Partly taxed
How Hawaii taxes retirement income
Hawaii exempts pensions that are funded by the employer. That covers the state Employees’ Retirement System, federal civil service and military retired pay, and private pensions where the employer made all the contributions. Social Security is not taxed.
What Hawaii taxes are retirement savings you paid for yourself. Withdrawals from IRAs, and the part of 401(k), 403(b) and 457(b) plans that came from your own contributions, are taxable. For plans funded by both you and your employer, only the part tied to your contributions is taxed.
Hawaii’s rates are among the highest in the country, from 1.4% up to 11%, so the split matters. A retiree living mainly on an ERS pension and Social Security owes little Hawaii income tax, while one living on IRA withdrawals pays at full rates.
Questions
Does Hawaii tax ERS pensions?
No. Employer-funded pensions such as ERS are exempt.
Does Hawaii tax pensions from other states?
Not if they are qualified plans funded by the employer. The part funded by your own contributions is taxable.
Does Hawaii tax Social Security?
No.