Hawaii GET Tax on Rental Income: Complete Landlord Guide

You close on your first Oʻahu investment property, find a great tenant, and start collecting $3,200 a month in rent. Everything is going smoothly — until you get a letter from the Hawaii Department of Taxation asking why you have not been filing your General Excise Tax returns. Suddenly you owe back taxes, penalties, and interest on every dollar of rent you have collected.

This is one of the most common — and most expensive — mistakes new landlords make in Hawaii. Most states do not tax rental income at the transaction level. Hawaii does. Every month, on every dollar of rent you collect, you owe the General Excise Tax. And if you do not know how it works, it will eat into your margins fast.

Our family has been managing rental properties on Oʻahu for three generations, and we set up every new landlord client with the correct GET filings from day one. This guide covers everything you need to know.

What Is the General Excise Tax?

The General Excise Tax (GET) is Hawaii's version of a sales tax — but it applies to virtually all business activity in the state, including rental income. Unlike a traditional sales tax that is charged only at the point of sale to a consumer, the GET is charged on the gross income of the business, which in this case means your total rent collected.

If you collect rent on property located in Hawaii, you owe GET. It does not matter where you live or how many properties you own. If rent is collected, GET is due.

Here are the current rates:

(Source: tax.hawaii.gov, 2026)

For every $1,000 in rent you collect on Oʻahu, you owe the state $45 in GET. On a $3,200/month rental, that is $144/month or $1,728/year — whether you made a profit or not. It is a cost of doing business in Hawaii, and we help every owner plan for it from the start.

For Oʻahu landlords, the total rate is 4.5%. This rate is locked through 2030 under current legislation.

On a $3,200/month rental, that is $144/month or $1,728/year in GET alone. That is real money that needs to be in your financial model before you buy.

GET vs. Income Tax: They Are Different

New landlords often confuse GET with Hawaii income tax. They are completely separate obligations:

GET (General Excise Tax): Charged on your gross rental income at 4.5% on Oʻahu. Filed monthly or quarterly depending on your tax liability. Due regardless of whether you made a profit (Source: tax.hawaii.gov, 2026).

Hawaii Income Tax: Charged on your net rental income (after deductions for mortgage interest, depreciation, repairs, etc.) at rates from 1.4% to 11%. Filed annually. Only due if you have taxable income after deductions.

The critical difference: GET is charged on gross rent collected — before expenses. Even if your rental property operates at a net loss after mortgage, insurance, and maintenance, you still owe GET on every dollar of rent that hits your bank account.

This often surprises new landlords who are used to only paying income tax on net profit — Hawaii's GET applies to gross receipts, which is a meaningful distinction.

How to Register for GET

Before you collect your first rent check, you need a Hawaii GET license. Here is how:

Step 1: Apply for a Hawaii Tax ID. File Form BB-1 (Basic Business Application) with the Hawaii Department of Taxation. You can file online through Hawaii Tax Online (HTO) at hitax.hawaii.gov (Source: tax.hawaii.gov, 2026).

Step 2: Select your filing frequency. Based on your anticipated annual tax liability:

(Source: tax.hawaii.gov, 2026)

Most Oʻahu landlords collecting $2,500–$3,500/month in rent will owe roughly $1,350–$1,890/year in GET — which puts them in the quarterly filing category. We recommend setting four calendar reminders: April 20, July 20, October 20, and January 20.

For most single-property Oʻahu landlords collecting $2,500–$3,500/month in rent, the quarterly filing option applies. Your annual GET will be roughly $1,350–$1,890.

Step 3: Begin filing returns. File Form G-45 (periodic return) on your chosen schedule, and Form G-49 (annual return) at year end. Returns are due on the 20th of the month following the end of each period.

If you hire a property manager like us, we handle the GET calculation and remittance as part of our management services. You still need the GET license in your name, but we file the returns and make the payments from your rental proceeds.

The Pass-On Rate: How to Charge Tenants

Here is where it gets interesting. Hawaii law allows landlords to pass the GET on to tenants — but you cannot simply add 4.5% to the rent. Why? Because the GET you charge the tenant is also subject to GET (it is a tax on your gross income, and the pass-on amount becomes part of your gross income).

This creates a circular calculation. The actual pass-on rate that makes you whole is:

4.712% (for Oʻahu's 4.5% GET rate) (Source: tax.hawaii.gov, 2026)

The formula is: Pass-on rate = GET rate / (1 - GET rate) = 0.045 / (1 - 0.045) = 0.04712

Here is how it works in practice:

(Source: tax.hawaii.gov, 2026)

If your tenant pays you $2,500/month in rent, you owe the state roughly $117.80 in GET — every single month. If you use the 4.712% pass-on rate in your lease, your tenant covers that cost. If you forget to include it in the lease, you absorb it yourself. We make sure this clause is in every lease we prepare.

