Hawaii Capital Gains Tax: 2026 Rules and Calculator
Hawaii caps the tax on capital gains at 7.25%, well below its 11% top rate, and holds back 7.25% of the price when a nonresident sells. Here is what a Hawaii seller pays in 2026, layer by layer, and a calculator for your own sale.
Short answer: Hawaii taxes ordinary income at up to 11% but caps the tax on net capital gain at 7.25% (HRS 235-51(f)). On top of that comes federal capital gains tax (0%, 15% or 20% for 2026 under IRS Rev. Proc. 2025-32, and up to 25% on building depreciation) and the 3.8% net investment income tax above $250,000 of income for married couples or $200,000 single (IRC 1411).
Hawaii capital gains tax calculator
Enter your sale: rental property, your home, land, a business, stock or collectibles. You get the 2026 tax in Hawaii (federal, the 3.8% tax and Hawaii tax) and the same sale spread over the years the buyer pays you. It runs in your browser on the same engine as our capital gains tax calculator.
You keep $1,802,828 after selling costs and tax. The tax is 33.4% of your gain.
Your gain
- Sale price less selling costs$2,256,000
- Less your basis$900,000
- Your taxable gain$1,356,000
- Depreciation, taxed at up to 25%$300,000
- Long-term gain at 0%, 15% or 20%$1,056,000
The tax, line by line
- Federal income tax (incl. $29,500 AMT)$303,334
- Net investment income tax (3.8%)$51,528
- Hawaii tax$98,310
- Total tax$453,172
- You keep$1,802,828
Get the REAL numbers
Talk to capital gains expert Hans Goldstein, EA.
These are estimates. Have a qualified tax professional run your real numbers in a 15-minute scope call.
Why now: the closing date and how the buyer pays you are set before closing, and they decide how much Hawaii and federal tax this sale costs.
Book my 15-minute callThis is an estimate. Getting it right down to the tee takes your actual tax forms (returns, K-1s, depreciation schedules), a consult and a paid analysis. The first 15-minute scope call is free.
How Hawaii taxes capital gains in 2026
Hawaii taxes ordinary income at up to 11% but caps the tax on net capital gain at 7.25% (HRS 235-51(f)).
- The 7.25% cap applies to net capital gain; depreciation recapture under Section 1245 and interest on a seller note are taxed at ordinary rates up to 11%.
- When a nonresident sells Hawaii real estate, the buyer must withhold 7.25% of the amount realized and send it to the state (HARPTA, HRS 235-68), unless a waiver or exemption applies.
Selling Hawaii property while living elsewhere: Hawaii taxes a nonresident on gain from Hawaii real estate, and the buyer withholds 7.25% of the amount realized at closing (HRS 235-68) unless a waiver applies.
Worked example (computed October 13, 2026)
A Hawaii vacation rental sale where the 7.25% cap does the work. A married couple filing jointly in Hawaii sells a rental property for $2,400,000 with $144,000 of selling costs. Basis is $900,000 after $300,000 of depreciation, and other income is $250,000.
- Taxable gain: $1,356,000, of which $300,000 is depreciation taxed at up to 25%.
- All in one year (2026): $303,334 federal income tax, $51,528 net investment income tax and $98,310 Hawaii tax (7.2% of the gain): $453,172 in total, 33.4% of the gain.
- Spread over 10 years on a note: $380,238 of tax on the gain, so the seller keeps $72,935 more. Interest on the note is taxed separately.
What the calculator simplifies
It applies the rule above to the whole gain for one sale in 2026. It also leaves out local taxes unless named above, the alternative minimum tax effect of note interest, and equipment recapture on a business sale. Federal tables for later years carry the 2026 tables forward.
Spreading a Hawaii sale over several years
On an installment sale the gain is reported as the buyer pays you (IRC 453), so each year's slice can stay in lower federal brackets and under the 3.8% threshold. Building depreciation is reported first (Treas. Reg. 1.453-12), equipment recapture is taxed in the year of sale (IRC 453(i)), and notes over $5,000,000 owe the Section 453A interest charge. More on how it works: what a structured installment sale is.
Sources
- Hawaii Revised Statutes chapter 235, unofficial compilation as of December 31, 2025 (235-51(f), 235-68)
- IRS Rev. Proc. 2025-32: 2026 federal brackets.
- IRC 1(h) and IRC 1411: capital gain rates and the 3.8% tax (as in force October 2026).
What is the tax bill on your Hawaii sale going to be?
Send me the sale price and rough basis. Within one business day I'll email you the actual number and the Seller's Guide to §453. If it doesn't fit your deal, I'll tell you that plainly.
No retainer · no obligation. Hans Goldstein, a licensed insurance agent (CA Insurance License #4273294), will contact you and may discuss insurance products, including annuities.
Frequently asked
What is the capital gains tax rate in Hawaii for 2026?
Hawaii taxes ordinary income at up to 11% but caps the tax on net capital gain at 7.25% (HRS 235-51(f)). Federal capital gains tax and the 3.8% net investment income tax come on top.
How much tax on a $2,400,000 sale in Hawaii?
In the example on this page, a married couple filing jointly selling a rental property for $2,400,000 with a $1,356,000 taxable gain owes $453,172 in 2026: $303,334 federal, $51,528 net investment income tax and $98,310 Hawaii tax. Spread over 10 years, the tax is $380,238.
Do nonresidents pay Hawaii tax when they sell property there?
Hawaii taxes a nonresident on gain from Hawaii real estate, and the buyer withholds 7.25% of the amount realized at closing (HRS 235-68) unless a waiver applies.
Does Hawaii have a capital gains deduction or special rule?
The 7.25% cap applies to net capital gain; depreciation recapture under Section 1245 and interest on a seller note are taxed at ordinary rates up to 11% When a nonresident sells Hawaii real estate, the buyer must withhold 7.25% of the amount realized and send it to the state (HARPTA, HRS 235-68), unless a waiver or exemption applies