How does Hawaii tax capital gains?

Hawaii generally taxes capital gains as ordinary income under its graduated brackets, which top out at 11%. However, Hawaii offers an alternative capital gains tax of 7.25% on net long-term capital gains. Taxpayers pay whichever method produces the lower Hawaii tax on the gain.

What are the 2024 federal long-term capital gains rates?

Federal long-term capital gains are taxed at 0%, 15%, or 20% depending on your taxable income. For 2024 single filers, the 0% rate applies up to about $47,025, 15% up to about $518,900, and 20% above that. Short-term gains are taxed at ordinary federal income tax rates.

What is the difference between short-term and long-term gains?

A gain is long-term if you held the asset more than one year before selling, and short-term if you held it one year or less. Long-term gains receive preferential federal rates and Hawaii's 7.25% alternative tax, while short-term gains are taxed as ordinary income at both levels.

Does Hawaii's 7.25% rate apply to short-term gains?

No. The 7.25% Hawaii alternative capital gains tax applies only to net long-term capital gains. Short-term capital gains are always taxed as ordinary income under Hawaii's regular graduated brackets, the same as wages and other income.

Does this include the federal Net Investment Income Tax?

No. This calculator estimates the base federal capital gains tax and the Hawaii tax only. The 3.8% federal Net Investment Income Tax can apply to high earners and would add to your federal liability. Consult a tax professional for a complete picture.

Hawaii Capital Gains Tax Calculator

Email me this result

Get this tool's output sent to your inbox, plus one useful tool a week. No spam, unsubscribe any time.

Selling an investment at a profit in Hawaii triggers both federal and state capital gains tax. This calculator estimates each, applying the federal 0/15/20 percent long-term schedule and Hawaii’s choice between ordinary brackets and its 7.25 percent alternative capital gains tax.

How it works

The holding period sets the rules. Short-term gains (held one year or less) are taxed as ordinary income at both the federal and Hawaii level. Long-term gains (held more than one year) get preferential treatment:

Federal LTCG = gain × {0%, 15%, or 20%}   (based on taxable income)
Hawaii LTCG  = min(ordinary-bracket tax on gain, gain × 7.25%)

Hawaii’s alternative tax caps the state rate on net long-term gains at 7.25 percent, well below the 11 percent top ordinary rate, so most investors with long-term gains pay the 7.25 percent figure.

Example

A single filer with 100,000 dollars of other taxable income and a 50,000 dollar long-term gain pays 15 percent federal (7,500 dollars) plus the lower of Hawaii ordinary tax or 7.25 percent (3,625 dollars) — roughly 11,125 dollars combined on the gain.

Notes

This tool models the base federal capital gains tax and Hawaii tax only. It does not include the 3.8 percent federal Net Investment Income Tax or state credits. The federal long-term bracket is chosen from your total taxable income including the gain. Verify your situation at irs.gov and tax.hawaii.gov.