Overview of Hawaii Taxes
The state of Hawaii has the lowest property tax rate in the nation at 0.27%. Despite this, the median annual tax payment in the state is $1,529, which is higher than 19 other states. This is because Hawaii has the highest median home value in the U.S. at $563,900.
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To calculate the exact amount of property tax you will owe requires your property's assessed value and the property tax rates based on your property's address. Please note that we can only estimate your property tax based on median property taxes in your area. There are typically multiple rates in a given area, because your state, county, local schools and emergency responders each receive funding partly through these taxes. In our calculator, we take your home value and multiply that by your county's effective property tax rate. This is equal to the median property tax paid as a percentage of the median home value in your county.
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Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.
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Hawaii Property Taxes
There's no state in the U.S. that has a lower property tax rate than Hawaii. The average effective property tax rate here is just 0.27%. Although the state’s median home value of almost $564,000 is higher than that of any other state, the typical Hawaii homeowner pays just $1,529 in property taxes each year. That's around $500 under the U.S. average.
A major reason Hawaii has low property taxes is that it offers generous exemptions on owner-occupied residences. Homeowners are eligible for exemptions ranging from $80,000 to $160,000, depending on their county of residence.
A financial advisor in Hawaii can help you understand how homeownership fits into your overall financial goals. Financial advisors can also help with investing and financial plans, including taxes, homeownership, retirement and more, to make sure you are preparing for the future.
How Property Taxes in Hawaii Work
Hawaii’s counties are entirely responsible for administering and collecting property taxes, although they all use similar systems. Taxes in each county are based on a home’s assessed value. To calculate this, county officials appraise every home in their respective counties. For new homes or homes that have been recently remodeled, this involves a personal visit to the property. Most other properties are subject to a mass appraisal, though.
A mass appraisal uses data on neighborhood, home type and other factors to value a large number of homes at once. This process occurs once a year and property owners are sent annual notices of assessment which list their property’s assessed value. If you disagree with this value, you can appeal the decision through your local tax board.
Once the assessed value is calculated, any applicable exemptions are subtracted before tax rates are applied. The most common exemption is the home exemption. This is available for owner-occupied primary residences only, meaning vacation homes are ineligible. In Honolulu County, the exemption is $80,000. So if your home has an assessed value of $400,000 and you qualify for the exemption, you'll only be taxed on $320,000.
Hawaii Property Tax Rates
Counties list property tax rates per $1,000 in taxable value. For example, the residential rate in Honolulu County is 3.5. That translates to a tax rate of .0035 (3.5 divided by $1,000). So if your home has a taxable value of $500,000, your annual tax bill would be $1,750.
Since exemptions vary by county, it is useful to compare effective tax rates. The effective tax rate is the median annual tax paid in the county as a percentage of the median home value. The table below shows the effective tax rates for all four of Hawaii’s populated counties, as well as the most recently listed rates.
As if year-round sunshine isn’t enticing enough, perhaps the notably low tax rates in Hawaii convinced you to make a move here. If you’re lucky enough to be scouting out a property to move into in Hawaii, take a glance at our Hawaii mortgage rates guide where you will find everything you need to know about mortgages in Hawaii before making your decision.
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Honolulu County, which covers all of the Island of Oahu, contains about 70% of Hawaii’s population. The county property tax rate is just 3.5 per $1,000 in taxable property, but the effective tax rate is even lower. The typical Honolulu resident pays $1,803 annually in property taxes, which makes the effective tax rate 0.29%. That's roughly a fourth of the U.S. average effective property tax rate.
Part of the reason real estate taxes in Honolulu County are so low are the exemptions available to many homeowners. As mentioned above, the basic home exemption can be claimed on any owner-occupied principal residence. It reduces taxable value by $80,000.
Seniors can claim a larger home exemption. If you are 65 years or older, the exemption is $120,000. To claim the home exemption you must file an application with the Honolulu Real Property Assessment Division by September 30 of the year before you claim the exemption. However, you only need to do so once. After you have been deemed eligible for the exemption, it will automatically be applied until you change residences.
If you have questions about how property taxes can affect your overall financial plans, a financial advisor in Honolulu can help you out.
Property tax rates on the Big Island are low at an effective rate of just 0.28%. Part of the reason for that low rate is that homeowners in Hawaii County who qualify for the homeowner exemption are also eligible for a lower tax rate.
While the standard residential rate in the county is 11.10 per $1,000 in taxable value, the rate for owner-occupied primary residences is just 6.15 per $1,000.
If you want to move to Hawaii, but don’t want to pay up for property taxes every year, Maui County may be the place for you. Maui’s effective tax rate of 0.19% is not only the lowest in the state of Hawaii, it's also the lowest of any county in the entire U.S. (out of over 3,100).
One of the reasons for that ultra-low rate is Maui’s generous homeowner exemption. If you own and live in your primary residence in Maui County, you can receive an exemption of $200,000 on your home’s assessed value. For example, if your home has an assessed value of $350,000, you would pay taxes on just $150,000 of that.
Kaua’i County, which includes the islands of Kauaʻi, Niʻihau, Lehua and Kaʻula, has an effective property tax rate of 0.25%. The average amount of property taxes a homeowner in Kauai County pays yearly is $1,321. As on the Big Island, property owners who qualify for the homeowner exemption in Kauai County also pay a lower tax rate. The full residential rate is 6.05 per $1,000 in taxable value, but the homestead rate is 3.05 per $1,000.
Places Receiving the Most Value for Their Property Taxes
SmartAsset’s interactive map highlights the places across the country where property tax dollars are being spent most effectively. Zoom between states and the national map to see the counties getting the biggest bang for their property tax buck.
Our study aims to find the places in the United States where people are getting the most value for their property tax dollars. To do this, we looked at property taxes paid, school rankings and the change in property values over a five-year period.
First, we used the number of households, median home value and average property tax rate to calculate a per capita property tax collected for each county.
As a way to measure the quality of schools, we analyzed the math and reading/language arts proficiencies for every school district in the country. We created an average score for each district by looking at the scores for every school in that district, weighting it to account for the number of students in each school. Within each state, we assigned every county a score between 1 and 10 (with 10 being the best) based on the average scores of the districts in each county.
Then, we calculated the change in property tax value in each county over a five-year period. Places where property values rose by the greatest amount indicated where consumers were motivated to buy homes, and a positive return on investment for homeowners in the community.
Finally, we calculated a property tax index, based on the criteria above. Counties with the highest scores were those where property tax dollars are going the furthest.