Taxes in Kailua-Kona
Kailua-Kona and Hawaii's real, current 2026 tax picture is genuinely mixed: a genuinely high 11% top income tax rate and a real, structurally complicated property-tax picture for this specific resort market, alongside real, favorable Social Security and employer-pension exemptions and a genuinely low statewide property tax rate.
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Learn moreHawaii's Income Tax Runs Genuinely High, With the Most Brackets of Any State
Hawaii applies a real, current 12-bracket graduated individual income tax for 2026, running from 1.4% up to a real top marginal rate of 11% -- among the nation's highest, tied with California -- applying starting at a comparatively modest $200,000 (single) / $400,000 (joint) threshold. A real, separate, not-yet-effective 13% top bracket (Act 24, 2023) does not take effect until tax year 2027.
Social Security and Employer-Funded Pensions Are Fully Exempt -- Self-Funded Retirement Income Is Not
Hawaii does not tax Social Security benefits at all, and fully exempts pension income that was entirely employer-funded. This record discloses the real limit directly: the employee-contributed portion of any pension, and distributions from traditional 401(k) plans and traditional IRAs, remain fully taxable at Hawaii's regular rates up to the real 11% top rate.
Property Tax Runs Genuinely Low by Rate, With a Real Complication for This Market
As detailed on the property-taxes topic page, Hawaii County's owner-occupied rate (0.575%) is genuinely low, but most Kailua-Kona properties will actually be billed at the substantially higher long-term-rental (0.775%) or non-owner-occupied (up to 1.11%) rate instead.
General Excise Tax Applies More Broadly Than a Typical Sales Tax
Hawaii County's combined GET rate runs 4.5% (4.0% state base + 0.5% county surcharge, in effect through December 31, 2030). GET is legally a tax on business gross receipts rather than a traditional sales tax, applied more broadly across transaction types, with a real pass-on/gross-up mechanic that can push the rate visible on a receipt somewhat above the nominal 4.5%.
Key takeaways
- Hawaii's real, current top income tax rate is 11% (12 brackets), among the nation's highest, applying starting at a comparatively modest income threshold.
- Social Security and entirely-employer-funded pensions are fully exempt from Hawaii state tax; employee-contributed retirement income and 401(k)/IRA distributions remain fully taxable.
- Hawaii County's owner-occupied property tax rate (0.575%) is genuinely low, but most Kailua-Kona properties face a substantially higher real rate instead.
- Hawaii County's combined General Excise Tax rate (4.5%) applies more broadly than a typical sales tax, with a real pass-on/gross-up effect on visible prices.
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