Hawaii taxes some retirement income and exempts a lot of it. Social Security, government pensions, military retirement, and qualified Roth withdrawals are not taxed by the state. Traditional IRA withdrawals and the portion of 401(k) money you contributed yourself are taxed as ordinary income, at rates running from 1.40% to 11.00%. So the answer to whether Hawaii taxes retirement income depends almost entirely on where the money came from.
What Hawaii Does Not Tax
Social Security
Hawaii excludes Social Security benefits from gross income under HRS § 235-7, no matter how high your other income is and no matter what the federal government does with your benefits.1Justia. Hawaii Revised Statutes 235-7 – Other Provisions as to Gross Income, Adjusted Gross Income, and Taxable Income Railroad Retirement Act benefits get the same treatment.
Government Pensions
Distributions from federal, state, and county retirement systems are exempt. HRS § 88-91 shields benefits from Hawaii’s Employees’ Retirement System from any state tax.2Justia. Hawaii Revised Statutes 88-91 – Exemption From Taxation and Execution The exemption reaches government pensions earned in other states, too. Hawaii’s administrative rules treat the employer and employee as Hawaii residents throughout the employment period for purposes of the exclusion, so a retiree who spent a career with, say, New York’s state government and later moved to Maui still qualifies on the employer-funded portion.3Legal Information Institute (LII) / Cornell Law School. Hawaii Administrative Rules 18-235-7-03 – Exclusion of Pension Income
Military Retirement and VA Benefits
Military retirement pay is fully exempt under HRS § 235-7(a)(2).1Justia. Hawaii Revised Statutes 235-7 – Other Provisions as to Gross Income, Adjusted Gross Income, and Taxable Income VA disability compensation is also not taxed at the state level, matching federal treatment, and Survivor Benefit Plan payments tied to military service receive the same protection.4VA News. Unlocking Veteran Tax Exemptions Across States and U.S. Territories A retired service member living on a mix of military pension and VA disability can end up with no Hawaii income tax at all.
Roth Accounts
Qualified distributions from Roth IRAs and Roth 401(k) accounts are not subject to Hawaii income tax. Contributions were made with after-tax dollars, and Hawaii generally conforms to the federal treatment of these accounts, so withdrawals that meet the federal requirements (usually the account has been open at least five years and you are 59½ or older) come out state-tax-free.
What Hawaii Does Tax
401(k) Elective Deferrals
The pension exclusion under HRS § 235-7(a)(3) does not cover the money you elected to defer into a 401(k). Hawaii treats those deferrals as voluntary individual investment decisions, not employer-funded pension contributions.5State of Hawaii Department of Taxation. Tax Information Release No. 96-5 – Taxation of Pensions Under the Hawaii Net Income Tax Law Every dollar you put in yourself, plus the earnings on it, is taxable when you withdraw.
The employer match is the exception. That portion is treated as employer-funded, and Hawaii applies an exclusion ratio to separate the match from your elective deferrals so the match piece can come out state-tax-free.5State of Hawaii Department of Taxation. Tax Information Release No. 96-5 – Taxation of Pensions Under the Hawaii Net Income Tax Law Your plan administrator can give you the total employer match over the life of the account; divide that by total contributions to get your exclusion percentage.
Traditional IRAs
Traditional IRA withdrawals are taxable in Hawaii to the extent the contributions were deducted federally. If you made nondeductible contributions along the way, that basis is not taxed again on withdrawal. Only the previously deducted contributions and the earnings are taxable.5State of Hawaii Department of Taxation. Tax Information Release No. 96-5 – Taxation of Pensions Under the Hawaii Net Income Tax Law Hold on to your Form 8606 records from the years you made nondeductible contributions; without them, proving basis to the state is hard.
Private Pensions With Employee Contributions
Private pensions sit on a split. If the plan was funded entirely by your employer, the full distribution is excluded under HRS § 235-7(a)(3).6State of Hawaii Department of Taxation. Tax Information Release No. 90-4 – Taxability of Benefit Payments From Pension Plans If you contributed to it during your working years, only the employer-funded portion and its earnings qualify for the exclusion; the rest is taxable. Hawaii uses an exclusion ratio to make the split.3Legal Information Institute (LII) / Cornell Law School. Hawaii Administrative Rules 18-235-7-03 – Exclusion of Pension Income Pull your plan documents before filing.
Rates on the Taxable Portion
Hawaii runs 12 brackets. Rates start at 1.40% and top out at 11.00%, which for single filers kicks in at $325,000 of taxable income and for joint filers at $650,000.7Department of Taxation. Tax Rate Schedules for Taxable Years Beginning After December 31, 2024 Most retirees land in the middle brackets. The single-filer rates that cover typical retirement income are:
- Up to $9,600: 1.40%
- $9,601 to $14,400: 3.20%
- $14,401 to $19,200: 5.50%
- $19,201 to $24,000: 6.40%
- $24,001 to $36,000: 6.80%
- $36,001 to $48,000: 7.20%
- $48,001 to $125,000: 7.60%
Joint-filer brackets are roughly double these figures.
Exemptions and Credits That Reduce the Bill
Hawaii grants each taxpayer a personal exemption of $1,144, and residents age 65 or older claim an additional $1,144.8Department of Taxation. FAQs A couple where both spouses are 65 or older claims four exemptions totaling $4,576. HRS § 235-54 authorizes the age-based exemption.9Justia. Hawaii Revised Statutes 235-54 The standard deduction is $4,400 for single filers and $8,800 for married couples filing jointly.10Department of Taxation. Tax Year Information – 2025 Hawaii does not add a separate standard deduction bump for age; the extra personal exemption is how the state handles that.
The refundable food and excise tax credit offsets the state’s 4% general excise tax, which functions like a sales tax touching groceries and most daily expenses.11Department of Taxation. General Excise Tax (GET) Information For 2025, a single filer earning under $15,000 gets $220 per qualified exemption on Form N-311, with the credit scaling down as income rises and phasing out at $40,000 for single filers or $60,000 for joint filers.12Hawaii.gov. Form N-311 – Refundable Food/Excise Tax Credit The credit is refundable, so you receive it even if you owe no tax.
Retirees who rent may qualify for the low-income household renter credit under HRS § 235-55.7. You need adjusted gross income below $30,000 and more than $1,000 in rent paid during the year. The base credit is $50 per qualified exemption, doubled to $100 for residents age 65 and older.13Justia. Hawaii Revised Statutes 235-55.7 – Income Tax Credit for Low-Income Household Renters It is also refundable.
One Thing Beyond Income Tax
Hawaii imposes its own estate tax, separate from the federal one. For deaths in 2026, estates above $5.49 million pay Hawaii estate tax at rates from 10% to 20% on the amount over the threshold. There is no separate state inheritance tax, so beneficiaries do not owe tax simply for receiving assets. If your retirement plan involves substantial wealth, the state threshold sits well below the federal exemption and is worth building into your planning.