The math works out so you collect your intended rent after the GET is paid. Without the pass-on, you absorb the full $144/month — over $1,700 a year — out of your own pocket.

Important: The GET pass-on must be disclosed in your lease agreement. You cannot surprise tenants with it after they sign. Our leases include a standard GET pass-on clause that clearly explains the charge.

Should You Pass the GET on to Tenants?

Not every landlord chooses to pass the GET to tenants. Here are the considerations:

Arguments for passing it on:

• It is standard practice on Oʻahu — tenants expect it
• It preserves your intended rental income
• Over a multi-year lease, the savings are significant ($1,700+/year)
• Most property management companies include it in their standard lease

Arguments against:

• It makes your effective rent slightly higher, which could reduce competitiveness in price-sensitive segments
• Some landlords prefer to build the GET into their base rent for simplicity
• In a soft market, absorbing GET can be a competitive advantage

Our recommendation: pass it on. On Oʻahu, the GET pass-on is widely understood and accepted by tenants. Building it into the base rent just inflates your listed price, which can hurt you in rental searches where tenants filter by price.

Filing Your GET Returns: Step by Step

Here is the actual filing process once you are registered:

Quarterly filers (most common for single-property landlords) submit Form G-45 four times per year:

(Source: tax.hawaii.gov, 2026)

Annual reconciliation Form G-49 is due April 20 of the following year.

On Form G-45, you report your gross rental income (including any GET pass-on collected) on the line for "Renting" activities. The tax is calculated at your applicable rate (4.5% on Oʻahu).

File electronically through Hawaii Tax Online for the fastest processing. Paper filing is still accepted but takes longer and has higher error rates.

Late filing penalties: A 5% penalty applies for each month (or part of a month) the return is late, up to a maximum of 25%. Interest accrues on unpaid tax from the original due date. Filing late is expensive — set calendar reminders or hire a manager who handles it for you.

GET and Property Management Fees

Here is a nuance that catches some landlords: if your property management company charges you a fee (say 10% of collected rent), the management fee itself is subject to GET at the manager's level — not yours. You do not pay GET on the management fee.

You pay GET on the gross rent you receive (or that is collected on your behalf). The property manager pays their own GET on their management fee income. These are separate tax obligations.

However, some management agreements structure fees differently. Make sure your agreement clearly states whether the management fee is calculated before or after GET. In our agreements, the management fee is calculated on gross rent collected, and GET is calculated and remitted separately.

GET Deductions and Exemptions for Landlords

There are limited GET exemptions that may apply to rental income:

Rental of residential property to a qualified low-income tenant — There is a GET exemption for landlords who rent to tenants who receive certain government housing assistance. This is a narrow exemption with specific documentation requirements.

Subletting situations — If you rent a property and sublet it, you may be able to deduct the rent you pay from your GET calculation under certain conditions. This is complex and requires careful structuring.

For most Oʻahu landlords collecting market-rate rents, there are no applicable exemptions. The full 4.5% applies to every dollar collected (Source: tax.hawaii.gov, 2026).

On the income tax side, GET paid is deductible as a business expense on your federal and state income tax returns. So while you cannot avoid GET, you do reduce your income tax liability by the amount of GET you pay.

GET Mistakes We See Landlords Make

After three generations of managing rentals on Oʻahu, here are the most common GET errors we encounter:

Mistake 1: Not registering at all. If you collect rent without a GET license, the Department of Taxation will find you — often through property tax records or county rental registrations. Back taxes, penalties, and interest add up fast (Source: tax.hawaii.gov, 2026).

Mistake 2: Using the wrong rate. The rate depends on where the property is located, not where the landlord lives. An Oʻahu property is taxed at 4.5% even if you live in Idaho (Source: tax.hawaii.gov, 2026).

Mistake 3: Applying GET to net income instead of gross. GET is on gross rent collected, not net after expenses. If you collect $3,200 and your mortgage is $2,100, you owe GET on the full $3,200 — not on the $1,100 difference.

Mistake 4: Forgetting the annual return. Even if you file quarterly G-45 returns all year, you must still file the annual G-49 reconciliation. Missing it triggers penalties.

Mistake 5: Not passing on to tenants correctly. Using 4.5% instead of the 4.712% pass-on rate means you are short-changing yourself by a few dollars each month. Over the life of a lease, it adds up (Source: tax.hawaii.gov, 2026).

