Hawaii Franchise Tax & Business Registration

This article discusses the important aspects of Hawaii’s franchise tax and business registration requirements.

 

 

Understanding State Tax Systems: Federal, State, and Local Tax and Transfer Distributions

Understanding State Tax Systems is vital for businesses operating in Hawaii. The state collects taxes at the federal, state, and local levels, with different tax and transfer distributions for each. Hawaii has a Franchise Tax on businesses that is collected annually. The tax rate is based on the company’s capital stock and surplus. Hawaii has a state corporate income tax, a state income tax, and a general excise tax. The state’s business tax climate ranks 30th in the United States, with high corporate tax rates and income taxes. For more information on Hawaii’s Franchise Tax & Business Registration, visit the Department of Taxation’s website.

2023 Hawaii State Individual Income Tax Rates and Brackets

2023 Hawaii State Individual Income Tax Rates and Brackets
Taxable Income Range	Tax Rate
Up to $4,800	1.4%
$4,801 – $9,600	$67.20 plus 3.2% of the amount over $4,800
$9,601 – $14,400	$247.20 plus 5.5% of the amount over $9,600
$14,401 – $19,200	$547.20 plus 6.4% of the amount over $14,400
$19,201 – $24,000	$887.20 plus 6.8% of the amount over $19,200
$24,001 – $36,000	$1,247.20 plus 7.2% of the amount over $24,000
$36,001 – $48,000	$1,943.20 plus 7.6% of the amount over $36,000
$48,001 – $150,000	$2,639.20 plus 7.9% of the amount over $48,000
Over $150,000	$10,367.20 plus 11% of the amount over $150,000

 

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Hawaii State Corporate Income Tax Rates and Brackets for 2023

Hawaii State Corporate Income Tax Rates and Brackets for 2023
Income Bracket	Tax Rate
$0 – $25,000	4.4%
$25,001 – $100,000	$1,100 + 5.4% of the excess over $25,000
$100,001 – $500,000	$4,540 + 6.4% of the excess over $100,000
$500,001 – $1,000,000	$30,740 + 7.4% of the excess over $500,000
Over $1,000,000	$71,940 + 8.25% of the excess over $1,000,000

Hawaii LLCs: Taxed as S-Corp or C-Corp?

When registering your business in Hawaii, you’ll need to choose between being taxed as an S-Corp or a C-Corp. S-Corps are taxed as pass-through entities, while C-Corps face double taxation. Which option is best for your LLC depends on your unique situation. If you’re not sure which to choose, consult a tax practitioner or use resources like CCH AnswerConnect or the Tax Foundation’s State Business Tax Climate Index to help you make an informed decision. Whichever option you choose, make sure you fill out the appropriate forms, such as the Franchise Tax Return and Tax Installment Payment Voucher, and keep up with any changes in Hawaii’s taxation laws.

How to Create an S Corporation in Hawaii

To create an S Corporation in Hawaii, you need to file Form F-1 with the Department of Commerce and Consumer Affairs (DCCA). You’ll also need to obtain a Certificate of Good Standing from the Hawaii Department of Taxation. Make sure to choose a unique name for your corporation that complies with Hawaii’s naming requirements. You’ll also need to appoint a registered agent and obtain an Employer Identification Number (EIN) from the IRS. Once you’ve completed these steps, you’ll need to file your S Corporation election with the IRS. Keep in mind that S Corporations are subject to Hawaii’s corporate income tax and an annual franchise tax based on your company’s capital stock, so be sure to stay compliant with all tax requirements.

Important Due Dates and Forms for Hawaii Tax Returns

Due Date	Form Name	Description
January 1st	Annual Report	All businesses registered in Hawaii must file an annual report by this date.
April 20th	Form N-30	Hawaii Franchise Tax return for corporations.
April 20th	Form N-35	Hawaii Franchise Tax return for partnerships, limited liability companies (LLCs), and S corporations.
April 20th	Form G-45	Hawaii General Excise/Use Tax Return.
April 20th	Form HW-6	Hawaii Withholding Tax Return.
July 20th	Form N-30	Extension deadline for Hawaii Franchise Tax return for corporations.
July 20th	Form N-35	Extension deadline for Hawaii Franchise Tax return for partnerships, LLCs, and S corporations.
July 20th	Form G-45	Extension deadline for Hawaii General Excise/Use Tax Return.
July 20th	Form HW-6	Extension deadline for Hawaii Withholding Tax Return.