Hawaii Corporate Income Tax: Everything You Need to Know
It is the amount of money, in percentage, that the government of Hawaii requires of corporations doing business in Hawaii as income tax.4 min read
2. Creating an S Corporation in Hawaii
3. Due Dates for Hawaii Tax Returns
4. Form N-301
5. Net Income Tax Rates of Hawaii
Updated November 11, 2020:
Hawaii corporate income tax is the amount of money, in percentage, that the government of Hawaii requires of corporations doing business in Hawaii as income tax, which depends on how much taxable revenue the corporation generates.
Hawaii Income Ranges and Tax Percentages
Corporations in Hawaii are liable to the corporate income tax of Hawaii at marginal rates, between 4.4 percent and 6.4 percent. More specifically, it is broken down as follows:
- Income as much as $25,000 is taxed at a rate of 4.4 percent.
- Income greater than $25,000 and as much as $100,000 is taxed at the rate of 5.4 percent, minus $250.
- Income greater than $100,000 is taxed at a rate of 6.4 percent, minus $1,250.
Let's say, for example, that in the most recent tax year, your corporation in Hawaii generated a taxable revenue of $200,000 and gained no net capital. In that case, your corporation will be liable to pay Hawaii a corporate income tax to the tune of $10,050. The first $25,000 when taxed at 4.4 percent will equal $1,100. The next $75,000 when taxed at 5.4 percent, minus $250, will be $3,800. The remaining $100,000 when taxed at 6.4 percent, minus $1,250, will equal $5,150.
Creating an S Corporation in Hawaii
To create an S corporation, a traditional corporation must first be formed. Then, a special form must be filed with the IRS to apply for S status. An S corporation isn't liable to federal income tax separately. Instead, income that is taxable is passed through to each shareholder. Each shareholder then pays federal taxes on their own share of the company's revenue. That simply makes S corporations pass-through organizations.
Take note that the income of an S corporation's shareholders doesn't have to be distributed for the shareholders to be expected to pay taxes on that amount. Hawaii acknowledges the S status of S corporations. Therefore, S corporations in Hawaii aren't required to return corporate income taxes to the state. Instead, individual members of an S corporation are expected to pay taxes on their own share of the corporation's income.
Due Dates for Hawaii Tax Returns
The tax returns of Hawaii are due by day 20 in the 4th month after the tax year closes. For businesses that file according to the traditional calendar year, returns are due by April 20. Businesses that can't file on that date can acquire an automatic extension of state tax. In Hawaii, an extension grants a filer six extra months to file their return, which means their new due date becomes October 20 (this is assuming the filer is going by the regular calendar year).
A corporation, REMIC, trust, or partnership must use Form N-301 to apply for an automatic extension of time to file a tax return in Hawaii. The filing can be done by traditional mail or by an online application via Hawaii's Electronic Services website, www.ehawaii.gov/efile.
If an entity desires to request a business extension, Form N-301 must be filed and submitted. This is required whether or not the entity has a due state tax balance. For the record, a tax extension doesn't provide extra time to pay the due tax balance.
In order to get a business extension, Hawaii demands 100 percent compliance with timely tax payment. So, the entity applying for the extension needs to ensure payment of all Hawaii's taxes by their original due dates, which is April 20 by default. This is to avoid extra charges as a penalty for delayed tax payments.
The applying entity can do the tax payments digitally via Hawaii's E-Service website by the above-provided link. Optionally, the entity can send a payment with Form N-301 by traditional mail.
Net Income Tax Rates of Hawaii
What are the personal net income tax rates in Hawaii? They're the following ranges and their corresponding percentages:
- From zero to 2.400 pays 1.4 percent
- From 2,400 to 4,800 pays 3.2 percent
- From 4,800 to 9,600 pays 5.5 percent
- From 9,600 to 14,400 pays 6.4 percent
- From 14,400 to 19,200 pays 6.8 percent
- From 19,200 to 24,000 pays 7.2 percent
- From 24,000 to 36,000 pays 7.6 percent
- From 36,000 to 48,000 pays 7.9 percent
- From 48,000 to 150,000 pays 8.25 percent
- From 150,000 to 175,000 pays 9 percent
- From 175,000 to 200,000 pays 10 percent
- From 200,000 and above pays 11 percent
If you need help with Hawaii corporate income tax, post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.