State Sales Tax Rates

State Sales Tax Rates Hawaii State Sales Tax 2014

Hawaii Sales Tax 2014
Hawaii State Sales Tax for 2014 Maximum Municipal Sales Tax

4.00%

0.71%

What is the Hawaii Sales Tax?

The Hawaii state sales tax is 4%, with a maximum possible sales tax (including local and municipal sales taxes) of 4.712%.

Local governments in Hawaii are allowed to add a local sales tax of up to 0.712 percent on top of the HI state sales tax for all qualifying sales in their jurisdiction - so the actual sales tax paid on any purchase in Hawaii can be up to 4.712% depending on location.

In place of a sales tax, Hawaii has a gross receipts tax levied on businesses which is, in many ways, much stricter then a standard sales tax. Hawaii allows vendors to pass the gross receipts tax on to the consumer, similar to a sales tax, but unlike a sales tax they cannot list it as a seperate charge on the receipt. The gross receipts tax is applicable to almost every type of transaction, including goods and services, and transactions for things such as groceries, medical services, and rent are subject to the tax (while they are exempt from the sales tax completely in many other states). Finally, tax-exempt non-profits, which are exempt from sales tax in many states, are not exempt from the Hawaii gross receipts tax.

The county of Honolulu charges an additional 0.5% tax on top of the Hawaii state tax, and due to the nature of Hawaii's gross receipts tax is allowed to tax not only the cost of the item, but the cost of the tax already added to it as well. In this way, sales tax can add up to as much as 4.712% in Oahu and 4.166% in other locations.

What sales are exempt from the Hawaii Sales Tax?

Hawaii Sales and Use Tax Rates

Many states set special sales tax rates for certain types of goods like groceries or clothes, and may completely exempt certain transactions from state and local sales taxes. Hawaii, however, does not exempt any purchases from state or local sales taxes.

Hawaii does not have special sales tax rates for certain types of purchase, a common practice in many states for goods such as food and clothing.While many other states also collect a special (and often higher) sales tax on prepared and restaraunt food, Hawaii does not have a specific restaraunt sales tax.

Generally, the Hawaii sales tax is collected only from the end consumer, or the end user of the product. Customers buying products in bulk, as a business-to-business transaction, or buying with the intent to resell do not have to pay the Hawaii sales tax if they provide the seller with a Hawaii Sales Tax Exemption Certificate at the time of purchase. Most states will accept the Uniform Sales and Use Tax Certificate for this purpose, which is available from the Multistate Tax Commission here.

Internet Sales Tax, or tax on purchases made over the internet, is currently a gray area in many states' tax codes. While most states can collect sales tax on internet purchases made within the state (the vendor and consumer are both located in Hawaii), taxation of interstate internet transactions is much more complicated.

Currently New York, Rhode Island, North Carolina, Colorado, and Illinois have some form of online sales tax that also handles interstate transactions. For details on how Hawaii handles taxation of online sales, read more about online sales taxes in the United States.

Resources:

[1] Table of state sales taxes on Wikipedia
http://en.wikipedia.org/wiki/Sales_taxes_in_the_United_States#By_jurisdiction

[2] Hawaii sales tax information on Tax-Rates.org
http://www.tax-rates.org/Hawaii/sales-tax

[3] Table of state sales, use, and excise taxes by The Tax Foundation
http://www.taxfoundation.org/taxdata/show/245.html

[4] State level taxation resources on IRS.gov
http://www.irs.gov/businesses/small/article/0,,id=99021,00.html