How to Do Payroll in Hawaii

Last reviewed: October 2026

1. Get a Federal EIN

Every Hawaii payroll setup starts the same way: with the IRS, not the state. Apply for a free Employer Identification Number at irs.gov, and you'll have the number in about fifteen minutes. You need this EIN before you can open either of the two Hawaii state accounts described below, so treat it as the very first task on your list, not something to circle back to later.

2. Register With Hawaii State Agencies

Once the EIN is in hand, two separate state registrations follow. The Hawaii Department of Taxation (DOTAX) handles withholding, and you register through Hawaii Tax Online to open a withholding tax account. The Hawaii Department of Labor and Industrial Relations (DLIR) handles unemployment insurance, and that's a separate account with the Unemployment Insurance Division.

A lot of business owners already have a Hawaii Tax Online login for General Excise Tax (GET), the state's broad business tax on gross receipts. GET registration does not extend to payroll withholding. If you've been operating without employees and are now hiring, you need to add a withholding account to your existing profile before you can legally withhold a dollar from anyone's paycheck.

3. Set Up HW-4 Withholding

Hawaii has its own state income tax, and it does not piggyback on the federal W-4. Every employee needs to complete Form HW-4, the Hawaii Employee's Withholding Allowance Certificate, in addition to the federal W-4. The HW-4 still uses an allowance-based system even though the federal form dropped allowances back in 2020, so the two forms are calculated differently and neither one substitutes for the other.

Hawaii's income tax runs across twelve brackets, and rates climb from 1.4% up to 11% at the top end. Withhold based on the current year's tables from the Department of Taxation's Booklet A, applied to the HW-4 on file, and update your payroll system whenever the brackets change for a new tax year.

4. Handle Unemployment Insurance

Once your DLIR account is open, you'll be assigned a new-employer contribution rate. That rate applies to wages up to the state's annual taxable wage base, and both figures move a little most years, so check the current numbers before you budget payroll costs. Unemployment insurance is entirely employer-paid in Hawaii; you never withhold it from an employee's check.

After a few years on the books, your rate becomes experience-rated, meaning your own claims history starts to drive the number instead of the flat new-employer rate. Quarterly wage reports (Form UC-B6) come due the last day of the month following each quarter: April 30, July 31, October 31, and January 31.

Separately, most Hawaii employers also need Temporary Disability Insurance (TDI) coverage, either through a private carrier or, for larger employers, an approved self-insurance plan. TDI protects employees who can't work because of an off-the-job illness or injury, and it needs to be in place before your first employee's first shift, not arranged after the fact.

5. Choose a Pay Schedule

Hawaii sets a floor on how infrequently you can pay people. Wages must go out at least twice a month, and payment is due within seven days of the end of the pay period. Weekly, biweekly, and semi-monthly schedules all satisfy the rule. A monthly schedule is allowed only if a majority of your employees elect it by secret ballot or the DLIR director approves it, even if monthly pay is routine in the state you're relocating from.

Final pay follows its own timeline. An employee who quits or is fired should generally be paid their final wages promptly, and delays can expose an employer to penalty wages under Hawaii law. Build your offboarding checklist around getting that final check out on time, every time.

6. Deposits and Filing Calendar

Federal deposits follow the IRS's semi-weekly or monthly lookback schedule, and you'll reconcile them quarterly on Form 941. Hawaii withholding follows a parallel but separate schedule, semi-weekly, monthly, or quarterly depending on your annual liability, reconciled on Form HW-14. Unemployment insurance stays on its own quarterly clock through the UC-B6.

Three different calendars, three different agencies, and none of them line up perfectly with each other. A simple shared calendar with every deposit and filing date marked in advance saves a lot of last-minute scrambling, especially in your first year when the rhythm still feels unfamiliar.

7. Year-End W-2 Filing

Close out the year by issuing Form W-2 to every employee and filing W-3 with the Social Security Administration, both due January 31. Hawaii no longer requires an annual Form HW-3. Instead, file W-2 (or HW-2) copies with the Department of Taxation by January 31, and make sure their Hawaii withholding matches the totals you already reported on your four quarterly HW-14 returns. Run that check before you file, because a mismatch triggers questions from the Department of Taxation that are easier to avoid than to answer.

Late W-2s carry a per-form federal penalty that increases the longer you wait, and it stacks up fast once you have more than a handful of employees. Building a short year-end checklist, gather final pay data, reconcile withholding totals, file W-2s with the SSA and the state, turns a stressful January into a routine one.

A useful next step: try the Hawaii paycheck calculator to sanity-check a sample payroll run, or use the W-4 helper if an employee needs a hand filling out their withholding forms. For federal deposit mechanics specifically, our Form 941 guide walks through the quarterly return in more detail.

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