Hawaii state tax- too good to be true

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sil2017
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Hawaii state tax- too good to be true

Post by sil2017 »

I have a CA public pension- defined benefit pension.
I have read that I will not be taxed my pension in Hawaii.

Doing the Math based on the instructions for filing Hawaii income tax form:

Hypothetically-

If my Federal AGI is 100k (65k for my pension plus 35k for long term capital gain)

My Hawaii AGI would be 35k

itemized deduction -medical insurance premium of 12k

I would not owe state tax ( 35k minus 12k = 23k)

Based on the state tax law, if my state AGI is 24k (individual) or less, I do not pay any long term gain tax.

As a result of my hypothetical Federal AGI of 100k, I would not pay any state tax

Am I missing something or is it too good to be true?
(I guess the law of not taxing defined benefit pension out of state could possibly be removed in the future)
Last edited by sil2017 on Sat Sep 12, 2020 6:51 pm, edited 1 time in total.
petulant
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Re: Hawaii state tax- too good to be true

Post by petulant »

Many states have favorable treatment of retirement income. It is not surprising.
marcopolo
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Re: Hawaii state tax- too good to be true

Post by marcopolo »

A number of states do not tax pensions. So, that is not that unusual.

HI also does not tax withdrawals from 401k type plans that are attributable to employer matching contributions. Only the employee deferral portion is taxed as income.
Once in a while you get shown the light, in the strangest of places if you look at it right.
BionicBillWalsh
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Re: Hawaii state tax- too good to be true

Post by BionicBillWalsh »

As long as it’s a public pension you won’t be taxed. Private pensions are not given the same treatment and are taxed as regular income.
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celia
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Re: Hawaii state tax- too good to be true

Post by celia »

I think SS also is not taxed by most states.
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Re: Hawaii state tax- too good to be true

Post by marcopolo »

BionicBillWalsh wrote: Sun Sep 13, 2020 3:39 am As long as it’s a public pension you won’t be taxed. Private pensions are not given the same treatment and are taxed as regular income.
This is not true.

Private pensions are also excluded from HI state income tax, as long as they are employer funded.
Even the employer funded portion of 401k plans (matching contributions) are excluded from taxable income when withdrawn during retirement.
Only portions of pensions (or 401k plans) that an employee voluntarily contributes to is included in taxable income. Involuntary contributions from the employee (forced contributions) are considered to be employer funded and are also excluded from taxable income.

PS. Love your signature line.
Once in a while you get shown the light, in the strangest of places if you look at it right.
BionicBillWalsh
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Re: Hawaii state tax- too good to be true

Post by BionicBillWalsh »

Thanks for the clarification. And your exquisite taste in fine signatures.
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ohboy!
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Re: Hawaii state tax- too good to be true

Post by ohboy! »

La la la la laaa
MathIsMyWayr
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Re: Hawaii state tax- too good to be true

Post by MathIsMyWayr »

marcopolo wrote: Sun Sep 13, 2020 4:02 am
BionicBillWalsh wrote: Sun Sep 13, 2020 3:39 am As long as it’s a public pension you won’t be taxed. Private pensions are not given the same treatment and are taxed as regular income.
This is not true.

Private pensions are also excluded from HI state income tax, as long as they are employer funded.
Even the employer funded portion of 401k plans (matching contributions) are excluded from taxable income when withdrawn during retirement.
Only portions of pensions (or 401k plans) that an employee voluntarily contributes to is included in taxable income. Involuntary contributions from the employee (forced contributions) are considered to be employer funded and are also excluded from taxable income.

PS. Love your signature line.
I rolled over previous employers' 401(k) to current employer's plan, all within Fidelity. Did I lose the record of the portion of the previous employers' contributions/earnings? Fidelity netbenefits shows the percentages of the following:
  • Rollover contribution
    Pre-tax contribution
    Company match
    Roth in-plan conversion
marcopolo
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Re: Hawaii state tax- too good to be true

Post by marcopolo »

MathIsMyWayr wrote: Sun Sep 13, 2020 2:09 pm
marcopolo wrote: Sun Sep 13, 2020 4:02 am
BionicBillWalsh wrote: Sun Sep 13, 2020 3:39 am As long as it’s a public pension you won’t be taxed. Private pensions are not given the same treatment and are taxed as regular income.
This is not true.

Private pensions are also excluded from HI state income tax, as long as they are employer funded.
Even the employer funded portion of 401k plans (matching contributions) are excluded from taxable income when withdrawn during retirement.
Only portions of pensions (or 401k plans) that an employee voluntarily contributes to is included in taxable income. Involuntary contributions from the employee (forced contributions) are considered to be employer funded and are also excluded from taxable income.

PS. Love your signature line.
I rolled over previous employers' 401(k) to current employer's plan, all within Fidelity. Did I lose the record of the portion of the previous employers' contributions/earnings? Fidelity netbenefits shows the percentages of the following:
  • Rollover contribution
    Pre-tax contribution
    Company match
    Roth in-plan conversion
Disclaimer:
This is only applicable to HI state taxes, and I am not a tax expert, just based on what i have been able to glean from reading the tax regulations and filing instructions.

