Social Security benefits are a significant source of income for many retirees. The way in which Social Security benefits are taxed, however, might differ significantly from state to state. You might be wondering if Hawaii taxes Social Security benefits if you’re thinking about retiring there or already live there.
Hawaii does not tax Social Security benefits, which is good news. Hawaii is really one of just 13 states that do not impose any tax on Social Security benefits. As a result, retirees in Hawaii will have a greater standard of life and be able to keep more of their hard-earned money.
Of fact, receiving Social Security benefits is only one aspect of taxes. The relative high cost of living in Hawaii may have an effect on retirees’ overall financial situation. Hawaii’s cost of living is approximately 92% more than the national average, according to data from Numbeo. Hawaii has higher costs for housing, food, and transportation than many other states.
In Hawaii, for instance, the price of a gallon of milk might range from $5 to $8, depending on the retailer and area. This is much more expensive than the $3.50 per gallon national average. Hawaii has higher prices than many other states for essential commodities including bread, eggs, and fruit.
Hawaii has high living costs in addition to a general excise tax (GET) that is imposed on the majority of products and services. The current GET rate is 4.5 percent, but some counties might tack on an extra fee. The GET is placed on businesses rather than on consumers, in contrast to a sales tax. Customers do not directly pay the tax, but firms may pass it through to them in the form of higher pricing. Despite these expenses, a lot of retirees still opt to live in Hawaii due to its natural beauty, mild climate, and laid-back way of life. For those who can afford it, Hawaii can be a terrific destination to retire because there is no state income tax and no tax on Social Security benefits.
In conclusion, Hawaii does not tax Social Security benefits even though it is not a tax-free state. While living expenses in Hawaii can be exorbitant, retirees can trade their costs for a high level of living and a stunning landscape.