that take into account some differences usually covered by sales-tax exemptions. The GET rate for wholesaling goods, manufacturing, producing, providing wholesale services, and business activities of disabled people is 0.5 percent.

Meanwhile, the rate for selling retail goods and services, renting, leasing real property, construction, contracting, and earning commissions is 4 percent (plus a 0.5 percent county surcharge for businesses in the city and county of Honolulu on Oahu).

Don't Get Got

If you're doing business in Hawaii, you surely already know about this "sales tax" trickeroo, but do you know the ins and outs of how to charge, track, and file your GET? For one thing, you need to get a GET license (costs $20).

Also keep in mind that GET is applied to your gross receipts -- that is, prior to deductions. File on the 20th day of the month following the close of each tax period, or face the consequences: 5 percent penalty per month on the unpaid tax up to a maximum of 25 percent.

Get your GET in order, or get got.

Avalara Author
Katherine Gustafson
Avalara Author Katherine Gustafson