What i have been able to glean is that, much like many tax issues, it is up to you to determine your taxable amounts, and be able to support that if asked. The rules say the proportions carry forward through any rollovers and such. So, even a 401k rolled over to a IRA will keep the tax-free portion associated with employer contributions. You declare the percentage at the time of filing. So, if you have records of your percentiles (perhaps previous employer can provide the info prior to rollover?), you should be able to take advantage of that.

My 401k was administered by Fidelity, and i was able to get the exact percentages from them just prior to rolling over the 401k to an IRA prior to retirement. I keep this separate from other IRA dollars to keep the calculations simple going forward.

Having mixed various sources certainly makes the math much more complicated, but as long as you can sort it out (should be easy for you, right :happy ), the rules allow for the prorated exclusion, as far as i am aware.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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CAsage
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Re: Hawaii state tax- too good to be true

Post by CAsage »

I will observe that the cost of living in Hawaii is quite a bit higher than stateside. They import almost everything.... But it's sunny there!
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Re: Hawaii state tax- too good to be true

Post by marcopolo »

CAsage wrote: Sun Sep 13, 2020 2:22 pm I will observe that the cost of living in Hawaii is quite a bit higher than stateside. They import almost everything.... But it's sunny there!
I suppose it depends on where you are comparing to.
It is more expensive than where we moved from, but we planned on that. Maybe not so much from Bay Area, NYC, Seattle, etc...

All places have their pluses and minuses. Sunny and 80 degrees as I get ready to head out for a long bike ride along a coastal road with expansive ocean views. What price to put on that?
Once in a while you get shown the light, in the strangest of places if you look at it right.
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heartwood
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Re: Hawaii state tax- too good to be true

Post by heartwood »

seconding CAsage Taxes may not be the critical item.
CAsage wrote: Sun Sep 13, 2020 2:22 pm I will observe that the cost of living in Hawaii is quite a bit higher than stateside. They import almost everything.... But it's sunny there!
sil2017 wrote: Sat Sep 12, 2020 6:34 pm I have a CA public pension- defined benefit pension.
I have read that I will not be taxed my pension in Hawaii.

Doing the Math based on the instructions for filing Hawaii income tax form:

Hypothetically-

If my Federal AGI is 100k (65k for my pension plus 35k for long term capital gain)

My Hawaii AGI would be 35k

itemized deduction -medical insurance premium of 12k

I would not owe state tax ( 35k minus 12k = 23k)

Based on the state tax law, if my state AGI is 24k (individual) or less, I do not pay any long term gain tax.

As a result of my hypothetical Federal AGI of 100k, I would not pay any state tax

Am I missing something or is it too good to be true?
(I guess the law of not taxing defined benefit pension out of state could possibly be removed in the future)
If your hypothetical AGI is in the ballpark you might be surprised at COL, but maybe not from CA. Most items are +20% v. mainland. Housing can be shocking as well.
checkout a city cost comparison calculator, here's one: https://www.bestplaces.net/cost-of-livi ... -hi/100000
cowbman
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Re: Hawaii state tax- too good to be true

Post by cowbman »

sil2017 wrote: Sat Sep 12, 2020 6:34 pm I have a CA public pension- defined benefit pension.
I have read that I will not be taxed my pension in Hawaii.

Doing the Math based on the instructions for filing Hawaii income tax form:

Hypothetically-

If my Federal AGI is 100k (65k for my pension plus 35k for long term capital gain)

My Hawaii AGI would be 35k

itemized deduction -medical insurance premium of 12k

I would not owe state tax ( 35k minus 12k = 23k)

Based on the state tax law, if my state AGI is 24k (individual) or less, I do not pay any long term gain tax.

As a result of my hypothetical Federal AGI of 100k, I would not pay any state tax

Am I missing something or is it too good to be true?
(I guess the law of not taxing defined benefit pension out of state could possibly be removed in the future)
You will still have to pay FTB (ie California state taxes) on the pension as it's California derived.
rooms222
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Re: Hawaii state tax- too good to be true

Post by rooms222 »

cowbman wrote: Sun Sep 13, 2020 3:15 pm
sil2017 wrote: Sat Sep 12, 2020 6:34 pm I have a CA public pension- defined benefit pension.
I have read that I will not be taxed my pension in Hawaii.

Doing the Math based on the instructions for filing Hawaii income tax form:

Hypothetically-

If my Federal AGI is 100k (65k for my pension plus 35k for long term capital gain)

My Hawaii AGI would be 35k

itemized deduction -medical insurance premium of 12k

I would not owe state tax ( 35k minus 12k = 23k)

Based on the state tax law, if my state AGI is 24k (individual) or less, I do not pay any long term gain tax.

As a result of my hypothetical Federal AGI of 100k, I would not pay any state tax

Am I missing something or is it too good to be true?
(I guess the law of not taxing defined benefit pension out of state could possibly be removed in the future)
You will still have to pay FTB (ie California state taxes) on the pension as it's California derived.
I believe this is no longer the case since this Federal law was passed in 1996.

https://finance.zacks.com/pay-taxes-pen ... -8131.html
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sil2017
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Re: Hawaii state tax- too good to be true

Post by sil2017 »

Thanks all in regards to the pension part .

I am more interested in the zero state tax question based on Hawaii AGI of 35k after being credited back 35 k for the CA public pension.