How Our Management Handles GET

When you hire Hawaii Home Sales & Management for property management services, we handle the GET process end to end:

1. Registration assistance. We walk you through the BB-1 filing and GET license setup.

2. Monthly GET calculation. We calculate the correct GET on all rent collected, including pass-on amounts.

3. Timely filing. We file your G-45 returns on schedule — never late, never missed.

4. Year-end reconciliation. We prepare and file your G-49 annual return.

5. Tax-ready documentation. Your year-end statement includes total GET paid, which your CPA needs for your income tax deductions.

GET compliance is built into our management fee. There is no separate charge for GET filing or calculation.

GET and Your Overall Tax Picture

GET is just one piece of the tax puzzle for Hawaii landlords. Here is how all the pieces fit together:

(Source: tax.hawaii.gov, 2026)

Hawaii landlords face three separate tax considerations — GET on every gross dollar collected, state income tax on net profit, and federal income tax on net profit. GET is the one that surprises new landlords because it is due even when you are losing money. A good CPA who knows Hawaii real estate can help you structure deductions that reduce the income tax burden — we are happy to connect you with professionals we trust.

With GET, state income tax, and federal income tax combined, Hawaii landlords face a significant tax burden. Proper planning — including maximizing deductions for depreciation, mortgage interest, repairs, and GET paid — is essential for maintaining positive cash flow.

We strongly recommend working with a CPA who specializes in Hawaii real estate. The tax code is specific enough that a generalist can miss significant deductions. Our team can provide referrals to CPAs we trust.

What This Means for Property Owners

GET is non-negotiable and non-avoidable — every Oʻahu landlord collecting rent owes it. The landlords who get hurt are not those who cannot afford it; they are the ones who did not know about it until the penalties piled up. Register before your first rent check, use the correct 4.712% pass-on rate in your lease, and set quarterly filing reminders. If you hire a professional manager, make sure GET filing is explicitly included in their services (Source: tax.hawaii.gov, 2026).

What This Means for Tenants

If your lease includes a GET pass-on line item, that is legal and standard on Oʻahu. Hawaii law allows landlords to pass the 4.712% GET charge to tenants as long as it is disclosed in the lease before you sign (Source: tax.hawaii.gov, 2026). You should see it clearly listed as a separate line — if a landlord tries to add it mid-lease or after signing, that is not permitted under Hawaii landlord-tenant law (Source: HRS Chapter 521).

Frequently Asked Questions

Do I have to pay GET on rental income if I live off-island?

Yes. GET is based on where the property is located, not where you live (Source: tax.hawaii.gov, 2026). If your rental property is on Oʻahu, you owe 4.5% GET on all gross rent collected, regardless of your home state. You must obtain a Hawaii GET license (Form BB-1) and file periodic returns even if you never set foot on the island. Many off-island landlords hire local property managers specifically to handle this obligation, since missing filings triggers penalties and interest that accumulate quickly.

Can I deduct GET on my federal taxes?

Yes. GET paid is deductible as a business expense on both your federal income tax return (Schedule E for rental income) and your Hawaii state income tax return. This means that while you pay 4.5% GET on gross rent, the after-tax cost is lower because it reduces your taxable income. For a landlord in the 24% federal bracket, a $1,728 annual GET payment effectively costs about $1,313 after the income tax deduction (Source: tax.hawaii.gov, 2026).

What is the difference between GET and Hawaii income tax on rentals?

GET is charged on your gross rent collected at a flat 4.5% rate on Oʻahu (Source: tax.hawaii.gov, 2026). It is due regardless of whether your property is profitable. Hawaii income tax is charged on your net rental income — gross rent minus allowable deductions like mortgage interest, depreciation, repairs, insurance, and GET paid. Income tax rates range from 1.4% to 11% depending on your total income. You can have a net loss for income tax purposes (owing no income tax) while still owing full GET on every dollar of rent collected.

How do I pass the GET on to my tenants?

Hawaii law allows landlords to pass GET on to tenants, but the pass-on rate is 4.712%, not the flat 4.5% rate (Source: tax.hawaii.gov, 2026). This higher rate accounts for the fact that the pass-on itself becomes part of your gross income and is subject to GET. The pass-on must be disclosed in the lease agreement — you cannot add it after the tenant signs. On a $3,200 base rent, the pass-on adds $150.78, making the total tenant payment $3,350.78. This is standard practice on Oʻahu and most tenants expect it.

What happens if I do not file my GET returns?

Late filing penalties start at 5% per month (or part of a month) the return is overdue, up to a maximum of 25% of the tax due (Source: tax.hawaii.gov, 2026). Interest also accrues on unpaid tax from the original due date. If you never file at all, the Department of Taxation will eventually identify you — often through property tax records, county rental registrations, or cross-referencing federal tax data — and assess taxes, penalties, and interest retroactively. In serious cases, the state can place a lien on your property. Filing on time is far cheaper than dealing with back taxes and penalties.