Hawaii Payroll Tax Guide (2026)
Hawaii’s unemployment wage base climbed to $64,500 for 2026 while the state stayed on rate Schedule C, the minimum wage stepped up to $16 on 1 January, and temporary disability deductions are capped at $7.50 a week per employee.[1]
Hawaii payroll at a glance
Hawaii has four state payroll layers: employer paid unemployment insurance and an employment and training assessment, employee income tax withholding, employee funded temporary disability insurance, and employer funded prepaid health care.[1]
What changed for Hawaii payroll in 2026
Six items moved for Hawaii employers this year. Anything below is what have changed since the 2025 tables, so a rate card carried over from last year will be wrong in at least one place.
2026 Hawaii payroll tax calculator
Enter one employee’s annual gross wages to see what the employer owes, what comes out of the paycheque, and the true cost of employment.
Employer pays
Withheld from the employee
State income tax withholding is not included above: it depends on the employee’s Form HW-4 and filing status, so it cannot be estimated from gross pay alone.
Payroll tax rates & the nexus question
Hawaii runs 6 state payroll taxes. The table below is the whole state layer for 2026.[1]
The state payroll taxes
| Tax | Paid by | 2026 rate | Wage base |
|---|---|---|---|
| UI | Employer | 0.00%–5.60%; 2.40% new | $64,500 |
| Employment and Training Assessment | Employer | 0.01% | $64,500 |
| Temporary Disability Insurance employer share | Employer | Varies | All wages |
| Prepaid Health Care Act contribution | Employer | Varies | All wages |
| Temporary Disability Insurance | Employee | 0.50% | $1,500 |
| Income tax withholding | Employee | 1.40%–11.00% | No limit |
Contribution rate Schedule C applies for 2026, the same schedule as 2025. New and reactivated employers take the rate assigned to a zero reserve ratio, which is 2.40%. The department forecasts moving to a lower schedule in 2027.[1]
Who has to register
Having employees who perform work in Hawaii generally creates coverage. Register by filing Form UC-1 through the employer web application at uiclaims.hawaii.gov before the first quarterly report falls due.[1] Income tax withholding is administered separately by Hawaii Department of Taxation, so most employers end up with two state account numbers, not one.
Multistate and remote employees
When an employee works in more than one state, the four-part test below decides which state the wages are reported to. The tests run in order: you stop at the first one that gives an answer.
- 1. Localisation of service→
- 2. Base of operations→
- 3. Place of direction & control→
- 4. Employee’s residence
One remote employee is usually enough. A single person working from home in Hawaii generally creates an obligation to register and report wages here, even if the business has no office, property or customers in the state.
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Ask a Payroll SpecialistRegistration & return filing
Registration is online and free. The unemployment account and, where one exists, the withholding account are opened separately and carry different numbers.[1]
How to register
- Cross the wage threshold→
- Hawaii Unemployment Insurance employer web application at uiclaims.hawaii.gov→
- Receive account number→
- File & deposit online
Having employees who perform work in Hawaii generally creates coverage. Register by filing Form UC-1 through the employer web application at uiclaims.hawaii.gov before the first quarterly report falls due.[1]
Deposit schedule
Set by annual withholding liability. Over $40,000 is semi-weekly, 5,000 to $40,000 is monthly and due the 15th of the following month, and under $5,000 is quarterly.[7]
Returns, reports & due dates
| Form | What it is | Due |
|---|---|---|
| Form UC-B6 Quarterly Wage, Contribution, and Employment and Training Assessment Report | Quarterly unemployment return | the last day of the month after each calendar quarter ends |
| Form HW-14 is the periodic withholding return that every withholding taxpayer files…. | Income tax withholding returns | Set by annual withholding liability. Over $40,000 is semi-weekly, |
| Annual reconciliation | Year-end withholding reconciliation | January 31 |
| Form 941 | Federal quarterly return | Last day of the month after quarter end |
| Form 940 | Federal unemployment, annual | January 31 |
| New hire report | Report of newly hired employees | Within 20 days of start date |
Quarterly unemployment returns are due the last day of the month after each calendar quarter ends. A return filed one day late is delinquent, and in most states the penalty attaches to the return, not the payment.[1]
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Subject wages vs. exempt payments
Not every dollar an employee receives is a taxable wage. The split below governs what goes into the unemployment wage base and what is reported at year end.[1]
Subject wages
- Salaries, hourly pay, overtime and piece rates
- Commissions, bonuses and incentive pay
- Most cash tips reported by the employee
- Vacation, holiday and paid sick leave when taken as wages
- Severance and payments in lieu of notice
- The cash value of meals and lodging provided as compensation
- Employer contributions to a non-qualified deferred compensation plan
- Wages subject to the employee-paid contributions listed above
Not subject
- Reimbursements of genuine business expenses under an accountable plan
- Employer contributions to a qualified retirement plan
- Employer-paid premiums for accident and health insurance
- Most third-party sick pay after the sixth calendar month
- Payments to a genuine independent contractor
- Workers compensation benefits
The wage base is per employer, per year, not per job. If you hire someone in August who already earned $64,500 elsewhere, your unemployment clock still starts at zero. The one exception is a successor employer taking over an existing payroll, who inherits the wages already paid.
