Hawaii Capital Gains Tax (2026)
Hawaii capital gains tax rate: Taxed at up to 7.25% (preferential rate)
Hawaii is one of the few states that taxes capital gains at a preferential rate (7.25% maximum) rather than as ordinary income. This is still a significant state-level capital gains tax.
Federal Capital Gains Rates Still Apply to Hawaii Residents
All Hawaii residents also owe federal capital gains tax. Federal long-term capital gains rates are 0% (income up to ~$47,025 single), 15% (income up to ~$518,900 single), or 20% (above). High earners may also owe the 3.8% Net Investment Income Tax (NIIT).
Short-Term vs. Long-Term Capital Gains in Hawaii
Assets held less than one year are taxed as ordinary income at federal rates (10%–37%). Assets held over one year qualify for the preferential 0%/15%/20% federal rates. Hawaii is one of the few states that taxes capital gains at a preferential rate (7.25% maximum) rather than as ordinary income. This is still a significant state-level capital gains tax.
Planning Considerations for Hawaii Investors
- Tax-loss harvesting can offset gains at both state and federal levels
- Timing asset sales to control income year and bracket placement
- Hawaii taxes capital gains at Taxed at up to 7.25% (preferential rate) — factor this into net-of-tax return calculations
- Qualified Opportunity Zone investments can defer federal and potentially state gains
Frequently Asked Questions
What is the capital gains tax rate in Hawaii?
Hawaii is one of the few states that taxes capital gains at a preferential rate (7.25% maximum) rather than as ordinary income. This is still a significant state-level capital gains tax. Federal rates (0%, 15%, 20% for long-term gains) also apply regardless of state.
Does Hawaii have a different rate for long-term vs. short-term capital gains?
Hawaii taxes capital gains at a preferential rate of up to 7.25% rather than as ordinary income (which reaches 11%). Most states do not distinguish between holding periods at the state level.
How do I reduce capital gains tax in Hawaii?
Strategies include: holding assets over one year for federal long-term rates, tax-loss harvesting to offset gains, contributing to retirement accounts (401k, IRA), investing in Qualified Opportunity Zones, and timing sales across tax years. In Hawaii, capital gains are taxed at up to Taxed at up to 7.25% (preferential rate), so these strategies reduce both federal and state tax.
Is this capital gains tax calculator free for Hawaii?
Yes. Enter your gain amount, holding period, and annual income. The calculator applies both federal rates (0%/15%/20% long-term) and Hawaii's Taxed at up to 7.25% (preferential rate) state rate to estimate your total tax owed.