Capital Gains Tax in Hawaii (2026)
Hawaii caps long-term capital gains at 7.25% — well below its 11% top income rate — while short-term gains are taxed as ordinary income (1.4%–11%). It all stacks on top of the federal 0/15/20% tax and the 3.8% NIIT. Run the combined number below.
Reviewed & updated · 2026 tax-year figures · Federal + Hawaii state
Hawaii caps long-term capital gains at 7.25%. Under HRS §235-51(f), a net long-term gain is taxed at the lower of your ordinary rate or 7.25% — even though Hawaii's ordinary brackets run 1.4% to 11%. Short-term gains get no cap and are taxed as ordinary income. The state tax is added on top of the federal capital gains tax (0/15/20% long-term under IRC §1(h)) and the 3.8% NIIT (§1411). A top-bracket Hawaii resident can face a combined rate near 31% on a long-term gain.
Net proceeds $174,800$26,200
Show our work federal + HI, step by step
Estimates only, for the 2026 tax year. Not tax advice. Hawaii's 2026 income-tax brackets, the $8,000/$16,000/$12,000 standard deduction, and the 7.25% long-term cap are the figures enacted by Act 46 (SLH 2024) and HRS §235-51 — verified against the Hawaii Department of Taxation's Announcement 2024-03. These are actual 2026 amounts, not projections.
How does Hawaii tax capital gains?
Hawaii is one of the few states that gives long-term capital gains a genuine break. Ordinary income — including a short-term gain — is taxed under HRS §235-51 at twelve graduated rates from 1.4% to 11%. But a net long-term capital gain gets the alternative tax of HRS §235-51(f): the tax on that gain is capped at 7.25%. So while a wage dollar can be taxed at 11%, a long-term gain dollar is never taxed above 7.25% by Hawaii.
The cap works as a ceiling, not a flat rate. If your income is low enough that the gain would stack in a bracket below 7.25% (the 1.4% through 7.2% bands, which for a single filer run up to about $48,000 of taxable income), you pay that lower ordinary rate. Once the gain would reach the 7.6% band or higher, the 7.25% cap takes over. In practice, most sellers with a meaningful long-term gain pay an effective 7.25% to Hawaii. Short-term gains get no cap and are taxed in full, up to 11%. Hawaii levies no county income tax on the gain.
How does Hawaii stack on top of federal?
The two systems run in parallel and the amounts are added — Hawaii does not replace or absorb the federal tax. For a long-term gain, you owe:
- Federal: 0%, 15%, or 20% depending on where the gain stacks on your taxable income, under IRC §1(h);
- Federal NIIT: an extra 3.8% on net investment income once MAGI passes $200,000 (single) / $250,000 (joint), under IRC §1411; and
- Hawaii: a long-term gain at the lower of your ordinary rate or 7.25% (HRS §235-51(f)); a short-term gain at ordinary rates 1.4%–11%.
Add those together and a top-bracket Hawaii resident with a long-term gain can pay roughly 20% + 3.8% + 7.25% ≈ 31.05%. A short-term gain is worse on both sides: the federal rate jumps to ordinary income (up to 37%) and Hawaii drops the 7.25% cap, taxing the full gain up to 11%. The calculator above computes each layer separately.
What are the 2026 Hawaii income-tax brackets?
These are Hawaii's 2026 ordinary brackets, shown for a single filer (married-filing-jointly thresholds are double; head-of-household has its own schedule). Short-term gains are taxed at these rates; the Effective LT column applies the 7.25% long-term cap. Verified against the Hawaii Department of Taxation's Announcement 2024-03 (Act 46).
