GET and Payroll: What Hawaii Employers Need to Know About General Excise Tax

Hawaii's General Excise Tax (GET) is one of the most misunderstood taxes in the state, especially for employers. It's not a sales tax, it's not a payroll tax, and yet it touches nearly every business transaction you make, including some that relate directly to running payroll and employing staff. If you're an employer in Hawaii, here's what you need to know.

What Is the General Excise Tax?

The General Excise Tax is a tax on the privilege of doing business in Hawaii. Unlike a traditional sales tax (which is a tax on the buyer), GET is levied on the seller or service provider for the right to conduct business. It applies to most business activities — selling goods, providing services, contracting, and more.

This distinction matters: you, as the business, owe GET on your gross income. What you do with that cost (whether you absorb it or pass it along) is a separate question entirely.

GET vs. Sales Tax: Key Differences

Hawaii is one of only a handful of states that uses a gross receipts-style tax instead of a traditional sales tax. Here's how they differ:

• Sales tax: Added on top of a transaction, paid by the buyer, remitted to the state by the seller
• GET: A tax on the business itself, calculated on gross receipts — regardless of whether you collect it from customers

Because GET applies to gross receipts, it can pyramid, meaning it gets charged at multiple levels of a supply chain. If a wholesaler sells to a retailer who sells to a customer, GET potentially applies at each step.

How GET Relates to Your Payroll Costs

GET doesn't apply to employee wages. Salaries and wages paid to W-2 employees are not subject to GET. This is an important distinction: if you pay an employee $50,000/year, you don't owe GET on those wages.

However, GET does apply to payments made to independent contractors in some contexts. If your business is paying contractors for services as part of your business operations, the contractor owes GET on what they receive. This is one more reason the employee vs. contractor distinction matters so much in Hawaii.

Can You Pass GET on to Employees?

This is where many employers get into trouble. GET is your tax, the business's tax. You cannot legally require employees to pay GET or deduct it from their wages. Attempting to do so would likely violate Hawaii's wage payment laws.

What you can do is pass GET on to customers, and many businesses do exactly that, adding a GET charge to invoices (up to 4.712% in every county). But that's a customer-facing practice, not an employee-facing one.

GET on Services Employers Purchase

When you hire outside vendors for your business (accountants, attorneys, cleaning services, temp agencies), those service providers owe GET on what they charge you. They typically factor this into their pricing, which means you're indirectly bearing the cost.

This is especially relevant for payroll services. A local Hawaii payroll provider like Pacific Data Services is subject to GET on fees they charge. That cost is generally baked into service pricing. It's the cost of doing business in Hawaii.

GET Rates for 2026

Hawaii GET rates vary by activity and county:

• General business (retail, services): 4% state rate + 0.5% county surcharge = 4.5% in every county (the maximum pass-on rate is 4.712%)
• Wholesale: 0.5% (the county surcharge does not apply)
• Contracting: 4% + 0.5% county surcharge = 4.5%
• Renting real property: 4% + 0.5% county surcharge = 4.5% (a sublease deduction may apply)

Filing and Paying GET

GET is filed with the Hawaii Department of Taxation. Filing frequency depends on your annual GET liability:

• Annual GET over $4,000: File monthly (by the 20th of the following month)
• Annual GET $4,000 or less: May file quarterly
• Annual GET $2,000 or less: May file semiannually

Most active businesses file monthly. You can file online through Hawaii Tax Online (hitax.hawaii.gov). Late filing penalties are 5% of the tax due for each month or part of a month, up to 25%, plus interest of 2/3 of 1% per month. Every business also files the annual reconciliation, Form G-49, by April 20 (calendar-year filers).

Common GET Mistakes Employers Make

We’ve seen these mistakes repeatedly from employers new to Hawaii:

• Confusing GET with payroll taxes: GET is separate from withholding, UI, or TDI. Don't mix them up.
• Not registering: Every business earning income in Hawaii must register with the Hawaii Dept. of Taxation and get a GET license (Form BB-1). No exceptions.
• Forgetting inter-company transactions: If related business entities transact with each other, GET may still apply.
• Miscategorizing contractors as employees: Payments to contractors have different GET implications. Getting the classification wrong creates tax risk on multiple fronts.
• Failing to collect the pass-on amount: If you want to pass GET to customers, you need to have language in your contracts/invoices allowing it. You can't add it after the fact.

Frequently Asked Questions

What is Hawaii's General Excise Tax and how does it differ from sales tax?

The General Excise Tax (GET) is a tax on business activity in Hawaii, not a sales tax. Unlike sales tax, GET is levied on the business for the privilege of doing business, not on the customer's purchase. Most businesses pass GET on to customers as a surcharge, but it is legally the business's obligation. The standard GET rate is 4%, plus a 0.5% county surcharge that all four counties now levy, for 4.5% on most retail and service income.

Does Hawaii GET apply to payroll or employee wages?

No. GET does not apply to employee wages, salaries, or payroll. Wages paid to W-2 employees are not subject to GET. However, amounts paid to independent contractors for services may be subject to GET for the contractor's business activities. GET and payroll taxes are separate obligations that operate independently.

Can a Hawaii employer pass GET charges on to customers?

Yes. Hawaii law allows businesses to pass GET on to customers as a separately stated surcharge. If you choose to pass it on, the maximum pass-on rate is 4.712% in every county for 2026, which accounts for the fact that GET is applied to the gross amount including the passed-on tax itself. The amount must be clearly disclosed.

How often do Hawaii businesses need to file GET returns?

GET filing frequency depends on annual tax liability. Businesses with GET liability over $4,000 per year file monthly (due on the 20th of the following month). Those with $4,000 or less may file quarterly, and those with $2,000 or less may file semiannually. Everyone also files the annual Form G-49 by the 20th day of the fourth month after the tax year ends (April 20 for calendar-year filers). All businesses must register with the Hawaii Department of Taxation before collecting GET.