Glossary of key terms
- Taxable wage base
- The slice of each employee’s annual pay that unemployment tax is calculated on. In Hawaii that is $64,500 for 2026. Earnings above it are still wages, they are simply no longer taxed for unemployment.
- Temporary Disability Insurance
- An employee-funded contribution withheld from pay at 0.50%. It is the employee’s money, so it is withheld rather than paid by the employer, but the employer is responsible for remitting it.
- Experience rating
- The method Hawaii Department of Labor and Industrial Relations uses to set each employer’s own unemployment rate from its history of claims. Employers with fewer charged claims move down the schedule; those with more move up.
- New employer rate
- The rate assigned before an employer has enough history to be experience rated. It normally applies for two to three years, then the account moves onto the experience schedule.
- Form HW-4
- The state withholding certificate. It sets how much income tax comes out of each cheque and is filed with the employer, not with Hawaii Department of Taxation.
- Reserve account
- The running balance of contributions an employer has paid in, less the benefits charged against it. The ratio of that balance to taxable payroll is what drives the assigned rate.
- Successor employer
- A business that acquires another’s payroll may inherit both its experience rate and the wages already paid toward the wage base for the year. Getting this wrong is a common acquisition error.
- Localisation of service
- The first of four tests deciding which state a multistate employee’s wages are reported to. If substantially all the work is in one state, that state wins and the remaining tests are never reached.
- FUTA credit reduction
- A reduction in the 5.4% federal unemployment credit applied to states that have carried an outstanding federal loan for two or more consecutive Januaries. It raises the effective FUTA rate and is settled each November.
- Supplemental wages
- Bonuses, commissions, awards and similar payments made outside the regular payroll cycle. Many states set a separate flat withholding rate for them.
Hawaii payroll tax, layer by layer
Federal tax applies everywhere and is the larger number. The state layer is what changes when you cross a border.
Layer 1: Federal
| Tax | Rate | 2026 base |
|---|---|---|
| Social Security | 6.2% each side | $184,500 |
| Medicare | 1.45% each side | No limit |
| Additional Medicare | 0.9% employee only | Over $200,000 |
| FUTA, standard | 0.6% net | $7,000 |
| Federal income tax | Per Form W-4 | No limit |
Hawaii has no FUTA credit reduction for 2026, so the standard 0.6% net rate applies, $42 per employee. The final list is not published until 10 November 2026.[13]
Layer 2: State
| Tax | Rate | 2026 base |
|---|---|---|
| UI, new employer | 2.40% | $64,500 |
| UI, experienced | 0.00%–5.60% | $64,500 |
| Employment and Training Assessment | 0.01% | $64,500 |
| Temporary Disability Insurance employer share | Varies | All wages |
| Prepaid Health Care Act contribution | Varies | All wages |
| Temporary Disability Insurance, employee | 0.50% | $1,500 |
| Income tax, standard | 1.40%–11.00% | No limit |
Layer 3, county & city: no payroll tax, but a wage floor
No county or city in Hawaii levies its own payroll or income tax withheld by employers. The local layer shows up as minimum wage, not as tax.[6]
The state minimum wage is $16.00 an hour, effective 2026-01-01. The tipped cash wage is $14.75. No local ordinance sets a higher floor. No Hawaii county sets its own minimum wage. The tip credit may only be taken where the employee’s combined wages and tips exceed the applicable minimum wage by at least $7 an hour. The cash wage and tip credit figures come from the US Department of Labor tipped wage table dated 1 July 2026. 18.00 on 2028-01-01[6]
Overtime exemption is a separate test. A salaried employee is exempt from overtime only above $35,568 a year ($684.00 a week) federal FLSA, and only if the duties test is also met. Paying a salary is not by itself enough.[11]
Hawaii payroll FAQs
You may withhold up to half the TDI premium, but never more than 0.5% of the employee’s weekly wages and never more than $7.50 in any week. The cap comes from the 2026 maximum weekly wage base of $1,500.21. Any premium above the employee share is the employer’s cost.
