Self-Employment Tax in Hawaii (2026)
Federal Self-Employment Tax (Applies to All States Including HI)
The federal self-employment tax is 15.3% on the first $168,600 of net SE income (2024), composed of 12.4% Social Security and 2.9% Medicare. Above $168,600, the 2.9% Medicare portion continues. An additional 0.9% Medicare surtax applies to SE income over $200,000 (single) or $250,000 (married joint).
Self-employed individuals can deduct half of their SE tax (7.65%) from gross income before calculating federal and state income tax.
Hawaii State Income Tax on Self-Employment Income
Self-employed Hawaii residents face one of the highest state income tax burdens in the nation. Hawaii also has a General Excise Tax (GET) of 4% on gross business receipts — unlike a sales tax, it applies to every transaction layer.
In Hawaii, net self-employment income is taxed as ordinary income at up to 11.0% (graduated rate system).
Quarterly Estimated Tax Payments for Hawaii Self-Employed
Self-employed Hawaii residents typically must make quarterly estimated tax payments to both the IRS (due Apr 15, Jun 15, Sep 15, Jan 15) and the Hawaii Department of Revenue. Underpayment can trigger penalties.
Deductions Available to Hawaii Self-Employed
- Half of federal SE tax (7.65%) — deductible above-the-line on federal return
- Home office deduction (if qualifying dedicated workspace)
- Health insurance premiums (100% deductible for self-employed if not eligible for employer plan)
- SEP-IRA or Solo 401(k) contributions — up to 25% of net SE income
- Business expenses: equipment, software, vehicle mileage (67 cents/mile in 2024), professional fees
Frequently Asked Questions
What taxes do self-employed people pay in Hawaii?
Self-employed Hawaii residents pay: (1) federal self-employment tax of 15.3% on net SE income up to $168,600; (2) federal income tax on net earnings; and (3) Hawaii state income tax at up to 11.0%. Self-employed Hawaii residents face one of the highest state income tax burdens in the nation. Hawaii also has a General Excise Tax (GET) of 4% on gross business receipts — unlike a sales tax, it applies to every transaction layer.
What is the self-employment tax rate in 2026?
The federal SE tax rate is 15.3% on the first $168,600 of net self-employment income (2024). Above that, only the 2.9% Medicare portion continues. An additional 0.9% Medicare surtax applies above $200,000 (single). This applies to all self-employed individuals regardless of state, including Hawaii.
Can I deduct the self-employment tax in Hawaii?
Yes. Half of your federal SE tax (7.65%) is deductible as an above-the-line deduction on your federal return, reducing your federal and state taxable income. In Hawaii, this deduction also reduces your state taxable income, saving you up to 11.0% of the deducted amount.
Do I need to make quarterly estimated tax payments in Hawaii?
Yes, if you expect to owe more than $1,000 in federal taxes for the year. Hawaii also requires estimated payments if state tax owed exceeds $500. Payment due dates are typically April 15, June 15, September 15, and January 15.