Hawaii Capital Gains Tax Rate (2026)
Hawaii capital gains tax overview
Hawaii has the second-highest top marginal rate at 11%, with 12 brackets. No preferential capital gains rate.
Federal + Hawaii combined rates
Your total capital gains tax bill includes both layers — federal and state. Here is what a Hawaii investor pays in 2026 for long-term gains:
| Federal Long-Term Rate | Hawaii State Rate | Combined Rate | Plus NIIT (if applicable) |
|---|---|---|---|
| 0% | 11% | 11% | 14.8% |
| 15% | 11% | 26% | 29.8% |
| 20% | 11% | 31% | 34.8% |
The NIIT (Net Investment Income Tax) adds an extra 3.8% for taxpayers whose MAGI exceeds $200,000 (single) or $250,000 (married filing jointly). It is a federal tax only — Hawaii does not have an equivalent.
How Hawaii compares to other states
Hawaii's top rate of 11% places it among the highest-taxed states for capital gains. For comparison:
- Zero-tax states (FL, TX, NV, etc.): 0% — total with 15% federal = 15%
- Low-rate states (AZ, IN, PA): 2.5–3.1% — total with 15% federal = 17.5–18.1%
- Hawaii: 11% — total with 15% federal = 26.0%
- High-rate states (NY, NJ): 10.75–10.9% — total with 15% federal = ~26%
- California: 13.3% — total with 15% federal = 28.3%
Tax-reduction strategies for Hawaii residents
With a top state rate of 11%, minimizing capital gains tax is particularly important in Hawaii. Key strategies:
- Hold over 1 year for long-term federal rates (0/15/20%). Hawaii does not offer a preferential state rate, but federal savings alone are often 7–17%.
- Tax-loss harvesting: Offset your gains with losses realized in the same year. A $20,000 loss offsets $20,000 of gains dollar-for-dollar, saving up to 31% ($6,200) on that $20,000 at top rates.
- 0% bracket planning: In lower-income years (retirement, sabbatical, between jobs), realize gains at the federal 0% rate. You still owe Hawaii state tax, but eliminating the federal component is significant.
- Donate appreciated stock directly to charity or a donor-advised fund to avoid capital gains tax entirely while generating a charitable deduction for the full fair market value.
- Installment sales: If selling a business or real estate, structuring as an installment sale spreads the gain over multiple years, potentially keeping each year's gain in a lower bracket.
Detailed Hawaii capital gains tax rules
Tax history and legal basis
Hawaii taxes capital gains at a preferential rate — one of only a few states that offers lower rates for long-term gains compared to ordinary income.
Exemptions and special treatment
Hawaii taxes long-term capital gains (held over 1 year) at a flat 7.25%, which is lower than its top ordinary income rate of 11%. Short-term gains are taxed as ordinary income. Gains from the sale of a Hawaii principal residence may qualify for additional benefits.
Filing requirements
File Form N-11 (resident) or N-15 (non-resident). Hawaii has unique rules for non-residents selling Hawaii real property — HARPTA (Hawaii Real Property Tax Act) requires 7.25% withholding at closing. Filing deadline is April 20.
Recent changes and legislative updates
Hawaii's preferential 7.25% capital gains rate has been in place since 2015. The state's top ordinary income rate of 11% (on income over $200,000) makes the capital gains preference significant — a 3.75 percentage point savings for long-term gains.
Worked example: $50,000 capital gain in Hawaii
Here's exactly what a Hawaii resident would owe on a $50,000 long-term capital gain with $80,000 in other income (single filer, 2026):
| Component | Amount | Notes |
|---|---|---|
| Capital gain | $50,000 | Long-term (held over 1 year) |
| Federal tax (15%) | −$7,500 | Based on $80,000 ordinary income + gain |
| Hawaii state tax (7.25%) | −$3,625 | Applied to the full gain amount |
| Total tax owed | −$11,125 | Federal + state combined |
| You keep | $38,875 | 77.8% of your gain |
After both federal and Hawaii state tax, you keep $38,875 of your original $50,000 gain. The effective combined rate is 22.3%. This is significantly higher than the national average — consider tax-loss harvesting or timing strategies to reduce your bill.
Frequently asked questions — Hawaii
Does Hawaii tax short-term and long-term gains differently?
No — Hawaii taxes both short-term and long-term capital gains as ordinary income at the same rates as wages. There is no state-level preferential rate for patience. The federal system, however, taxes long-term gains at 0/15/20% vs. up to 37% for short-term — a significant difference that applies regardless of state.
Do I need to file a Hawaii tax return if I only have capital gains?
If you have capital gains income and meet Hawaii's filing threshold, you are required to file a Hawaii state income tax return. The threshold is typically similar to the standard deduction amount — check the HI Department of Revenue for the current year's filing requirements.
What if I moved to Hawaii mid-year?
If you moved to Hawaii during the year, you are a part-year resident. Hawaii generally taxes capital gains realized while you were a Hawaii resident. Gains realized before you moved may be taxable by your prior state. Keep detailed records of when each sale occurred relative to your move date.