Hawaii Estate Tax: What Executors Need to Know

Hawaii's Estate Tax: The Basics

Hawaii imposes its own estate and transfer tax under Hawaii Revised Statutes Chapter 236E, entirely separate from the federal estate tax. The two key numbers you need to know:

Hawaii exemption: Approximately $5,490,000 (indexed for inflation under HRS 236E-6) — check the current year's amount at tax.hawaii.gov
Federal exemption: Over $13,000,000 per individual (2024 — indexed for inflation)

The practical implication: estates that owe zero federal estate tax may still owe significant Hawaii estate tax. This is one of the most common surprises for Hawaii executors — and one of the most costly to miss, because the return is due within 9 months of death.

Why Hawaii Estates Are More Exposed Than You Might Think

Hawaii has some of the highest real estate values in the United States. A family that has owned a modest home in Honolulu or Maui since the 1980s may now hold real property worth $1–$2 million or more. Add retirement accounts, life insurance, investment accounts, and a second property, and a middle-class Hawaii estate can approach or exceed $5.49 million without anyone expecting it.

The gross estate for Hawaii estate tax purposes includes:

All real property located in Hawaii (fee simple and leasehold)
All personal property located in Hawaii or owned by a Hawaii domiciliary
The full face value of life insurance proceeds (even if paid to a named beneficiary)
Retirement accounts (IRAs, 401(k)s, pension plans) — at their date-of-death value
Jointly held property — the deceased's share
Certain gifts made within three years of death

Hawaii Estate Tax Rates

Hawaii's estate tax is graduated. The tax applies only to the value of the estate that exceeds the exemption amount. The rates range from 10% to 20% on amounts above the exemption:

Taxable Estate (Above Exemption)	Rate
$0 – $1,000,000	10%
$1,000,001 – $2,000,000	11%
$2,000,001 – $3,000,000	12%
$3,000,001 – $4,000,000	13%
$4,000,001 – $5,000,000	14%
$5,000,001 – $6,000,000	15%
$6,000,001 – $7,000,000	16%
$7,000,001 – $8,000,000	17%
$8,000,001 – $9,000,000	18%
$9,000,001 – $10,000,000	19%
Over $10,000,000	20%

Note: Tax rates are applied to amounts above the applicable Hawaii exemption. Consult a Hawaii CPA or tax attorney for the current year's exemption amount and any legislative changes.

The Marital Deduction

Hawaii, like the federal government, provides an unlimited marital deduction for transfers to a surviving U.S. citizen spouse. Property transferred to a surviving U.S. citizen spouse is not subject to Hawaii estate tax. This defers the tax — but when the surviving spouse later dies, their estate will be subject to Hawaii estate tax on the full remaining estate (unless the exemption has increased).

Note: the marital deduction does not apply if the surviving spouse is not a U.S. citizen. A Qualified Domestic Trust (QDOT) may be needed in that situation — consult an attorney.

When Is Hawaii Form M-6 Due?

The Hawaii Estate and Transfer Tax Return (Form M-6) is due within 9 months of the date of death. A 6-month extension of time to file (not to pay) may be requested. However, any tax owed is still due within 9 months — interest and penalties accrue on unpaid amounts after that date.

File Form M-6 with the Hawaii Department of Taxation, not the probate court. Download the form at tax.hawaii.gov.

Who Must File

A Hawaii estate tax return (Form M-6) must be filed if:

The gross estate of a Hawaii resident exceeds the applicable Hawaii exemption amount; or
The gross estate of a non-resident includes real or tangible personal property located in Hawaii and the value exceeds the exemption.

Even if the estate is below the threshold and no tax is owed, it may be wise to file a return to create a clear record — particularly if the estate includes appreciated Hawaii real estate that could later be questioned.

Practical example: A couple owns a Honolulu condo worth $1.8 million, retirement accounts totaling $2.1 million, investment accounts of $800,000, and $400,000 in life insurance. Gross estate: $5.1 million. Below the Hawaii ~$5.49M exemption — no Hawaii estate tax. But if the condo is now worth $2.3 million due to appreciation, gross estate rises to $5.6 million — above the threshold. Hawaii estate tax would be owed on roughly $110,000 at 10%, approximately $11,000. Always calculate the current values before assuming no tax applies.

Hawaii Fiduciary Income Tax (Form N-40)

Separate from the estate tax, if the estate earns income after the date of death — rental income, bank interest, dividends — the estate must file a Hawaii Fiduciary Income Tax Return (Form N-40) for each tax year during administration. This is in addition to the federal Form 1041. Hawaii's income tax rates are among the highest in the country (up to 11%).

The Hawaii Form N-40 is due by the 20th day of the 4th month following the close of the estate's tax year. The estate can elect a fiscal year that ends on any month-end within 12 months of the date of death — which can affect when the N-40 is due.

Act early: If the gross estate might be near or above $5.49 million, engage a Hawaii CPA or estate tax attorney within the first few months after death. The 9-month deadline for Form M-6 arrives faster than most executors expect — especially when the administration involves appraisals, property transfers, and other time-consuming tasks.

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