All employers are required to follow the standard procedures for withholding and reporting Hawai‘i income tax, regardless of size or location. These requirements are detailed in Booklet A – Employer’s Tax Guide.
Business FAQs
Are large or out-of-state employers subject to any new reporting requirements under this tax law?
Is there a limit on the number of employees this change applies to, or does it affect all employees equally?
The tax changes affect all employees subject to Hawai‘i income tax withholding, regardless of the number of employees a business has. The withholding requirements and adjustments apply equally to all W-2 employees.
How does this new state tax change interact with federal tax requirements?
While state and federal taxes are calculated separately, they can affect one another. State income taxes may be deductible on your federal income tax return if you itemize deductions, subject to the federal cap on state and local tax (SALT) deductions. This means lower state taxes could reduce the amount you can deduct on your federal return, but overall, you’ll still see savings.
It’s important to note that changes to Hawai‘i’s income tax law do not directly affect federal tax rates, credits, or the process for filing federal tax returns. For specific guidance, consult a tax professional.
Do I have to change anything about my federal payroll tax filings, like Form 941 or W-2s?
No, you do not need to change your federal payroll tax filings. Forms like Form 941 (Employer’s Quarterly Federal Tax Return) and Form W-2 (Wage and Tax Statement) are for federal tax purposes and are not affected by the changes to Hawai‘i’s state income tax.
Will this change how I calculate FICA, Medicare, or Social Security taxes for employees?
No, this change will not affect how you calculate FICA, Medicare, or Social Security taxes for your employees. These taxes are federal taxes, and their calculation is based on federal guidelines and rates, which are not impacted by changes to Hawai‘i state income tax.
Is there a dedicated phone line or email where I can ask questions about the tax changes?
You can contact the Hawai‘i Department of Taxation’s technical section for assistance:
Phone: 808-587-1577
Email: tax.technical.section@hawaii.gov
Are there training sessions or webinars for employers to understand these changes?
TaxCutHawai‘i is working with business organizations, including the Hawai‘i State Chamber of Commerce, the separate island Chambers of Commerce, Society for Human Resource Management (SHRM), and the Hawai‘i Employers Council, to offer webinars about the new tax cuts. You can contact your local business organization to see if they are hosting a webinar and to sign up. Additionally, the webinar schedule will be posted on this website.
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