Hawai'i Vacation Rental Taxes

Hawai'i Taxes on Vacation Rentals

Introduction

This page discusses Hawai'i state taxes on vacation rentals and how they're handled.

Effective 01 November 2021, Transient Accommodation Tax was increased to 13.25%.

Effective 01 July 2019, the Transient Accommodation Tax is applied to the cleaning fee.

The remainder of this page is for your inner accountant ...

Hawai'i has two taxes applicable to vacation rentals; the GET and TAT. They are paid separately from the rent and cleaning fee to minimize taxes.

GET: The General Excise Tax

Maui has what most people think of as a 4.167% sales tax. (Honolulu and Kauai are at 4.712%. The big island is at 4.439% until 2020 when it joins Honolulu and Kauai at 4.712%.) Technically, a general excise tax is not the same as a sales tax. In practice, the GET acts very much as a sales tax.

(The GET is actually 4% - but when $ 4 is paid on a $ 100 purchase, the GET applies to that $ 4 so there's another 16¢ to pay on that $ 4, and then another 0.64¢ to pay on that 16¢. Hence the effective 4.167% tax rate.).

For vacation rentals, the 4.167% tax is applied to all payments for the vacation rental. In this case, that would be the total rent plus the cleaning fee.

TAT: The Transient Accommodation Tax

In Hawai'i, a stay of less than six months is classified as 'transient' and associated rental fees are subject to the then-current TAT.

From July 1, 2009 to June 30, 2010, the TAT rate was 8.25%. From July 1, 2010 through December 31, 2017, the TAT was 9.25%. Starting January 1, 2018, the TAT increased to 10.25%. Starting on July 1, 2019, the TAT was extended to apply to "all required charges and fees". This was intended to hit "resort fees" but the language of the bill resulted in cleaning fees as collateral damage. Starting on November 1, 2021, Maui County imposed an additional 3% TAT bringing the combined state and county TAT rate to 13.25%.

Separate Payment

Hawai'i tax rules have special provisions regarding how taxes are paid. If the taxes are not separately itemized (something many on-line reservation sites don't do, or don't do for Hawai'i, or don't do properly), then the GET may have to be applied to the TAT payment, or the TAT may have to be applied to the GET payment, or some uncomputable amalgamation of cross-applied taxes. Having the taxes separately paid eliminates the tax-on-a-tax possibility.

It does complicate things a bit, though. Sorry.

As September 10, 2019, AirBnB bookings will include these taxes with reservation payments. AirBnB has joined VRBO in providing separate line items for TAT and GET - complying with the requirement needed to avoid cascading taxes. Previously, AirBnB did not have this facility available so we were compelled to issue a separate tax billing. This was a bit of a headache for all concerned so it is nice that AirBnB (finally!) came around (after a what looked to be a long feud with Hawai'i).

The statute imposing Maui Country's added TAT subjects existing reservations that were not fully paid at the time the statute was passed to the additional tax. Neither AirBnB nor VRBO comply with that requirement - which mean we have to ask for the additional tax separately. Sorry.

< 2019-12-30 >