So if I itemize deduction for Hawaii and my insurance premium is 12k than my state AGI will be 23k

Do I need to pay Hawaii income tax on the 23k or will it be zero tax as long term capital gain on the AGI will be 24k or less ?
Last edited by sil2017 on Sun Sep 13, 2020 4:01 pm, edited 1 time in total.
MathIsMyWayr
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Re: Hawaii state tax- too good to be true

Post by MathIsMyWayr »

rooms222 wrote: Sun Sep 13, 2020 3:45 pm
cowbman wrote: Sun Sep 13, 2020 3:15 pm
sil2017 wrote: Sat Sep 12, 2020 6:34 pm I have a CA public pension- defined benefit pension.
I have read that I will not be taxed my pension in Hawaii.

Doing the Math based on the instructions for filing Hawaii income tax form:

Hypothetically-

If my Federal AGI is 100k (65k for my pension plus 35k for long term capital gain)

My Hawaii AGI would be 35k

itemized deduction -medical insurance premium of 12k

I would not owe state tax ( 35k minus 12k = 23k)

Based on the state tax law, if my state AGI is 24k (individual) or less, I do not pay any long term gain tax.

As a result of my hypothetical Federal AGI of 100k, I would not pay any state tax

Am I missing something or is it too good to be true?
(I guess the law of not taxing defined benefit pension out of state could possibly be removed in the future)
You will still have to pay FTB (ie California state taxes) on the pension as it's California derived.
I believe this is no longer the case since this Federal law was passed in 1996.

https://finance.zacks.com/pay-taxes-pen ... -8131.html
No so quick. In Oregon, they increase the state pension benefits to compensate for the in-state taxes with certain restrictions. I believe that no compensation if you pay out of state taxes on Oregon state pension.

The Legislature then established tax remedy payments, increasing benefits to compensate for the state taxes. The maximum tax payment is 9.89 percent of a member's benefits. In 2013, legislators eliminated tax remedy payments from qualifying members who live out of state and were not paying Oregon income taxes. The Oregon Supreme Court upheld this change
palanzo
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Re: Hawaii state tax- too good to be true

Post by palanzo »

marcopolo wrote: Sun Sep 13, 2020 4:02 am
Only portions of pensions (or 401k plans) that an employee voluntarily contributes to is included in taxable income. Involuntary contributions from the employee (forced contributions) are considered to be employer funded and are also excluded from taxable income.
Do you have a list or a link to the states that follow this principle?
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Re: Hawaii state tax- too good to be true

Post by palanzo »

sil2017 wrote: Sun Sep 13, 2020 3:52 pm Thanks all in regards to the pension part .

I am more interested in the zero state tax question based on Hawaii AGI of 35k after being credited back 35 k for the CA public pension.

So if I itemize deduction for Hawaii and my insurance premium is 12k than my state AGI will be 23k

Do I need to pay Hawaii income tax on the 23k or will it be zero tax as long term capital gain on the AGI will be 24k or less ?
You might want to fill out a HI tax return to see what you will need to pay.

https://tax.hawaii.gov/forms/a1_b1_1income/

Or if you use TurboTax buy the HI return and run the numbers.
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Re: Hawaii state tax- too good to be true

Post by bayview »

CAsage wrote: Sun Sep 13, 2020 2:22 pm I will observe that the cost of living in Hawaii is quite a bit higher than stateside. They import almost everything.... But it's sunny there!
Sorry, but... Mainland, not stateside. “Stateside” tends to irk Hawaii residents. :D :beer
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rooms222
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Re: Hawaii state tax- too good to be true

Post by rooms222 »

MathIsMyWayr wrote: Sun Sep 13, 2020 4:00 pm
rooms222 wrote: Sun Sep 13, 2020 3:45 pm
cowbman wrote: Sun Sep 13, 2020 3:15 pm
sil2017 wrote: Sat Sep 12, 2020 6:34 pm I have a CA public pension- defined benefit pension.
I have read that I will not be taxed my pension in Hawaii.

Doing the Math based on the instructions for filing Hawaii income tax form:

Hypothetically-

If my Federal AGI is 100k (65k for my pension plus 35k for long term capital gain)

My Hawaii AGI would be 35k

itemized deduction -medical insurance premium of 12k

I would not owe state tax ( 35k minus 12k = 23k)

Based on the state tax law, if my state AGI is 24k (individual) or less, I do not pay any long term gain tax.

As a result of my hypothetical Federal AGI of 100k, I would not pay any state tax

Am I missing something or is it too good to be true?
(I guess the law of not taxing defined benefit pension out of state could possibly be removed in the future)
You will still have to pay FTB (ie California state taxes) on the pension as it's California derived.
I believe this is no longer the case since this Federal law was passed in 1996.

https://finance.zacks.com/pay-taxes-pen ... -8131.html
No so quick. In Oregon, they increase the state pension benefits to compensate for the in-state taxes with certain restrictions. I believe that no compensation if you pay out of state taxes on Oregon state pension.

The Legislature then established tax remedy payments, increasing benefits to compensate for the state taxes. The maximum tax payment is 9.89 percent of a member's benefits. In 2013, legislators eliminated tax remedy payments from qualifying members who live out of state and were not paying Oregon income taxes. The Oregon Supreme Court upheld this change
That is very slick that they have a bonus payment if you live in-state. I think that is to get around the fact that they cannot tax you if you move out of state.
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Re: Hawaii state tax- too good to be true

Post by cowdogman »

sil2017 wrote: Sun Sep 13, 2020 3:52 pm Thanks all in regards to the pension part .

