Hawaii offers a variety of tax incentives, credits and exemptions to attract new business ventures, help existing businesses and stimulate the overall growth of Hawaii's economy.

Hawaii's Tax Incentives

• Hawaii has only two levels of government taxation: state and county.
• No personal property tax
• No tax on inventories, furniture, equipment or machinery
• Credit against taxes paid on the purchase of capital goods, machinery, and equipment
• No state tax on exported goods or services
• No stock transfer tax (all security exchange transactions are exempt from general excise tax, as an incentive to financial institutions)
• No unincorporated business tax
• Banks and financial institutions pay only one business tax

Tax Incentives for High Technology Businesses

Hawaii offers high technology businesses unparalled tax incentives through legislative initiatives, Foreign Trade Zone program and Enterprise Zone Partnership. For further information on high technology incentives, visit: Hi Tech Hawaii: Tax Incentives.

Hawaii's Tax Rates

Income Tax

The corporate tax rate is 4.4 percent of income up to $25,000; 5.4 percent of income up to $100,000, and 6.4 percent of income exceeding $100,000. The capital gains tax rate is 4 percent for corporations.

General Excise Tax

Manufacturers, wholesalers, processors, millers, refiners, packer and canners are taxed at only 0.5 percent of gross proceeds.

Insurance solicitors and agents are taxed at .15 percent.

Contractors are taxed at 4 percent of gross proceeds.

All sales of goods (retail) and services are taxed at 4 percent of gross income.

Use Tax

A use tax is imposed upon tangible personal property, imported or purchased from out-of-state sellers for use or for further resale in Hawaii. This tax is levied at the rate of .05 percent, if the property is intended for resale at retail; 4 percent if property is intended for use by importer or purchaser. No tax is imposed if the property is intended for resale at wholesale.

General Excise & Use Tax Credits and Exemptions

Businesses that purchase depreciable tangible personal property are provided a refundable income tax credit against excise and use taxes paid at time of purchase.

General excise tax exemptions are in effect for air pollution control facilities, certain federal scientific contracts, ships used in international trade and commerce, sugar and pineapple manufacturers, and sales of tangible personal property to the federal government. Sales of services to the federal government are not exempt.

Vessels engaged in intrastate transportation are exempt from use tax.

Enterprise Zones Program

The Hawaii Enterprise Zones Partnership was established to increase business activity and create jobs in areas with above normal unemployment and/or below average income levels. Businesses within a designated enterprise zone and qualifying under the Program (manufacturing, wholesaling, certain types of call centers, certain types of technology businesses and marine and aviation maintenance) are eligible for General Excise Tax exemptions. They are also eligible for two different income tax credits. These include a seven-year exemption from general excise taxes on gross proceeds, an 80 percent first-year income tax credit (decreasing 10 percent each year thereafter during the next six years), and an additional income tax credit equal to 80 percent of unemployment taxes paid during the first year (decreasing by 10 percent each year during the next six years).

Counties also contribute one or more incentives for each zone designated under their jurisdiction. These include property tax increment waivers, building permit fee exemptions and other permitting or business support incentives.

Hawaii's Foreign Trade Zone

Hawaii's Foreign Trade Zone (FTZ) lies outside U.S. Customs territory for tax, duty, and quota purposes, helping companies engaged in international trade significantly reduce their operating costs. The zone and subzone sites are used to store, exhibit, manufacture, assemble, re-label, import and export products. Currently, about 330 companies employ over 2,100 workers at the FTZ.
(808) 586-2509

Employment and Training Fund (ETF) Program

The fund was created to improve long term employability of Hawaii's workers by developing their skills to meet the demands of our increasingly global community.

Business-specific training, upgrade training, new occupational skills training, management skills training, and other similar activities are available to both employers and individuals.

The program provides industry or employer-specific training programs in critical skill shortage and high growth occupational areas.

Training and retraining programs are also available to assist workers who have recently become unemployed or are likely to become unemployed.

Hawaii's Business Support Network

Strategic Marketing and Support Division: helps new and existing businesses in Hawaii through community development projects, information programs, licensing and permit information and referral, and business advocacy.
(808) 586-2590

Business Action Center: a "one-stop" business permit and license center. Business and trade name registration, general excise tax licenses, and employer registration are processed here.
(808) 586-2545

DBEDT Affiliated Agencies

Hawaii Strategic Development Corporation: invests public funds in return for equity or ownership positions in private businesses to stimulate capital formation. High-technology and innovation businesses are given priority.
(808) 587-3829

High Technology Development Corporation (HTDC): promotes the growth of commercial high-technology industry in Hawaii. Emphasis is on electronic design and assembly, software development, telecommunications, bio- technology, space exploration, and astronomy. HTDC also manages the Hawaii Software Service Center. The Center assists Hawaii's software developers promote their products.

HTDC also oversees the Manoa Innovation Center, an advanced-tech business incubator, and the Maui Research and Technology Center.
(808) 539-3604

Manoa Innovation Center (MIC): 46,000 square feet (4,410 m²) of space for high-tech businesses, including those coming out of their initial phases. Business support includes management, financial and business consulting, business plan assistance, seminars and workshops and access to University laboratories and equipment.
(808) 539-3600

Maui Research and Technology Center: a business incubation center (8,000 square feet/720 m²) with office and lab space, support services, office equipment. It is also a business phase-in facility (14,000 square feet/1,260 m²) with larger office and lab areas, access to advanced communications technologies and longer leases; a business support center (4,000 square feet/360 m²); a resource for all tenants and a "business champion" for individual consultation. The University Support Center (4000 square feet/360 m²) which supports University of Hawaii faculty and research activities, includes a telecommunications center (8,000 square feet/720 m²) with video conferencing, interactive instruction, broad-band media communications and a central computing facility.
(808) 875-2340

Hawaii Small Business Innovation Research (SBIR) Grant Program: grants of 50 percent of the total Phase I funding provided by the participating federal agencies in the SBIR program. The maximum grant is $25,000 and companies must be incorporated and operate in Hawaii. Loans are administered by High Technology Development Corporation.
(808) 539-3604

Mililani Technology Park (MTP): located in central Oahu, accommodates a variety of high-technology and support-service businesses. Tenants access the University of Hawaii Data Network, and are connected to the U.S. Federal Internet, NSF Net and other networks tied into the United States, Japan, and Europe. The MTP has received Foreign Trade subzone status, securing the economic advantages of an FTZ.
(808) 539-3604