Hawaii

Hawaii's per capita tax burden is one of the highest in the US. In 2003, its combined state and local taxes totaled 10.7% of income, the 6th highest in the country. Hawaii has, however, been in the process of reducing the rates on its 8-bracket personal income tax schedule, and in 2002 it reduced all 8 rates. The bottom rate was lowered from 1.5% to 1.4%, and the top rate from 8.5% to 8.25%. Personal and child exemptions are $1040 per person. The lowest rate applies up to $2000 of taxable income, and the highest to taxable income above $40,000. Capital gains are taxed at 4%, down from a maximum of 7.25%. The corporate income tax is 4.4% on taxable income up to $25,000, 5.4% on taxable income over $25,000 but not over $100,000 less $250, and 6.4% on taxable income over $100,000 less $1,250. The state general sales tax rate is 4% with exemptions for prescription drugs. There is a broad-based general use tax of 0.5% on wholesaling and manufacturing activities. There are no local sales taxes, whereas all property taxes are local taxes. Most of Hawaii's taxes (79.4% in 2000) are collected at the state level. There are also selective sales taxes (excises). In 2002 Hawaii raised its tax on cigarettes from $1 to $1.20 a pack. There are other excise on motor fuels, liquor, insurance premiums, public utilities and other selected goods. The state estate tax is tied to the federal exemption for state death taxes and is therefore set to be phased out in tandem with the federal estate tax credit by 2007 absent any action by Hawaii's government to preserve the state assessment. Revenue losses from the phasing out of Hawaii's estate tax are estimated at -$9 million in 2002/03, -$14.1 million in 2003/04 and -$24.2 million in 2007. Death and gift taxes accounted for 0.48% of state collections in 2002. Other state taxes include various license fees and stamp taxes.

Total state tax collection in Hawaii came to $3.4 billion in 2002, 47% from the general sales tax, 32.5% from personal income taxes, 14.7% from excises, 3.2% from license fees, and 1.54% from the corporate income tax.

The following table from the US Census Bureau provides a summary of taxes collected by the state in 2002.