I am more interested in the zero state tax question based on Hawaii AGI of 35k after being credited back 35 k for the CA public pension.

So if I itemize deduction for Hawaii and my insurance premium is 12k than my state AGI will be 23k

Do I need to pay Hawaii income tax on the 23k or will it be zero tax as long term capital gain on the AGI will be 24k or less ?
Couple probably minor points (acknowledging that I know nothing about HI income tax but assume it generally follows Fed taxes):

1. Health insurance deduction (unless self-employed) does not lower AGI, just taxable income. But looks like the $24 threshold you refer to is HI TI, not AGI.

2. Health insurance deduction (unless self-employed) is likely subject to an AGI floor (a quick look indicated 10% of AGI for HI in 2019).

I'd suggest you print out the 2019 HI income tax forms and just run some hypothetical numbers to avoid surprises.

Good luck.
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Re: Hawaii state tax- too good to be true

Post by marcopolo »

heartwood wrote: Sun Sep 13, 2020 2:51 pm seconding CAsage Taxes may not be the critical item.
CAsage wrote: Sun Sep 13, 2020 2:22 pm I will observe that the cost of living in Hawaii is quite a bit higher than stateside. They import almost everything.... But it's sunny there!
sil2017 wrote: Sat Sep 12, 2020 6:34 pm I have a CA public pension- defined benefit pension.
I have read that I will not be taxed my pension in Hawaii.

Doing the Math based on the instructions for filing Hawaii income tax form:

Hypothetically-

If my Federal AGI is 100k (65k for my pension plus 35k for long term capital gain)

My Hawaii AGI would be 35k

itemized deduction -medical insurance premium of 12k

I would not owe state tax ( 35k minus 12k = 23k)

Based on the state tax law, if my state AGI is 24k (individual) or less, I do not pay any long term gain tax.

As a result of my hypothetical Federal AGI of 100k, I would not pay any state tax

Am I missing something or is it too good to be true?
(I guess the law of not taxing defined benefit pension out of state could possibly be removed in the future)
If your hypothetical AGI is in the ballpark you might be surprised at COL, but maybe not from CA. Most items are +20% v. mainland. Housing can be shocking as well.
checkout a city cost comparison calculator, here's one: https://www.bestplaces.net/cost-of-livi ... -hi/100000

Yes, hopefully it does not come as a surprise to anyone that Hawaii might be an expensive place to live. I think what we are talking about here is one small way to stretch your dollars a bit.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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Re: Hawaii state tax- too good to be true

Post by marcopolo »

sil2017 wrote: Sun Sep 13, 2020 3:52 pm Thanks all in regards to the pension part .

I am more interested in the zero state tax question based on Hawaii AGI of 35k after being credited back 35 k for the CA public pension.

So if I itemize deduction for Hawaii and my insurance premium is 12k than my state AGI will be 23k

Do I need to pay Hawaii income tax on the 23k or will it be zero tax as long term capital gain on the AGI will be 24k or less ?
Sorry, I missed that part of your question.

I believe you have a mis-understanding on how capital gains are taxed. From my understanding, they are not at 0% up to $24k. They follow the same progressive tax rates (between 1.4% to 7.2%) as all other types of income up to that point. Beyond that, the marginal rates are capped at 7.25% for capital gains, while rates for ordinary income continue to rise (up to as much as 11%). So, there is a bit of a break for capital gains relative to other types of income, but only at higher incomes, and there is really no 0% capital gains rate bracket.

EDIT: For single filer with $23k of taxable income (after deduction, exemptions, etc), HI income tax in 2019 would have been ~$1284
Last edited by marcopolo on Sun Sep 13, 2020 6:35 pm, edited 1 time in total.
Once in a while you get shown the light, in the strangest of places if you look at it right.
marcopolo
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Re: Hawaii state tax- too good to be true

Post by marcopolo »

palanzo wrote: Sun Sep 13, 2020 4:49 pm
marcopolo wrote: Sun Sep 13, 2020 4:02 am
Only portions of pensions (or 401k plans) that an employee voluntarily contributes to is included in taxable income. Involuntary contributions from the employee (forced contributions) are considered to be employer funded and are also excluded from taxable income.
Do you have a list or a link to the states that follow this principle?
Sorry, I do not have, or know of, such a list.

I am only familiar with PA (which does not tax any retirement plan income), and HI which follows above idea because I have done my taxes in both of those states.
Last edited by marcopolo on Sun Sep 13, 2020 6:36 pm, edited 1 time in total.
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Re: Hawaii state tax- too good to be true

Post by marcopolo »

bayview wrote: Sun Sep 13, 2020 5:02 pm
CAsage wrote: Sun Sep 13, 2020 2:22 pm I will observe that the cost of living in Hawaii is quite a bit higher than stateside. They import almost everything.... But it's sunny there!
Sorry, but... Mainland, not stateside. “Stateside” tends to irk Hawaii residents. :D :beer
Eh, You get used to it pretty quickly...
Once in a while you get shown the light, in the strangest of places if you look at it right.
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Re: Hawaii state tax- too good to be true