New and reactivated employers are assigned 2.40% for 2026 under contribution rate Schedule C, applied to the first $64,500 of each employee’s wages. That is up to $1,548 per worker. Experience rated employers range from zero to 5.60% on the same wage base.
Any employee who works at least 20 hours a week and earns at least 86.67 times the minimum hourly wage in a month, which is $1,386.72 at the 2026 minimum wage of $16. Coverage starts after four consecutive weeks of employment. The employee may be charged the lesser of half the premium or 1.5% of monthly gross earnings.
You owe it if your unemployment contribution rate is above zero and below the maximum for the schedule in force. The 2026 rate is 0.01% on the same 64,500 dollar wage base, about $6.45 per employee. It is not credited to your reserve account and cannot offset your FUTA liability.
Every withholding employer files Form HW-14 as the periodic return. Payment frequency follows annual liability: over $40,000 is semi-weekly, 5,000 to $40,000 is monthly and due the 15th, and under $5,000 is quarterly. Employers over $40,000 a year, or filing 10 or more W-2 statements, must file electronically.
Only when the tip credit conditions are met. Hawaii allows a 1.25 dollar credit, giving a 14.75 dollar cash wage, and only where the employee’s combined wages and tips exceed the minimum wage by at least $7 an hour. If tips fall short in any week you must make up the difference.
$64,500 per employee per calendar year. Once an employee reaches that in wages from you, no further unemployment tax is due on that employee for the rest of the year. The count restarts on 1 January and does not carry over from a previous employer.
$16.00 an hour. No local ordinance sets a higher rate. The tipped cash wage is $14.75.
the last day of the month after each calendar quarter ends. A return is delinquent the day after the deadline even if the tax itself was paid on time, so file the return whether or not you can pay.
Sources & methodology
- Hawaii Department of Labor and Industrial Relations, Unemployment Insurance Division – Tax Rate Schedule and Weekly Benefit Amount
- Hawaii Department of Labor and Industrial Relations – Annual Evaluation of the Hawaii Unemployment Compensation Trust Fund, 2025
- Hawaii Department of Labor and Industrial Relations, Disability Compensation Division – 2026 Maximum Weekly Wage Base, Maximum Weekly Benefit Amount and Maximum Weekly Deduction (TDI)
- Hawaii Department of Labor and Industrial Relations, Disability Compensation Division – About Temporary Disability Insurance
- Hawaii Department of Labor and Industrial Relations, Disability Compensation Division – About the Prepaid Health Care Act
- Hawaii Department of Labor and Industrial Relations, Wage Standards Division – Minimum Wage and Overtime
- Hawaii Department of Taxation – Withholding Tax, For Employers
- Hawaii Department of Taxation – Booklet A, Employer’s Tax Guide (Rev. 2025), withholding tables effective 1 January 2026
- Hawaii Department of Labor and Industrial Relations – Employer Frequently Asked Questions, Unemployment Insurance
- US Department of Labor, Wage and Hour Division – Minimum Wages for Tipped Employees
- US Department of Labor, Wage and Hour Division – Fact Sheet 17A, Exemption for Executive, Administrative, Professional, Computer and Outside Sales Employees
- US Department of Labor, Employment and Training Administration – Significant Provisions of State Unemployment Insurance Laws, January 2026
- Internal Revenue Service – FUTA Credit Reduction
- Tax Foundation – State Individual Income Tax Rates and Brackets, 2026
Need help with Hawaii payroll compliance?
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Running payroll in more than one state?
Hawaii alone means its own registration, its own deposit calendar and its own year-end reconciliation. Add a second state and the work compounds rather than doubles. CrownGlobe runs multistate payroll end to end: registration, deposits, quarterly returns and year-end.
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