The Hawaii Department of Taxation has released the 2026 edition of Booklet A, Employer’s Tax Guide, with income tax withholding rates, methods, and tax tables effective as of December 5, 2025 for withholding on wages paid January 1, 2026 and thereafter.
Effective January 1, 2026, Hawaii will adopt the 10 or more electronic filing threshold for Forms W-2 and HW-2, as announced in Tax Announcement No. 2025-05. This change applies to tax year 2025 returns filed in 2026. Employers with annual withholding tax liability exceeding $40,000 must also continue to file Forms W-2 and HW-2 electronically.
Additionally, the extra lump sum withholding allowance amount increased significantly from $1,650 to $4,350 annually. This change propagates through all payroll period calculations, resulting in lower effective withholding for employees.