Post by PaulF »

marcopolo wrote: Sun Sep 13, 2020 6:21 pm
bayview wrote: Sun Sep 13, 2020 5:02 pm
CAsage wrote: Sun Sep 13, 2020 2:22 pm I will observe that the cost of living in Hawaii is quite a bit higher than stateside. They import almost everything.... But it's sunny there!
Sorry, but... Mainland, not stateside. “Stateside” tends to irk Hawaii residents. :D :beer
Eh, You get used to it pretty quickly...
Well I found it jarring, and I have only been to HI twice! :)
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heartwood
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Re: Hawaii state tax- too good to be true

Post by heartwood »

PaulF wrote: Sun Sep 13, 2020 11:11 pm
marcopolo wrote: Sun Sep 13, 2020 6:21 pm
bayview wrote: Sun Sep 13, 2020 5:02 pm
CAsage wrote: Sun Sep 13, 2020 2:22 pm I will observe that the cost of living in Hawaii is quite a bit higher than stateside. They import almost everything.... But it's sunny there!
Sorry, but... Mainland, not stateside. “Stateside” tends to irk Hawaii residents. :D :beer
Eh, You get used to it pretty quickly...
Well I found it jarring, and I have only been to HI twice! :)
You get used to it pretty fast or you'll be gently or otherwise reminded. I still run into mainland friends who don't seem to know it's a state. A common island saying is "this isn't the mainland" used in many situations: slow down, "this isn't ..." Or saying too frequently that things are done differently "back in the states" gets a response that "this isn't ..."

Another more sensitive subject is saying "hawaiian time" as a comment on the less punctualness of appointments, esp if its a good surf day. I was strongly told by a several-year local friend with hawaiian heritage that it was offensive to her.

But there really is an Aloha spirit in daily life.
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Re: Hawaii state tax- too good to be true

Post by tj »

marcopolo wrote: Sat Sep 12, 2020 7:18 pm A number of states do not tax pensions. So, that is not that unusual.

HI also does not tax withdrawals from 401k type plans that are attributable to employer matching contributions. Only the employee deferral portion is taxed as income.
How would you keep track of the percentage that is the employer contribution?
tj
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Re: Hawaii state tax- too good to be true

Post by tj »

sil2017 wrote: Sun Sep 13, 2020 3:52 pm Thanks all in regards to the pension part .

I am more interested in the zero state tax question based on Hawaii AGI of 35k after being credited back 35 k for the CA public pension.

So if I itemize deduction for Hawaii and my insurance premium is 12k than my state AGI will be 23k

Do I need to pay Hawaii income tax on the 23k or will it be zero tax as long term capital gain on the AGI will be 24k or less ?
Most states treat capital gains as income. It would be news to me to learn that Hawaii follows the federal government in regards to having "0% LTCG/qualified dividends"
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Re: Hawaii state tax- too good to be true

Post by marcopolo »

tj wrote: Mon Sep 14, 2020 10:50 am
marcopolo wrote: Sat Sep 12, 2020 7:18 pm A number of states do not tax pensions. So, that is not that unusual.

HI also does not tax withdrawals from 401k type plans that are attributable to employer matching contributions. Only the employee deferral portion is taxed as income.
How would you keep track of the percentage that is the employer contribution?
The 401k plan I contributed to (administered by Fidelity) kept track of it for me.

Also, it is my understanding that it is not just the employer contributions that are tax exempt, any growth attributable to them are also exempt.
Once in a while you get shown the light, in the strangest of places if you look at it right.
tj
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Re: Hawaii state tax- too good to be true

Post by tj »

marcopolo wrote: Mon Sep 14, 2020 11:39 am
tj wrote: Mon Sep 14, 2020 10:50 am
marcopolo wrote: Sat Sep 12, 2020 7:18 pm A number of states do not tax pensions. So, that is not that unusual.

HI also does not tax withdrawals from 401k type plans that are attributable to employer matching contributions. Only the employee deferral portion is taxed as income.
How would you keep track of the percentage that is the employer contribution?
The 401k plan I contributed to (administered by Fidelity) kept track of it for me.

Also, it is my understanding that it is not just the employer contributions that are tax exempt, any growth attributable to them are also exempt.
Interesting! I believe the TSP also keeps track of them separately . I wonder if they'd allow rolling over only the employee portions.

That being said, does anyone worry about the medical availability that is in Hawaii for retirement? Is the plan to move back to the mainland, say, in one's 80s or just get by with whatever Hawaii has to offer for the duration?
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Re: Hawaii state tax- too good to be true

Post by marcopolo »

tj wrote: Mon Sep 14, 2020 1:03 pm
marcopolo wrote: Mon Sep 14, 2020 11:39 am
tj wrote: Mon Sep 14, 2020 10:50 am
marcopolo wrote: Sat Sep 12, 2020 7:18 pm A number of states do not tax pensions. So, that is not that unusual.

HI also does not tax withdrawals from 401k type plans that are attributable to employer matching contributions. Only the employee deferral portion is taxed as income.
How would you keep track of the percentage that is the employer contribution?
The 401k plan I contributed to (administered by Fidelity) kept track of it for me.

Also, it is my understanding that it is not just the employer contributions that are tax exempt, any growth attributable to them are also exempt.
Interesting! I believe the TSP also keeps track of them separately . I wonder if they'd allow rolling over only the employee portions.

