Hawaii payroll tax guide

Your Ultimate Guide to US Payroll in Hawaii

Managing payroll in Hawaii? Read our state-by-state guide to US payroll taxes to learn what you must withhold and deduct from employee wages.

Shannon Hodgen
Written by Shannon Hodgen
August 4, 2023
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Key takeaways

  1. Employers in Hawaii must account for unemployment insurance (UI), personal income tax (PIT), temporary disability insurance (TDI), and workers’ compensation (WC).
  2. Distinguishing between WC and TDI is vital for providing comprehensive employee protection in different injury scenarios.
  3. Using professional payroll services like Deel’s US payroll services can streamline tax withholding and reporting, allowing businesses to focus on core operations and growth.

Employers have to navigate a variety of regulations and requirements to ensure proper payroll withholding in each US state. This guide serves as an introduction to what employers need to pay and withhold from payroll in Hawaii, including unemployment insurance, personal income tax, and workers’ compensation. 

Unemployment insurance (UI)

As an employer in Hawaii, it is your duty to pay UI taxes on behalf of your employees. This tax is meant to support the unemployment insurance program, which offers temporary financial aid to individuals who have lost their jobs due to circumstances beyond their control.

The US Department of Labor administers the national UI program, and in Hawaii, you can manage your UI taxes through the state's online portal. For detailed information and guidelines on paying your unemployment insurance taxes, you can refer to the Hawaii Department of Labor and Industrial Relations’ official website.

Withholding personal income tax (PIT)

Employers in Hawaii are required to deduct personal income tax from their employees’ wages, in addition to federal income tax withholding. This tax is deducted from the employee’s pay and then paid to the state. This tax is deducted from your employee’s pay and is then paid to the state by the employer.

Personal income tax is a tax on the income of Hawaii residents, and the amount to be withheld depends on the employee’s income and tax filing status. To make the process seamless, Hawaii offers an online portal where you can conveniently pay the withheld amount. For comprehensive guidance on handling personal income tax withholding, see the Hawaii Department of Taxation's official website.

Withholding state disability insurance (TDI)

Temporary disability insurance (TDI) is designed to provide financial support to employees who suffer non-work-related injuries or illnesses that prevent them from working. As an employer, you have the option to purchase coverage from an authorized private carrier in Hawaii.

While you can withhold wages from your employees to contribute towards TDI, the withholdings should not exceed 0.5% of an employee’s weekly wages. 

Paying workers’ compensation (WC)

Workers’ compensation insurance is a crucial aspect of protecting your employees and your business in case of workplace injuries. In Hawaii, employers are required to carry workers’ compensation insurance, even if they have just one employee.

Unlike temporary disability insurance, which covers non-work-related injuries, workers' compensation focuses on providing benefits to employees injured while performing their job duties. As an employer, you can purchase workers’ compensation insurance from qualified commercial carriers in the state. To ensure compliance, confirm your insurance coverage meets the state’s regulations for workers’ compensation.

Simplify US payroll tax compliance with Deel

While this guide provides essential information on Hawaii payroll taxes, payroll compliance and state requirements extend beyond what is covered above. To streamline the process and ensure full compliance, companies can turn to Deel. 

Deel offers a comprehensive solution for managing US and international payroll, including payments, taxes, worker classification, and more. Speak with an expert today to see how you can streamline your US payroll processes and ensure compliance with state regulations.

Disclaimer: This article is provided for general informational purposes and should not be treated as legal or tax advice. Consult a professional before proceeding.

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