On January 1, 2026, major federal tax changes take effect as prior TCJA provisions expire and new rules continue rolling out under updated legislation.
Because Hawaii has both a state income tax and a high cost of living, federal changes will significantly impact Hawaii taxpayers.
These changes affect:
This guide explains exactly how the 2026 tax changes affect Hawaii residents.
Impact on Hawaii
Hawaii has one of the highest costs of living in the country, so a reduced standard deduction increases federal taxable income for most households — especially those with:
The federal standard deduction decreases significantly:
Federal tax brackets increase in 2026:
Most Hawaii residents fall into income ranges where these bracket increases significantly impact take-home pay.
Those most affected include:
QBI continues at the federal level, but Hawaii does not provide a matching deduction. Meaning:
This especially affects:
Families living on Oahu, Maui, and other higher-cost islands will feel these changes sharply.
Hawaii has many dual-income households, especially in Honolulu County.
In 2026:
Couples earning between $80K–$250K may see substantial increases in federal taxes.
Federal changes affect Hawaii through several unique state factors.
Unlike many states, Hawaii taxes:
Federal bracket increases directly raise the tax burden for retirees on both federal and state levels.
Hawaii real estate is among the most expensive in the U.S. 2026 will affect:
This greatly affects owners in:
Hawaii STR markets are already regulated; in 2026 federal rules add additional layers:
These changes hit heavily in areas like:
Many households already face high:
Higher federal taxes reduce disposable income faster in Hawaii compared to mainland states.
No — QBI is federal-only.
Most Hawaii residents will see higher federal taxable income due to deduction and bracket changes.
Yes — reduced credits will affect many Hawaii families.
Yes — reduced depreciation and stricter rules apply.
Yes — federal changes also influence Hawaii state taxation of retirement income.
Hawaii residents face federal tax changes that reduce deductions, increase brackets, and shift how income from wages, business, retirement, and property is taxed.
A personalized strategy ensures you’re prepared before 2026 takes full effect.