That being said, does anyone worry about the medical availability that is in Hawaii for retirement? Is the plan to move back to the mainland, say, in one's 80s or just get by with whatever Hawaii has to offer for the duration?
I am in my early 50s, so have not given that much thought to what i will do in my 80s.
The medical care on Oahu (Honolulu) seems to be reasonably good. The neighbor islands is more akin to living in a rural part of the country with limited advanced medical care. But, lots of people age in rural areas, right?
Once in a while you get shown the light, in the strangest of places if you look at it right.
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CAsage
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Re: Hawaii state tax- too good to be true

Post by CAsage »

bayview wrote: Sun Sep 13, 2020 5:02 pm
CAsage wrote: Sun Sep 13, 2020 2:22 pm I will observe that the cost of living in Hawaii is quite a bit higher than stateside. They import almost everything.... But it's sunny there!
Sorry, but... Mainland, not stateside. “Stateside” tends to irk Hawaii residents. :D :beer
I grovel in mortification. Of course I knew better, and I wonder what deep untapped recess of my modern brain that came from? Too many WW2 movies lately? I was clearly thinking about the COL, which is still higher than what I see in the Golden state. Mea culpa.
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Re: Hawaii state tax- too good to be true

Post by tj »

CAsage wrote: Mon Sep 14, 2020 2:54 pm
bayview wrote: Sun Sep 13, 2020 5:02 pm
CAsage wrote: Sun Sep 13, 2020 2:22 pm I will observe that the cost of living in Hawaii is quite a bit higher than stateside. They import almost everything.... But it's sunny there!
Sorry, but... Mainland, not stateside. “Stateside” tends to irk Hawaii residents. :D :beer
I grovel in mortification. Of course I knew better, and I wonder what deep untapped recess of my modern brain that came from? Too many WW2 movies lately? I was clearly thinking about the COL, which is still higher than what I see in the Golden state. Mea culpa.
I would disagree with the notion that the COL is more expensive than the golden state, but it depends on your lifestyle. Based on the 9 months that I lived on Maui, gas was significantly cheaper than CA, rent was slightly more expensive, auto insurance was cheaper, renters insurance was the same, and restaurant pricing seemed similar. I didn't notice OTC drugs being any more expensive at Longs Drugs vs CVS on mainland. The movie theater was cheaper on Maui than here in Arizona. Beach parking was not only less costly, but also less hectic. One of the biggest adjustments for me was Amazon Prime taking longer for free delivery.

At the moment, you can buy condos walkable to the beach for $300k-$400k in Maui, and possibly less on other islands. I'm not aware of anywhere in California where you can do that, plus the California ocean is very cold IMO...
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Re: Hawaii state tax- too good to be true

Post by marcopolo »

tj wrote: Mon Sep 14, 2020 4:08 pm
CAsage wrote: Mon Sep 14, 2020 2:54 pm
bayview wrote: Sun Sep 13, 2020 5:02 pm
CAsage wrote: Sun Sep 13, 2020 2:22 pm I will observe that the cost of living in Hawaii is quite a bit higher than stateside. They import almost everything.... But it's sunny there!
Sorry, but... Mainland, not stateside. “Stateside” tends to irk Hawaii residents. :D :beer
I grovel in mortification. Of course I knew better, and I wonder what deep untapped recess of my modern brain that came from? Too many WW2 movies lately? I was clearly thinking about the COL, which is still higher than what I see in the Golden state. Mea culpa.
I would disagree with the notion that the COL is more expensive than the golden state, but it depends on your lifestyle. Based on the 9 months that I lived on Maui, gas was significantly cheaper than CA, rent was slightly more expensive, auto insurance was cheaper, renters insurance was the same, and restaurant pricing seemed similar. I didn't notice OTC drugs being any more expensive at Longs Drugs vs CVS on mainland. The movie theater was cheaper on Maui than here in Arizona. Beach parking was not only less costly, but also less hectic. One of the biggest adjustments for me was Amazon Prime taking longer for free delivery.

At the moment, you can buy condos walkable to the beach for $300k-$400k in Maui, and possibly less on other islands. I'm not aware of anywhere in California where you can do that, plus the California ocean is very cold IMO...
I would think just the lower property taxes for homeowners would make up a lot of the difference in other living costs. relative to CA.
We were also pleasantly surprised at how much our various insurance costs went down. Homeowners, Auto, and Umbrella insurance dropped dramatically when we moved here. Dry goods are only slightly higher. Perishable goods definitely a LOT higher.

We paid cash for our new construction home, leaving that aside, our overall expenses only went up a modest amount relative to a moderately HCOL area of the country that we moved from. I think it would have been higher in San Diego County, which is the other place we were considering for our retirement destination.

Being able to swim comfortably in the ocean year round is a huge bonus, as is the year round mild climate. We do not have any HVAC system in our new house. That also saves some money...
Once in a while you get shown the light, in the strangest of places if you look at it right.
fishNfool
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Re: Hawaii state tax- too good to be true

Post by fishNfool »

I am also Hawaii bound with a Government pension....woohoo!

I also just turned 60 so we can now take advantage of the homestead property tax exemption which really brings down your tax rate. And another exemption at age 70. Something to also take advantage of if you were not already privy of

Aloha
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Re: Hawaii state tax- too good to be true

Post by marcopolo »

fishNfool wrote: Mon Sep 14, 2020 6:57 pm I am also Hawaii bound with a Government pension....woohoo!

