Is Shipping Taxable in Hawaii? Hawaii GET Rules for Delivery and Freight Charges
Hawaii does not impose a traditional sales tax. Instead, it imposes the General Excise Tax, or GET, on gross income from business activities. Shipping, delivery, and freight charges are generally included in gross income and are taxable when connected with taxable sales. This article explains Hawaii shipping tax rules and compliance considerations for ecommerce sellers.
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Is Shipping Taxable in Hawaii?
Hawaii is different from many other states because it does not impose a traditional sales tax. Instead, Hawaii imposes the General Excise Tax, commonly known as GET, on gross income from business activities.
For sellers, this means that shipping, delivery, freight, and similar charges are generally included in gross income when they are charged to customers in connection with a taxable sale. As a result, Hawaii shipping charges are generally taxable under the GET framework.
Source: Hawaii Department of Taxation, Tax Information Release No. 95-5 https://files.hawaii.gov/tax/legal/tir/1990_09/tir95-5.pdf
General Rule: Shipping Charges Are Generally Taxable in Hawaii
Under Hawaii’s GET system, the taxable base is generally the seller’s gross income from business activities. When a seller charges a customer for shipping or delivery as part of a sale, that charge is typically part of the seller’s gross receipts.
For example:
Product price: $100 Shipping charge: $8 Gross income / taxable base: $108
In this example, the seller would generally include the full $108 in the Hawaii GET tax base, rather than excluding the separately stated shipping charge.
Does Separately Stating Shipping Make It Non-Taxable?
Generally, no. In Hawaii, separately stating a shipping charge on the invoice does not automatically make the charge non-taxable.
This is an important distinction from states where separately stated shipping may be excluded from sales tax. Hawaii’s GET system focuses on gross income. If the shipping, delivery, or freight charge is collected by the seller as part of the transaction, it is generally treated as part of the taxable gross income.
Hawaii GET Is Not the Same as Sales Tax
For ecommerce sellers, the most important point is that Hawaii GET is not a standard retail sales tax.
In a traditional sales tax state, shipping taxability may depend on factors such as:
- whether the shipping charge is separately stated;
- whether the purchaser can avoid the charge;
- whether the shipment relates to taxable goods;
- whether the charge is for delivery, freight, or handling.
In Hawaii, the analysis is more focused on whether the amount collected is part of the seller’s gross income from business activity. Because of this, sellers should not simply apply another state’s shipping tax rules to Hawaii.
Common Compliance Issues for Ecommerce Sellers
Treating Hawaii like a regular sales tax state
Many ecommerce sellers use automated tax settings that are designed around standard state sales tax rules. Hawaii should be configured carefully because GET operates differently from traditional sales tax.
Excluding separately stated shipping
A separately stated shipping charge may still be part of taxable gross income in Hawaii. Sellers should avoid assuming that invoice presentation alone determines taxability.
Confusing marketplace and direct sales
For marketplace orders, platforms may handle certain tax collection obligations. For direct sales through Shopify, WooCommerce, or a custom website, sellers should separately confirm their Hawaii GET registration, collection, and filing responsibilities.
Not keeping sufficient records
Because Hawaii GET is based on gross income, sellers should retain invoices, order records, shipping records, marketplace reports, and tax filing data to support their reporting.
Practical Tips for Sellers Shipping to Hawaii
Sellers shipping goods to Hawaii customers should review their tax settings and reporting logic carefully. Shipping, delivery, and freight charges collected from customers should generally be included in the Hawaii GET tax base when they are connected with taxable sales.
Sellers should also ensure that marketplace reports, direct sales reports, invoices, and tax filings use consistent treatment. If the seller separately passes Hawaii GET on to customers, the checkout and invoice display should be reviewed for accuracy.
Conclusion
In Hawaii, shipping, delivery, freight, and similar charges are generally taxable under the General Excise Tax system when they are part of the seller’s gross income from a taxable transaction. Separately stating the charge on the invoice does not automatically make it non-taxable.
The key compliance takeaway for ecommerce sellers is clear: Hawaii shipping charges should generally be treated as taxable under GET when they are collected in connection with taxable sales.
Source: Hawaii Department of Taxation, Tax Information Release No. 95-5 https://files.hawaii.gov/tax/legal/tir/1990_09/tir95-5.pdf