Hawaii Retirement Income Tax: No Tax on Social Security, 401(k)s Count

Hawaii retirement income tax skips Social Security and qualifying employer-funded pensions paid at retirement, disability or death, but it reaches the retirement money you chose to put in yourself.1

A non-contributory pension paid at retirement comes through tax-free. Your 401(k) elective deferrals are taxed on Hawaii's graduated scale, and so, in general, is an IRA you funded yourself. For tax year 2025, that scale runs from 1.40 percent to a top rate of 11.00 percent, and a single filer doesn't reach the top rate until taxable income passes $325,000.1

For a pension, the Department of Taxation asks who put the money in and whether you had a choice about it.1 Hawaii law also has a separate exclusion for income its state retirement system statute exempts, and for comparable income under other public retirement systems.1

Does Hawaii Tax Social Security or Public Retirement System Benefits?

Social Security isn't taxed, and neither is first-tier Railroad Retirement. Hawaii doesn't tax Social Security benefits, and first-tier Railroad Retirement benefits are exempt from the state's net income tax on the same footing.1

Public retirement systems have their own exclusion. Hawaii law excludes the rights, benefits and other income that section 88-91 of the Hawaii Revised Statutes exempts. That's the section dealing with the state retirement system. The same provision excludes comparable income under any other public retirement system.1

That provision is a route to exclusion in its own right. You don't have to clear it before the who-paid-in test below applies to you.1

Military, federal and state or county pensions are on the state's not-taxed list. The 2025 Form N-11 instructions list pension or annuity distributions from a public (government) retirement system among the distributions Hawaii doesn't tax. Their examples are a federal civil service annuity, a military pension, and a state or county retirement system. That holds unless an employee made voluntary contributions under an elective right.1

Don't stretch that into a blanket rule for every payment from a public employer's plan. The statute's wording covers what section 88-91 exempts and comparable income under another public system. If your income comes from a public plan, ask the plan or a tax preparer which of your payments that covers. If you also chose to defer pay into a workplace plan, check that money against the elective test in the next section.

The Hawaii Department of Taxation explains both exclusions in Tax Information Release 96-5, including how it applies the contribution-source test to private pensions, 401(k)s and IRAs.

The Rule Behind Hawaii Retirement Income Tax: Who Paid In?

You might expect the answer to depend on the kind of account: pension, IRA, 401(k). For Hawaii's pension exclusion, the Department of Taxation asks who funded the income, and whether you had a choice.

The exempt side is employer-funded income. If your former employer paid the entire cost of your pension and you contributed nothing, that pension is non-contributory. Hawaii doesn't tax it when it's paid because of retirement, disability or death.1

The taxed side is employee-funded income. Money you chose to set aside yourself is taxable when it's paid back out to you.1

The test is the choice. The state treats a plan as your own investment when you could've taken that money in cash instead of putting it in.1 The clearest examples are 401(k) elective deferrals, the pay you chose to route from your paycheck into the plan, and, in general, distributions from an IRA you funded yourself.

A 401(k) isn't all-or-nothing, though. Where the employer also made matching or nonelective contributions, that employer-funded share stays excluded. An exclusion ratio decides how much of each distribution comes out tax-free.1

A contributory pension, one you paid part of the cost of, is harder. For a private employer's pension received at retirement, the 2025 Form N-11 instructions say it's partially taxed by Hawaii if you contributed to the plan.1

Tax Information Release 96-5 draws a finer line: having contributed isn't the same as having elected. Where an employee is required to contribute, with no right to have that money paid in cash instead, the release says those contributions are considered employer-funded too. It says so in its discussion of 401(k) plans.1

Those two documents leave a gap. The sources we read for this guide don't settle whether a private pension funded by mandatory contributions is fully excluded or partially taxed. Ask the Department of Taxation or a tax preparer before you count on either answer.

The payment has to qualify too. It must be paid by a pension plan because of retirement, disability or death. An early distribution that's subject to the 10 percent federal penalty tax doesn't qualify and is taxable.1

So the first question for your Hawaii tax bill isn't "Is this a pension or a 401(k)?" It's "Did my employer pay for this, or did I choose to put it in?"

Sorting Your Own Income

This is the step that trips people up, so work through your sources one at a time.