I also just turned 60 so we can now take advantage of the homestead property tax exemption which really brings down your tax rate. And another exemption at age 70. Something to also take advantage of if you were not already privy of

Aloha
There is homeowners exemption for all ages. The amount increases at age 60 and 70.

Also, similar to CA Prop 13, there is a cap on how fast a homeowners assessment can grow. It is capped at 3%/yr. Not quite as good as CA's 2% cap, but still helpful.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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Sandtrap
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Re: Hawaii state tax- too good to be true

Post by Sandtrap »

heartwood wrote: Mon Sep 14, 2020 9:43 am
PaulF wrote: Sun Sep 13, 2020 11:11 pm
marcopolo wrote: Sun Sep 13, 2020 6:21 pm
bayview wrote: Sun Sep 13, 2020 5:02 pm
CAsage wrote: Sun Sep 13, 2020 2:22 pm I will observe that the cost of living in Hawaii is quite a bit higher than stateside. They import almost everything.... But it's sunny there!
Sorry, but... Mainland, not stateside. “Stateside” tends to irk Hawaii residents. :D :beer
Eh, You get used to it pretty quickly...
Well I found it jarring, and I have only been to HI twice! :)
You get used to it pretty fast or you'll be gently or otherwise reminded. I still run into mainland friends who don't seem to know it's a state. A common island saying is "this isn't the mainland" used in many situations: slow down, "this isn't ..." Or saying too frequently that things are done differently "back in the states" gets a response that "this isn't ..."

Another more sensitive subject is saying "hawaiian time" as a comment on the less punctualness of appointments, esp if its a good surf day. I was strongly told by a several-year local friend with hawaiian heritage that it was offensive to her.

But there really is an Aloha spirit in daily life.
Yes bruddah :D
Hawaii No Ka Oi
Mahalo Nui Loa

kimo :)
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smitcat
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Re: Hawaii state tax- too good to be true

Post by smitcat »

marcopolo wrote: Mon Sep 14, 2020 4:31 pm
tj wrote: Mon Sep 14, 2020 4:08 pm
CAsage wrote: Mon Sep 14, 2020 2:54 pm
bayview wrote: Sun Sep 13, 2020 5:02 pm
CAsage wrote: Sun Sep 13, 2020 2:22 pm I will observe that the cost of living in Hawaii is quite a bit higher than stateside. They import almost everything.... But it's sunny there!
Sorry, but... Mainland, not stateside. “Stateside” tends to irk Hawaii residents. :D :beer
I grovel in mortification. Of course I knew better, and I wonder what deep untapped recess of my modern brain that came from? Too many WW2 movies lately? I was clearly thinking about the COL, which is still higher than what I see in the Golden state. Mea culpa.
I would disagree with the notion that the COL is more expensive than the golden state, but it depends on your lifestyle. Based on the 9 months that I lived on Maui, gas was significantly cheaper than CA, rent was slightly more expensive, auto insurance was cheaper, renters insurance was the same, and restaurant pricing seemed similar. I didn't notice OTC drugs being any more expensive at Longs Drugs vs CVS on mainland. The movie theater was cheaper on Maui than here in Arizona. Beach parking was not only less costly, but also less hectic. One of the biggest adjustments for me was Amazon Prime taking longer for free delivery.

At the moment, you can buy condos walkable to the beach for $300k-$400k in Maui, and possibly less on other islands. I'm not aware of anywhere in California where you can do that, plus the California ocean is very cold IMO...
I would think just the lower property taxes for homeowners would make up a lot of the difference in other living costs. relative to CA.
We were also pleasantly surprised at how much our various insurance costs went down. Homeowners, Auto, and Umbrella insurance dropped dramatically when we moved here. Dry goods are only slightly higher. Perishable goods definitely a LOT higher.

We paid cash for our new construction home, leaving that aside, our overall expenses only went up a modest amount relative to a moderately HCOL area of the country that we moved from. I think it would have been higher in San Diego County, which is the other place we were considering for our retirement destination.

Being able to swim comfortably in the ocean year round is a huge bonus, as is the year round mild climate. We do not have any HVAC system in our new house. That also saves some money...
"Being able to swim comfortably in the ocean year round is a huge bonus"
This is a big plus.
smitcat
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Re: Hawaii state tax- too good to be true

Post by smitcat »

tj wrote: Mon Sep 14, 2020 4:08 pm
CAsage wrote: Mon Sep 14, 2020 2:54 pm
bayview wrote: Sun Sep 13, 2020 5:02 pm
CAsage wrote: Sun Sep 13, 2020 2:22 pm I will observe that the cost of living in Hawaii is quite a bit higher than stateside. They import almost everything.... But it's sunny there!
Sorry, but... Mainland, not stateside. “Stateside” tends to irk Hawaii residents. :D :beer
I grovel in mortification. Of course I knew better, and I wonder what deep untapped recess of my modern brain that came from? Too many WW2 movies lately? I was clearly thinking about the COL, which is still higher than what I see in the Golden state. Mea culpa.
I would disagree with the notion that the COL is more expensive than the golden state, but it depends on your lifestyle. Based on the 9 months that I lived on Maui, gas was significantly cheaper than CA, rent was slightly more expensive, auto insurance was cheaper, renters insurance was the same, and restaurant pricing seemed similar. I didn't notice OTC drugs being any more expensive at Longs Drugs vs CVS on mainland. The movie theater was cheaper on Maui than here in Arizona. Beach parking was not only less costly, but also less hectic. One of the biggest adjustments for me was Amazon Prime taking longer for free delivery.