| Hawaii taxable income (single) | Ordinary / ST rate | Effective LT |
|---|---|---|
| $0 – $9,600 | 1.4% | 1.4% |
| $9,600 – $14,400 | 3.2% | 3.2% |
| $14,400 – $19,200 | 5.5% | 5.5% |
| $19,200 – $24,000 | 6.4% | 6.4% |
| $24,000 – $36,000 | 6.8% | 6.8% |
| $36,000 – $48,000 | 7.2% | 7.2% |
| $48,000 – $125,000 | 7.6% | 7.25% |
| $125,000 – $175,000 | 7.9% | 7.25% |
| $175,000 – $225,000 | 8.25% | 7.25% |
| $225,000 – $275,000 | 9% | 7.25% |
| $275,000 – $325,000 | 10% | 7.25% |
| Over $325,000 | 11% | 7.25% |
How this calculator works & where the numbers come from
No black box. The federal side uses the same unit-tested engine as our main calculator: net gain = proceeds − basis; classify by holding period; for long-term gains, subtract the standard deduction and stack the gain across the 0/15/20% bands per IRC §1(h); add 3.8% NIIT where modified AGI crosses the §1411 threshold; short-term gains are computed as the true marginal difference in ordinary tax. The Hawaii side takes the same taxable gain (after any §121 exclusion, since Hawaii conforms), subtracts the Hawaii standard deduction from your ordinary income, and stacks the gain across the Hawaii ordinary brackets (1.4%–11%, HRS §235-51). For a long-term gain it then caps the result at 7.25% of the gain (HRS §235-51(f)) and takes the lower amount; a short-term gain keeps the full ordinary tax. The two results are summed.
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Primary sources (linked, not just named)
- HRS §235-51 — tax rates & the 7.25% capital gains cap
- Hawaii DOT Announcement 2024-03 — Act 46 brackets & standard deduction
- Hawaii Department of Taxation — tax year information
- 26 U.S.C. §1(h) — federal capital gains rates
- 26 U.S.C. §1411 — 3.8% NIIT
- 26 U.S.C. §121 — home-sale exclusion
- IRS Topic No. 409 — Capital Gains and Losses
- IRS Publication 550 — Investment Income
Hawaii capital gains tax, answered
Does Hawaii have a separate capital gains tax rate?
Yes, for long-term gains. Under HRS §235-51(f), a net long-term capital gain is taxed at the lower of your ordinary rate or a 7.25% cap — even though ordinary income is taxed up to 11%. Short-term gains get no cap and are taxed as ordinary income at 1.4%–11%.
How much is capital gains tax in Hawaii for 2026?
For a long-term gain, Hawaii charges the lower of your ordinary rate or 7.25%. Federally a long-term gain is taxed at 0/15/20% (IRC §1(h)) plus 3.8% NIIT. A mid-to-high income seller pays an effective 7.25% to Hawaii; a top earner can pay near 20% + 3.8% + 7.25% ≈ 31% combined. A short-term gain is taxed at ordinary rates up to 11%. Use the calculator above for your exact figure.
How does Hawaii capital gains tax stack on top of federal?
They are computed separately and summed. The federal side taxes long-term gains at 0/15/20% and adds 3.8% NIIT. Hawaii caps a long-term gain at 7.25% (ordinary rate if lower); short-term gains are taxed in full at 1.4%–11%. Your total tax is federal + NIIT + Hawaii.
How does Hawaii's 7.25% long-term cap work?
HRS §235-51(f) limits the tax on a net long-term capital gain to 7.25% of the gain. The calculator computes the ordinary-rate tax on your gain, then compares it to 7.25% of the gain and charges the lower amount. For most sellers with a meaningful gain the cap binds, so the effective Hawaii rate is 7.25%. Short-term gains receive no cap.
Does the 3.8% federal NIIT apply to Hawaii residents?
Yes — the NIIT is federal and applies in every state. Once modified AGI exceeds $200,000 (single) or $250,000 (married filing jointly), the 3.8% surtax under IRC §1411 hits the lesser of your net investment income or the amount over the threshold. It is added to your federal capital gains tax and is entirely separate from Hawaii state tax.
Does Hawaii conform to the $250k/$500k home-sale exclusion?
Yes. Hawaii conforms to the IRC §121 exclusion of up to $250,000 ($500,000 joint) on a primary residence. Any remaining long-term gain then gets Hawaii's 7.25% cap. Note that HARPTA withholding of 7.25% of the sale price applies to nonresident sellers as a prepayment. See our home-sale hub for the mechanics.
Compare Hawaii with other state hubs
Hawaii's 7.25% long-term cap lands it in the middle: heavier than flat-tax Pennsylvania (3.07%) and its own neighbor-free-of-tax peers, lighter than California (up to 13.3%) and New York (over 10%) for long-term gains, and comparable to Minnesota's lower brackets. Note that a Hawaii short-term gain, taxed up to 11%, is among the heaviest anywhere. Every state page combines the same unit-tested federal engine with that state's own rules. The main Capital Gains Tax Calculator lets you fold any state's rate into your federal receipt.