• A private pension you never paid into. Non-contributory, so Hawaii doesn't tax it when you receive it at retirement. Early retirement and disability retirement count.1
• A private pension you paid part of. The 2025 Form N-11 instructions say it's partially taxed by Hawaii.1 If your contributions were mandatory, with no option to take the money as cash, the sources we read don't settle how much is excluded. Ask the Department of Taxation or a tax preparer.
• A military, federal civil service, state or county pension. On the instructions' not-taxed list, unless you made voluntary contributions under an elective right.1
• A 401(k). The elective deferrals were yours, so that share of your distributions is taxable. If your employer also made matching or nonelective contributions, an exclusion ratio keeps that employer-funded share exempt.1
• An IRA you funded yourself. In general, withdrawals are taxable. The 2025 instructions say they may be fully or partly taxable, depending on whether the IRA holds deductible or nondeductible contributions.1
• A Roth IRA. The sources we read for this guide don't state how Hawaii treats Roth IRA withdrawals. Ask the Department of Taxation or a tax preparer.
• A rollover IRA. When money is transferred directly from an employer plan into a rollover IRA, the IRA is treated, in essence, as a continuation of the original plan. If a distribution from the original plan would have qualified, the IRA's distributions don't have to be reported either. If it would have been taxable, they're taxable too.1 The instructions' taxable example is a lump sum from an employer-funded profit-sharing plan the worker never paid into, received on leaving the job before retirement and rolled into an IRA. It doesn't count as a pension because it wasn't paid on retirement, disability or death.1
• A SEP or a SARSEP. A SEP is generally considered an employer-funded pension plan, and its distributions are generally excluded. A SARSEP is generally funded by salary reduction, where you could choose an employer contribution to your IRA or cash, and to that extent its distributions are taxable.1
• A 403(b) or teachers' tax-sheltered annuity. Where an employee of a public school or a charitable organization bought the annuity through salary reduction, distributions are taxable to the extent of the amounts subject to the employee's election.1
• A 457 plan, including the State of Hawaii Deferred Compensation Plan. Not eligible for the pension exclusion. That covers the state plan set up under chapter 88E and other section 457 plans of state or local governments or tax-exempt organizations.1
• The federal Thrift Savings Plan. Treated the same as a 401(k)-style cash or deferred arrangement, so it isn't eligible for the exclusion either.1
• A plan from your own self-employment. Where the employer and the employee are the same person, any plan of any type counts as a deferred compensation plan, and distributions to you aren't eligible for the exclusion. That rule doesn't disqualify distributions to other employees of the same employer.1

For 401(k)s, SARSEPs, the Thrift Savings Plan and 457 plans, the 2025 instructions say distributions may be partly or fully taxable.1

If you aren't sure whether your pension was contributory, check your benefit statements or ask your plan administrator. You're looking for how much, if anything, you paid in, and whether those contributions were required or elective. Take that record to a tax preparer. It's what they need to work out the taxable share.

On the 2025 Form N-11 resident return, the excluded amount goes on line 13, Pensions. Those qualifying distributions were counted in your federal adjusted gross income, and that line takes them out for Hawaii.1 Check the line on the form for the year you're filing.

What Hawaii Retirement Income Tax Costs You

Hawaii taxes the slice of your retirement income you funded by choice: your 401(k) elective deferrals and, in general, distributions from an IRA you funded yourself.1 That slice goes through the state's regular graduated income tax. The exempt slice never enters the calculation.

For tax year 2025, the schedule starts at 1.40 percent and tops out at 11.00 percent.1 The top rate applies only to taxable income above:

• $325,000 for a single filer or someone married filing separately
• $650,000 for a married couple filing jointly or a qualifying surviving spouse
• $487,500 for an unmarried head of household1

If your taxable income is under $100,000, the Department of Taxation sends you to its tax table instead of the rate schedule.1 Both are in the Form N-11 resident return instructions. Check there for exactly what applies to your income.

Two 2025 amounts come off your income first. The standard deduction on line 23 is $4,400 for a single filer or someone married filing separately, $8,800 for a married couple filing jointly or a qualifying surviving spouse, and $6,424 for a head of household. Hawaii didn't adopt the federal increase in the standard deduction for tax years 2018 through 2025, so don't plan on the federal amount.1

On line 25 of the 2025 form, residents are allowed $1,144 for each exemption they can claim. Someone who can be claimed as a dependent on another person's return can't claim one for themselves. The instructions also refer to additional exemptions for being 65 or older, and line 6a has an "Age 65 or over" oval to fill in if you were 65 or over as of January 1, 2026.1

Taxable income, on line 26, is what's left: line 20 minus your deduction on line 22 or 23, then minus your exemptions on line 25, and never less than zero.1

An illustration from the 2025 Tax Table itself. The table's own example is a married couple filing a joint return with taxable income of $23,275. On the $23,250 to $23,300 line, in the married filing jointly column, the tax shown is $399.1 That's one row for one filing status, so look up your own.

What this means in practice:

• If you live mostly on Social Security and a non-contributory pension, Hawaii taxes little or none of your retirement income.
• If your own 401(k) deferrals or an IRA you funded do the heavy lifting, those withdrawals are generally taxed on the graduated scale.

Which Retirement Income Does Hawaii Tax?

Why This Matters for Care

State tax is real money when you're pricing assisted living or in-home help. It leaves your budget before the care bill arrives. In Hawaii, how much it takes depends on your income mix.

If a non-contributory pension and Social Security carry your retirement, Hawaii leaves most of your income whole, and the money you planned for housing, health, and care stays available. But if you're drawing on your own 401(k) deferrals or an IRA you funded yourself, those withdrawals are generally taxable on Hawaii's graduated rates, and the after-tax figure is what actually covers care.

That belongs in an honest funding plan. Build the after-tax number into your budget, not the gross withdrawal, on every dollar Hawaii does tax. Our guide to building a senior care funding plan walks through how to map income, taxes, and care costs together. The broader guide to paying for senior care covers Medicaid, VA benefits, and private-pay options. Our guide to retirement accounts for care covers how to time those withdrawals when care costs enter the picture.

Learn More

Find personalized help mapping your Hawaii retirement income against care costs at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.