Our Dash of SALT Blog provides the most recent developments and changes in state and local tax regulations. Here are the latest updates for Hawaii.
September 20, 2024
Hawaii Amends Pass-Through Entity Tax
Authored by: Bonnie Susmano, JD, MBA and Kiana McGowan, CPA, MBA
On August 15, 2024, Hawaii issued Tax Information Release (“TIR”) No. 2024-01, which provides guidance on changes to the state’s pass-through entity (“PTE”) tax under Act 50, Session Laws of Hawaii (“2024 Act 50”) and notice of proposed temporary administrative rules concerning the PTE tax and related credit.
2024 Act 50 amends the PTE tax base by taxing the sum of the distributive shares and guaranteed payments of all “qualified members.” A “qualified member” is now defined as a member of an electing PTE that is an individual, trust, or estate whose distributive shares and guaranteed payments are subject to PTE taxation for the taxable year. PTEs without qualified members are no longer eligible to elect PTE taxation.
2024 Act 50 reduced the PTE tax rate to 9% (from 11%) and allowed a PTE credit to be carried forward in subsequent years until fully utilized.
This TIR replaces and supersedes TIR 2023-03 (Amended) for taxable years beginning after December 31, 2023.
For additional information on Hawaii’s PTE election, please view the full Tax Information Release here.
If you have questions about PTE Taxes, please reach out to a member of the Withum SALT Team.
November 10, 2023
Hawaii Issues Pass-Through Entity Tax Guidance
Authored by: Brandon Mejia and Jonathan Weinberg, JD, LLM, Principal
On October 31, 2023, the Department of Taxation amended issued guidance on the state’s Pass-Through Entity Tax, along with proposed administrative rules. The guidance provides additional information on the Pass-Through Entity Tax election, including information on the types of entities that may make the election, how to compute the PTE Tax, the applicable payment (and estimated payment) deadlines, and required schedules that must be attached to the PTE return.
For additional details on the state’s guidance on PTE, please refer to Hawaii Tax Information Release No. 2023-03.
If you have questions about PTE elections, please reach out to a member of the Withum SALT Team.
August 29, 2023
Hawaii Announces Relief for Income, Excise, Sales, Estate Taxpayers Affected by Wildfires
Authored by: Brandon Spinella and Jonathan Weinberg, JD, LLM, Principal
On August 23, 2023, the Hawaii Department of Taxation announced relief for individuals and businesses affected by the Maui wildfires. Affected taxpayers may obtain relief for sales and use, corporate income, individual income, trust income, estate, and excise taxes. The Department will consider requests by affected businesses for extensions to file and pay Hawaii taxes, penalty and interest waivers, and for relief based on mail delivery interruptions on a case-by-case basis. Taxpayers who file electronically and wish to request relief must send a message at the time of filing via Hawaii Tax Online by selecting “I have a 2023 Wildfire Relief question” and include the information requested in the Department’s online portal. Taxpayers can claim casualty loss deductions permitted by the Internal Revenue Code for state income tax purposes. Additionally, there will be an exemption from general excise tax for amounts that were received under property or casualty insurance policies for loss or damage of inventory used in a business that is in a disaster area. For more information on the Hawaii tax relief provision, please visit the Department’s Announcement.
If you have questions about the Hawaii Department of Taxation’s disaster relief provisions, please reach out to a member of the Withum SALT Team.
August 26, 2021
Hawaii – Excise Tax Treatment of Software
The Hawaii Department of Taxation provided additional guidance about the general excise tax (GET) and the treatment of software sales. The sale of canned or prewritten software is considered a sale of tangible personal property. Software provided as a license to use software is also taxable as it is treated as a sale of tangible personal property. However, the sale of custom software has been deemed a provision of a service.
The sale of tangible personal property or services is subject to Hawaii’s GET retail rate of 4%. Still, a wholesaler of tangible personal property or services is subject to GET at the wholesale rate of 0.5%.
If software is sold or licensed by a marketplace facilitator, then the marketplace facilitator is the seller of record and subject to the GET retail rate of 4%. The marketplace seller is considered to have made a sale at wholesale. (Hawaii Tax Information Release No. 2021-06.)
March 30, 2021
Hawaii Update on Extension of Filing Deadline
The Hawaii Department of Taxation is not extending the state’s tax year 2020 filing deadline. Taxpayers must file their returns by April 20, 2021. While taxpayers are required to file by April 20, they are granted an automatic 6-month extension to file the return through October 20, 2021 if one of these two conditions is met: (1) the taxpayer is due a refund; or (2) the taxpayer pays the properly estimated tax amount owed by April 20, 2021. Taxpayers who are not able to pay the properly estimated tax amount owed should pay as much as they can to avoid additional interest and penalties. No form is required to request the extension. (Hawaii Filing Deadline to Remain April 20, 2021, Haw. Dept. of Taxation, 03/24/2021.)
Disclaimer: Please note this is the information that is readily available at this time, it is subject to change so please consult your Withum tax advisor.
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The State and Local Tax (SALT) laws vary from state to state and are constantly changing. Reach out to Withum’s SALT Team for guidance on how to navigate your state’s local tax laws.
