Hawaii Estate Tax

 

Only a few states collect their own estate or inheritance tax. Find out if Hawaii collects either (or both) taxes on the estate after someone has died.

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Hawaii residents are subject to an estate tax if they leave an estate of more than $5.49 million dollars in 2023. This tax falls on the estate of the person who died; the beneficiaries or heirs inherit what's left. The Hawaii tax falls on the portion of the estate that exceeds that amount and ranges from 10% to 20%.

There is no inheritance tax in Hawaii; this would be the tax that falls on the heirs and beneficiaries, not on the estate of the person who died.

This state estate tax is in addition to the federal estate tax, which also falls on the estate of the person who died, not on the people who inherit that property. There is a federal estate tax exemption of  $13,610,000, and only people who die with an estate larger than that exemption will have to pay estate tax. It is estimated that only the richest .14% of Americans will be subject to the estate tax at all, or only two out of every 1,000 people who die.

If someone dies in Hawaii with less than the federal exemption amount (currently $13,610,000), their estate doesn't owe any federal estate tax,

And if someone dies in Hawaii with an estate worth less than 5.49 million, there is no Hawaii estate tax, either. The heirs and beneficiaries inherit the property free of tax.

They don't pay income tax on it, either, because inherited property is not ordinary income. The only exception to this are inherited retirement accounts, which are subject to income tax as the assets are withdrawn.

Portability: Spouses Get to use the unused portion

Hawaii, like the federal government, allows a surviving spouse to use the unused portion of a deceased spouse's estate tax exemption. This rule is called portability. For example, if the first spouse to die uses only $1 million of his estate tax exemption, his surviving spouse could use the rest. To take advantage of this provision, however, state and federal estate tax returns must be filed at the death of the first spouse to die. 

Where to find Hawaii Estate Tax Forms

For background information and tax forms, see the Hawaii Department of Taxation website. 





Jurisdictional relevance: ST

There are versions of this article for each State.