Hawaii Taxes 101: Understanding GET (General Excise Tax) in Hawaii

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Hawaii Taxes 101: Understanding GET (General Excise Tax) in Hawaii

 Many people moving to Hawaiʻi or starting a business here assume that Hawaiʻi’s tax system works the same way as most other states.

One of the first surprises they encounter is that Hawaiʻi does not use a traditional sales tax system.

Instead, Hawaiʻi uses a General Excise Tax, commonly known as GET.

Understanding this difference is important because misunderstandings about GET can affect pricing, cash flow, and tax compliance for businesses of all sizes.

What Is GET?

GET stands for General Excise Tax.

Unlike sales tax, which is generally charged to customers and collected on behalf of the government, GET is imposed on the business itself.

In simple terms, GET is a tax on gross business income.

This means the tax is based on total revenue, not profit.

Even if a business has high expenses or earns only a small profit, GET may still apply because it is calculated from gross receipts.

Why Does This Confuse So Many People?

Most states use a sales tax system.

Under a sales tax model:

• The customer pays the tax.
• The business collects the tax.
• The business remits the tax to the state.

Hawaiʻi’s GET system works differently.

The business is legally responsible for paying GET, although businesses may choose to visibly pass the cost on to customers.

Because of this difference, many new business owners mistakenly assume they can treat GET exactly like sales tax.

That misunderstanding can create pricing and budgeting problems.

Common GET Mistakes

1. Not Building GET Into Pricing

Many new businesses set prices based only on costs and desired profit margins.

If GET is not considered during pricing, business owners may discover later that a portion of their revenue must be used to pay taxes.

2. Confusing GET and TAT

Another common misunderstanding involves GET and TAT.

TAT refers to the Transient Accommodations Tax, which may apply to certain lodging and short-term rental activities.

GET and TAT are separate taxes and may both apply depending on the type of business activity.

3. Missing Filing Deadlines

Businesses are responsible for filing and paying GET according to their assigned filing schedule.

Missing deadlines can result in penalties, interest, and unnecessary compliance issues.

GET Readiness Checklist

Before operating a business in Hawaiʻi, consider the following questions:

✓ Do I understand which GET rate applies to my business activities?

✓ Have I included GET in my pricing strategy?

✓ Do I know my filing requirements and deadlines?

✓ Am I maintaining accurate records of business income?

✓ Do I understand whether any additional taxes may apply to my business?

Frequently Asked Questions

Do I need a GET license if I only sell occasionally?

In many situations, business activities conducted in Hawaiʻi may still require registration and tax compliance. It is important to review your specific situation with the Hawaiʻi Department of Taxation or a qualified tax professional.

Is GET the same as income tax?

No.

GET is based on business revenue, while income tax is based on taxable income after applicable deductions and calculations.

Does every business pay the same GET rate?

Not necessarily.

Rates may vary depending on location and business activity.

Always verify current requirements with official state resources.