A few U.S. states don’t have what we think of as the traditional “sales tax.” So as a Hawaii-based seller how do you handle shipping taxability when sales tax isn’t sales tax? Let’s take a look at how the Aloha State handles shipping taxability.
Is Shipping Taxable in Hawaii?
The Hawaii Department of Taxation has this to say, in a round-about way, about shipping taxability:
Hawaii does things a little differently from other states when it comes to sales tax. First of all, they actually have a “general excise tax” (GET) rather than a sales tax. And this GET is actually charged to the business rather than the consumer, though the business can (and usually does) pass the tax on to the consumer.
But if you are shipping to someone within Hawaii, then you would be responsible for GET on the total gross proceeds of the sale. This includes any shipping or delivery charges. (I.e. Unless you want to pay out of pocket, charge the GET on shipping charges to your buyers.)
If you live in Hawaii and ship goods to a customer in Hawaii, you are responsible for remitting GET on the entire gross proceeds of the sale to the state. Unless you want to pay out of pocket, charge your customers tax on the shipping and delivery fees you charge them.