Hawaii stands out from most states when it comes to grocery taxation. Instead of a traditional sales tax, the state applies a General Excise Tax (GET) on nearly all business transactions, including grocery sales. While customers may not see a separate grocery sales tax line at checkout, the GET often gets passed on through higher prices. 

This makes understanding Hawaii grocery tax rules essential for both shoppers and businesses. For a broader context, see this sales tax guide. 

Does Hawaii Tax Groceries?

The short answer is yes. There is a tax on food in Hawaii but not in the traditional sales tax sense. Instead, Hawaii applies a General Excise Tax (GET) on nearly all business activities, including grocery sales. To understand how it differs from other systems, check out VAT vs. sales tax. 

Overview of Sales Tax in Hawaii

Hawaii levies GET, which is broader and applies to nearly all business income. The state’s base GET rate is 4%, with counties like Honolulu (Oʻahu) adding a 0.5% surcharge, making the effective rate 4.5% in some locations.

Unlike a sales tax that targets only the final retail sale, the GET is applied at multiple stages of commerce, from wholesalers to retailers to service providers. Businesses often pass this tax on to consumers by adding it to receipts or embedding it in shelf prices, which makes it feel similar to a sales tax, even though it is technically different.

For compliance context, see sales tax exemption certificate rules.

For grocery retailers, restaurants, and distributors, this means every transaction, from selling basic staples to operating dining establishments, falls under the GET framework.

Grocery Tax Rules in Hawaii

Unlike places that exempt groceries from retail sales tax, Hawaii food tax is applicable on most food purchases under the GET system. Here’s how it works across categories:

  • Staple Groceries: Everyday items such as bread, milk, fruits, and vegetables are not exempt. GET applies at the business level, and many retailers pass the cost on to consumers.
  • Beverages, Soft Drinks, and Candy: These items are treated the same as other groceries and are subject to GET. There is no special exemption for snacks or soda.
  • SNAP and WIC Purchases: While federal law prohibits taxing SNAP and WIC benefits directly, Hawaii businesses still owe GET on these transactions. However, they cannot pass this tax on to customers using benefits.

The broad application of GET means that both consumers and businesses feel the tax impact. To stay compliant, learn more about sales tax compliance. 

Tax on Food and Beverages in Hawaii

The way Hawaii applies the GET creates unique outcomes for both consumers and businesses when it comes to food and beverages.

Here is how food and beverage tax in Hawaii rolls out for consumers and businesses:

For Consumers:

  • Shoppers don’t see a separate sales tax line at checkout, but they often pay higher prices because many businesses pass the GET cost on.
  • Whether you buy staple groceries, a takeout meal, or a soda, the tax burden is embedded in the price.
  • Dining out and buying prepared foods can feel especially costly since restaurants apply GET to all food and beverage sales.

For Businesses:

  • Restaurants, grocery stores, and beverage retailers are required to pay GET on their gross income, regardless of profitability.
  • Businesses may choose to absorb this cost or itemize it on receipts as a “tax surcharge,” though legally the obligation remains theirs.
  • Alcoholic beverages are subject not only to GET but also to separate Hawaii excise taxes, further increasing compliance requirements for sellers.

Understanding this dual system helps avoid mistakes during a sales tax audit. 

Local Jurisdiction Variations in Hawaii

The sales tax on groceries in Hawaii remains consistent across Honolulu, Maui, Kauai, and the Big Island.

The base GET rate is 4%, with certain counties (such as Honolulu) adding a small surcharge, typically 0.5%, that applies across all purchases, including groceries and prepared foods.

Cities and counties cannot exempt groceries, beverages, or prepared foods from the GET, ensuring consistent application.

While consumers experience near-uniform prices across the islands, businesses operating in multiple counties must track surcharges carefully to ensure accurate filings.

Businesses operating in multiple counties must track surcharges carefully to avoid compliance issues. For example, understanding physical nexus and economic nexus is critical. 

Examples: How Grocery Tax Applies in Hawaii

To understand how Hawaii’s GET applies in real life, here are a few everyday examples:

  • Bag of Rice
    • Consumer Tax: No separate sales tax line appears at checkout, but the retailer factors GET into the price.
    • Business Impact: The grocery store pays GET on the revenue from the sale.
  • Packaged Candy Bar
    • Consumer Tax: Cost includes the GET portion, passed on through shelf pricing.
    • Business Impact: Candy sales are taxable under GET without exemption.
  • Restaurant Meal
    • Consumer Tax: Diners pay menu prices that already include the GET.
    • Business Impact: Restaurants must remit GET on total food and beverage revenue.
  • Coffee Beans vs. Brewed Coffee
    • Coffee Beans (staple grocery): Taxed under GET at the business level.
    • Brewed Coffee (prepared food): Also taxed, with cost typically passed to the consumer in menu pricing.
  • SNAP/WIC Purchases
    • Consumer Tax: Customers using SNAP or WIC do not see added tax at checkout.
    • Business Impact: Retailers cannot pass GET onto SNAP/WIC customers, but they still owe the GET on those sales.

