Our Dash of SALT Blog provides the most recent developments and changes in state and local tax regulations. Here are the latest updates for Hawaii.

May 6, 2025

Hawaii Announced Income Tax Withholding Amendment

Authored by: Chao Zhang, MSA and Bonnie Susmano, JD, MBA

Effective for tax years beginning on and after December 31, 2024, Hawaii repealed the 8% top withholding rate and removed the requirement that the standard deduction allowance be treated as a withholding exemption. In a future determination, the Director of Taxation may set a standard deduction allowance that can be more than or fewer than one exemption when determining income tax withholding. [IL. 2025, S 1470 (Act 24).]

If you have any questions about income tax withholdings, please reach out to a member of the Withum SALT Team.

February 18, 2025

Hawaii Releases New Temporary Pass-Through Entity Tax Rules

Authored by: Bonnie Susmano, JD, MBA and Kiana McGowan, CPA, MBA

Effective January 2, 2025, the State of Hawaii has implemented new temporary rules regarding the Pass-Through Entity Level Tax (PTET). While many aspects of the rules remain unchanged, the expiration date of the regime has been extended from August 16, 2025, to July 2, 2026. These temporary rules provide general guidance on making the election, payment due dates, electronic filing requirements, calculation examples, and more.

The Hawaii Temporary PTET rules will continue to be an elective option for partnerships and S corporations with individual, trust, and estate members. The elective tax rate for PTET remains at 9%. The election must be made using Form N-362E and submitted with the originally filed return.

Please note that the due dates for estimated payments have changed from tax year 2024 to tax year 2025. For tax year 2024, the due dates were September 20 of the current year and January 20 of the following year. For tax year 2025, estimated payments must be made quarterly on April 20, June 20, and September 20 of the current year and January 20 of the following year.

For additional information on Hawaii’s PTE election, please refer to their detailed PTE website here.

If you have questions about PTE Taxes, please reach out to a member of the Withum SALT Team.

September 20, 2024

Hawaii Amends Pass-Through Entity Tax

Authored by: Bonnie Susmano, JD, MBA and Kiana McGowan, CPA, MBA

On August 15, 2024, Hawaii issued Tax Information Release (“TIR”) No. 2024-01, which provides guidance on changes to the state’s pass-through entity (“PTE”) tax under Act 50, Session Laws of Hawaii (“2024 Act 50”) and notice of proposed temporary administrative rules concerning the PTE tax and related credit.

2024 Act 50 amends the PTE tax base by taxing the sum of the distributive shares and guaranteed payments of all “qualified members.” A “qualified member” is now defined as a member of an electing PTE that is an individual, trust, or estate whose distributive shares and guaranteed payments are subject to PTE taxation for the taxable year. PTEs without qualified members are no longer eligible to elect PTE taxation.

2024 Act 50 reduced the PTE tax rate to 9% (from 11%) and allowed a PTE credit to be carried forward in subsequent years until fully utilized.

This TIR replaces and supersedes TIR 2023-03 (Amended) for taxable years beginning after December 31, 2023.

For additional information on Hawaii’s PTE election, please view the full Tax Information Release here.

If you have questions about PTE Taxes, please reach out to a member of the Withum SALT Team.