Why There’s No Inheritance Tax in Hawaii
Learn about inheritance tax in Hawaii, including why there isn’t one and what it means for residents and property owners in the real world.
Hawaii doesn’t have an inheritance tax (although it does have an estate tax). The state levies an estate tax on larger estates, but beneficiaries don’t pay a separate inheritance tax when they receive assets.
For years, many states relied on a federal “pick-up” system that shared federal estate tax revenue with the states. When Congress phased out that credit in the early 2000s, some states let their taxes lapse, while others rebuilt independent systems. Hawaii chose the estate-tax route. It enacted Chapter 236E to apply to residents’ estates and to nonresidents with Hawaii-situs property for transfers after January 25, 2012. The state did not add an inheritance tax. Today, six states impose inheritance taxes, and Hawaii isn’t one of them.
Why that choice? Estate taxes are assessed on the estate before beneficiaries receive property, which aligns cleanly with federal concepts and simplifies administration. Hawaii’s law expressly coordinates with federal rules while remaining a state-level system. That structure let lawmakers restore revenue after the federal credit disappeared—without creating a separate levy on heirs.
Bottom line: inheritance tax in Hawaii doesn’t exist, and it hasn’t been part of the state’s modern framework. Hawaii opted for an estate tax that works alongside federal law, keeping beneficiaries free from a separate, state-level inheritance levy.
What No Inheritance Tax in Hawaii Means
Example 1: Honolulu condo to a niece.
An aunt with a Honolulu condo and savings passes, and her niece inherits the condo. If the aunt’s total taxable estate is below Hawaii’s estate-tax threshold, there’s no state estate tax. Either way, the niece doesn’t pay a separate inheritance tax in Hawaii on what she receives.
Example 2: Mainland resident, Hawaii property.
A Colorado resident owns a Maui lot. After passing, the estate may owe Hawaii estate tax on the Hawaii-situs portion, depending on size. But the niece or nephew who inherits the lot still doesn’t owe inheritance tax in Hawaii as a beneficiary. The liability—if any—belongs to the estate under Chapter 236E.
Example 3: Heir lives in an inheritance-tax state.
If a beneficiary lives in a state that does impose inheritance tax, that state’s rules could apply to what they receive from the decedent in that state. Hawaii’s status doesn’t change those other states’ laws—another reason people double-check the receiving state’s rules.
(Read More: Learn about revocable trusts in Hawaii versus Nevada.)