Hawaii sales tax rate vs pass on rate

Forum|Forum|5 years ago
April 26, 2021
1 reply
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I can deduct state sales tax paid. Do I use the pass-on rate of 4.712%? That is the tax rate used on my receipts.

Background: Hawaii does not have a sales tax; instead, we have the General Excise Tax, 4%, which is assessed on all business activities. City and County of Honolulu assesses a 0.5% county surcharge on state GET so it's 4.5%. Then there's this thing called a pass-on rate. From the tax.hawaii.gov website: "Yes, a seller may choose to visibly pass on the GE and any applicable county surcharge to its customers, but is not required to do so. The tax is on the business and not on the customer. If the business passes on its GE tax, the maximum pass-on rates, which include the county surcharge if applicable, are as follows:

City and County of Honolulu: 4.7120%"

ErnieS0

Level 15

You can claim the Hawaii General Excise Tax as a sales tax deduction. The IRS lists it as a deduction on the 2020 Optional State Sales Tax Tables.

The table lists only the base rate (4%) but you can claim any add-ons, e.g. the pass on rate. The IRS says, “Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) you paid in 2020 if the tax rate was the same as the general sales tax rate… The 4.0% rate for Hawaii is actually an excise tax but is treated as a sales tax for purpose of this deduction.”

See 2020 Instructions for Schedule A (2020)

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