At the moment, you can buy condos walkable to the beach for $300k-$400k in Maui, and possibly less on other islands. I'm not aware of anywhere in California where you can do that, plus the California ocean is very cold IMO...
Here is a comparative map FWIW....
https://www.visualcapitalist.com/these- ... n-the-u-s/
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Sandtrap
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Re: Hawaii state tax- too good to be true

Post by Sandtrap »

Actual nuts and bolts (living there decade after decade) comparisons of cost of living and standard of living and lifestyle available at what cost, ad infinitum, between IE: Honolulu, Hawaii, and IE: various parts of the "mainland" are highly relative and often very specific to individual experiences and financial situations that include the following:
1
Working and depending on that paycheck or retiree with a steady pension, SS, etc, that covers all of one's expenses including health care.
2
Able to relocate to Hawaii from the mainland and, having sold one's home for good money, is able to purchase a residence and not be house poor. (and, what one is accustomed to per dollar and what is purchased in what area of town. IE: $600,000 vs 4 mil.)
IE: If one is retired and living in Hawaii in a 800 s.f. condo in a good part of town close to the beach and with good weather, then that is good too, for you vs .....
3
One's stage of life and concerns and relative needs; having to support children and family growing up in Hawaii, and where in Hawaii, etc, . . . or single, or retired. . . IE: Real estate valuations for what? and so forth.
4
Starting out as a 20 year old in Hawaii and attempting to make a living, save for a home, raise a family, earn a retirement, etc. VS ..... relocating as a retiree. Each person's path is unique whether Hi or the Mainland or . . . . where.

A
Hawaii State Taxes are one piece in a very large jigsaw puzzle. And, in this case, each person has, perhaps, relocating to or from Hawaii, or permanently not or not there, so the picture is different. The only common jigsaw piece is Hawaii.

Actionably. Look at your needs and fit and retiring to Hawaii with a govermunt pension may be a good idea or maybe elsewhere may or may be better.

B
As for "cost of living and dollar valuation comparisons". . . there's much more involved than what's on spreadsheets and graphs and charts and so forth when actually living in Hawaii, and where in Hawaii, and what one is doing and needs to do or is satisfied with having or not having.

There are so many ways of thinking and looking at comparisons like this depending on one's experiences and so forth, none right or wrong, simply unique.

Mahalo Nui Loa
Ku‘u home ‘o Hawaii nō ka ‘oi.
j :happy
Last edited by Sandtrap on Tue Sep 15, 2020 10:11 am, edited 2 times in total.
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Re: Hawaii state tax- too good to be true

Post by FrugalProfessor »

Here's a helpful tool for comparing state tax burdens across state lines:
https://smartasset.com/taxes/hawaii-tax-calculator

Replace "hawaii" with whatever state you're interested in. Hyphenate two-word states (e.g. "new-york")
I blog. Taxes are the lowest hanging source of alpha. I eat tax alpha for breakfast.
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Re: Hawaii state tax- too good to be true

Post by Cruise »

marcopolo wrote: Mon Sep 14, 2020 7:09 pm There is homeowners exemption for all ages. The amount increases at age 60 and 70.
Can you provide a citation for this? My research only shows an exemption at age 65 in Honolulu:

https://www.realpropertyhonolulu.com/ex ... formation/

"Beginning tax year 2020-2021, the basic home exemption will be $100,000. This means that $100,000 is deducted from the assessed value of the property and the homeowner is taxed on the balance. For homeowners 65 years and older the home exemption is $140,000. To qualify for this exemption, you must be 65 years or older on or before June 30 preceding the tax year for which the exemption is claimed."

On the Big Island, there is an exemption at age 60 and 70.
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Re: Hawaii state tax- too good to be true

Post by marcopolo »

Cruise wrote: Tue Sep 15, 2020 11:40 am
marcopolo wrote: Mon Sep 14, 2020 7:09 pm There is homeowners exemption for all ages. The amount increases at age 60 and 70.
Can you provide a citation for this? My research only shows an exemption at age 65 in Honolulu:

https://www.realpropertyhonolulu.com/ex ... formation/

"Beginning tax year 2020-2021, the basic home exemption will be $100,000. This means that $100,000 is deducted from the assessed value of the property and the homeowner is taxed on the balance. For homeowners 65 years and older the home exemption is $140,000. To qualify for this exemption, you must be 65 years or older on or before June 30 preceding the tax year for which the exemption is claimed."

On the Big Island, there is an exemption at age 60 and 70.
The exemption is different for each county (island), I should have mentioned that. We live on the Big Island. Here every owner occupied home gets a $40k exemption plus 20% of the assessed value capped at $80k. Given price of homes, most people hit the cap. So, the base exemption is $120k.
At age 60, there is an additional $40k available ($80k + 20% = $160k), at 70, another $20k is added ($100k + 20% = $180k). The tax rate is then $6.15 per $1000 of the reduced assessment.

reference:
https://www.google.com/url?sa=t&source= ... 0190119069


Edit: I believe your quoted text for Honolulu county also implies every one gets an exemption. It seems to be $100k for all ages, increased to $140k once you hit age 65, and the tax rate there is only $3.50 for each $1000 of the reduced assessment.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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