These examples highlight how Hawaii’s GET differs from traditional sales tax systems: the tax is always there, but it is embedded in prices and borne primarily by businesses, not directly charged to consumers at checkout.

Some states don’t follow the same approach. See which states do not accept out-of-state resale certificates. 

Compliance Challenges for Businesses in Hawaii

While Hawaii’s GET simplifies consumer-facing transactions, it creates several compliance challenges for businesses:

  • Multiple Tax Rates: The standard GET rate is 4%, but some counties, like Honolulu (Oahu), impose a 0.5% surcharge, bringing the total to 4.5%. Businesses must track and apply the correct rate based on their location.
  • Broad Tax Base: Unlike traditional sales tax, GET applies to nearly all business activities, retail, wholesale, services, and even rent. Companies must ensure proper classification of each revenue stream to avoid misreporting.
  • No Exemptions for SNAP/WIC at the Business Level: While SNAP and WIC customers don’t pay additional tax, retailers must still remit GET on those sales, creating a cost burden that businesses must absorb.
  • Filing and Record-Keeping: Businesses must file periodic GET returns (monthly, quarterly, or annually depending on revenue). Proper record-keeping is essential to meet statute of limitations. 
  • Licensing Requirements: Companies engaging in taxable activities must obtain a Hawaii GET license before operating. Failure to register can result in fines and prevent legal business operation. Obtaining a Hawaii GET license, much like getting a sales tax permit. 
  • Consumer Pricing Challenges: Since GET is factored into prices rather than added at checkout, businesses must carefully adjust pricing strategies to stay competitive while covering tax obligations.

These compliance responsibilities make it crucial for Hawaii businesses to have strong tax management systems. This complexity highlights why sales tax is important and why automation helps.

How Commenda Helps with Hawaii Grocery Tax Compliance

Managing Hawaii’s GET can be complex for businesses because of its broad base, county surcharges, and unique application compared to standard sales taxes. That’s where Commenda makes compliance seamless:

  • Automated Grocery and Food Tax Calculations: Accurately applies GET across grocery staples, prepared foods, and beverages.
  • Real-Time Rule Updates: Automatically adjusts when Hawaii or county-level GET regulations change.
  • Simplified Filings: Streamlines VAT, GST, and sales tax filings, saving time and reducing administrative effort.
  • Reduced Compliance Risk: Minimizes errors, penalties, and the burden of manual tracking.

Commenda, a sales tax platform, ensures your grocery tax compliance in Hawaii is accurate and effortless. Book a demo today and get started. 

FAQs on Grocery Tax in Hawaii

1. Are groceries taxed in Hawaii?

Yes. Most grocery items are subject to Hawaii’s General Excise Tax (GET), which is applied at the business level but often passed on to consumers.

2. Is there sales tax on prepared food in Hawaii?

Yes. Prepared meals, takeout, and restaurant dining are fully taxable under General Excise Tax (GET).

3. Are soft drinks and candy taxed?

Yes. Hawaii does not exempt snacks, soda, or candy. These are taxed the same as other groceries.

4. Are groceries purchased with SNAP/WIC taxed?

No. Federal law prohibits taxing SNAP and WIC purchases. However, businesses must still pay General Excise Tax (GET) on these transactions but cannot pass the cost to customers using benefits.

5. Do restaurants charge sales tax in Hawaii?

Restaurants collect General Excise Tax (GET) on food and beverage sales. This is typically shown as a separate line item on receipts.

6. How often do grocery tax laws change in Hawaii?

Hawaii’s General Excise Tax (GET) structure is relatively stable, but county-level surcharges and administrative updates can occur. Businesses must stay informed to remain compliant.

7. How can businesses automate compliance?

Businesses can use tools like Commenda’s Sales Tax Software to automate General Excise Tax (GET) calculations, filings, and rule updates.

8. Does Commenda’s software handle multi-state grocery tax?

Yes. Commenda supports compliance across multiple states, helping businesses with both Hawaii General Excise Tax (GET) and other state/local tax rules.