Hawaii Estate Tax 2026: $5.49M Exclusion, Rates, Nonresidents

The exclusion is $5.49 million, and it does not move

Searchers call it an exemption. The Department of Taxation’s Form M-6 instructions say Act 123 of 2025 conforms the estate tax law to the Internal Revenue Code as of December 31, 2024, “with the exception of the excludable amount of $5,490,000.” They add that for 2025 deaths the federal base amount is $13,990,000, “causing a ‘Gap’ between the federal and state excludable amount.” For 2026 deaths the federal figure is $15,000,000 (Rev. Proc. 2025-32). Subtracting, the gap is $9,510,000 (our arithmetic).

Three consequences follow for a reader with $250,000 or more of investable assets and real estate:

• An estate over about $5.5 million owes Hawaii tax even though no federal return is required. The instructions tell such estates to prepare a “Computed-Hawaii only” Form 706 and file Form M-6.
• The federal law passed in 2025 does not raise the Hawaii line. The statute the Department cites sets the exclusion by reference to the Code “as amended as of December 21, 2017.” A bill in 2026 (HB 2329) moves the conformity date for other provisions to December 31, 2025; the exclusion stays tied to 2017 (see the pending-bills section).
• Hawaii has no inheritance tax and no gift tax. The instructions say so in the purpose of the form; gifts matter only because they reduce the exclusion.

Our federal estate tax guide covers the $15,000,000 line, and the state-by-state list puts Hawaii next to the other twelve estate-tax jurisdictions.

The rate table

HRS 236E-8(b) imposes the tax on the Hawaii net taxable estate, defined in HRS 236E-2 as the Hawaii taxable estate “less the applicable exclusion amount.” The first band therefore starts at the exclusion, not at zero. The Department prints the same table in its instructions.

The Hawaii taxable estate for a resident is the federal taxable estate “without regard for the deduction for state death taxes paid under section 2058” (HRS 236E-7). In plain terms, the state tax is not deducted before computing the state tax.

Tax by estate size

All figures are our arithmetic from the table. They treat the figure as the Hawaii taxable estate of a resident, with no earlier taxable gifts, no credit for tax paid to another state and an exclusion of $5,490,000.

Because the rate starts at 10% on the first dollar above the line, there is no cliff of the kind our New York page describes. Hawaii’s top rate of 20% is reached only above $15,490,000 of taxable estate (our arithmetic: $10,000,000 plus the exclusion).

Gifts reduce the exclusion

The Department says that “Although Hawaii does not have a gift tax, the applicable exclusion amount is reduced by the federal adjusted taxable gift(s) made by the decedent.” Form M-6 does this in Schedule A: line 5 is the Hawaii basic exclusion, line 6 the adjusted taxable gifts from the federal Form 706, and line 7 the difference.

The gift itself leaves the estate, so what matters is what it was worth at death compared with at the gift date. A gift of a property that doubles in value shrinks the Hawaii base, but a gift of a stable asset only uses the exclusion earlier. Our guides to Form 709 for illiquid real estate interests and to SLATs cover the federal side of a gift; the Hawaii point is that you cannot assume a federal gift leaves the Hawaii exclusion untouched.

Portability: a second $5.49 million, but only with a filing

The instructions describe Hawaii’s version of the deceased spousal unused exclusion (DSUE). The surviving spouse may add the unused amount of the last predeceased spouse, and “The DSUE amount cannot exceed $5,490,000 or the amount of the unused basic exclusion amount, whichever is less.” Form M-6 Part 2 repeats the cap. Two conditions matter:

• The election is made on the first spouse’s Hawaii return. The Department says that portability can be elected only on a timely filed Hawaii estate tax return of the predeceased spouse, and that the estate of a decedent with a surviving spouse “must timely file a return to elect portability” even when the taxable estate is under the line.
• A late election has a five-year window. The Department recognizes the Rev. Proc. 2022-32 method: an otherwise untimely return, marked as the instructions require, filed within five years of death, if no return was required.

Of the states we read, Hawaii and Maryland are the two with a portability rule; see the state list. Federal portability does not help here: the Hawaii election has to be made on the Hawaii return. For the trust alternative, our credit shelter, QTIP and disclaimer trust guide explains why a couple may use both.

A mainland owner of a Hawaii condo or rental

HRS 236E-8(a) applies to “a nonresident of the State whose gross estate includes any real property situated in the State or tangible personal property having a situs in the State.” Two sentences of the statute decide how much is taxed:

1. HRS 236E-7 multiplies the federal taxable estate by a fraction, the Hawaii property over the federal gross estate.
2. HRS 236E-6(b)(2) multiplies the exclusion by the same fraction.

The result: the tax is the rate table applied to that fraction of the amount above $5,490,000. A nonresident whose taxable estate is at or below $5,490,000 owes nothing, and the instructions say no return is required for a nonresident U.S. citizen or resident at that size.

Three points are easy to miss:

• Hawaii presumes residence. HRS 236E-6(c)(1) says that “every decedent having property in the State shall be presumed to have died a resident of the State,” with the burden on an estate claiming nonresidency. A domicile file matters if a second home is used much of the year.
• A reciprocity exemption may apply. The instructions exempt a nonresident’s estate if the home state exempts Hawaii residents’ property and the exemption “must specifically reference Hawaii” or contain a reciprocal provision. We did not test any particular state against that wording; if your home state has its own death tax, the credit rules in HRS 236E-8(c) and the other state’s law both matter.
• An LLC does not always shield the property. HRS 236E-8(a) says that a sole owner’s single-member LLC “that has not elected to be taxed as a corporation” is disregarded, “and this chapter shall be applied as if the sole member is the owner of the property.” For an LLC with several members or a fund that owns the condo, the text we read is silent, and whether the interest is treated as intangible personal property is a question for Hawaii counsel (our reading). Our LLC for rental property guide covers the liability side.

Holding Hawaii real estate in a transfer-on-death deed does not remove it from the gross estate; our TOD deed guide explains what such a deed does and does not do.

Return, deadlines and penalties

On a $531,400 tax, a year of interest is about $42,500 at 8% (our arithmetic), so cash for the tax matters as much as the number. A rental, a fund share or a Hawaii condo may take longer than nine months to sell or redeem. The instructions also say a release (Form M-6A) is available if the executor wants a document stating the estate is free of Hawaii estate tax.

Pending bills, as of October 22, 2026

Two bills touch this page. Neither changes the $5,490,000 figure in the text we read.

• HB 2329 (2026), conformity. The conference draft changes HRS 236E-3 from December 31, 2024 to December 31, 2025, for deaths after December 31, 2025. We read the draft; we could not confirm from the Legislature’s own pages that it was signed. The exclusion is set outside the conformity date.
• SB 721 SD1 (2025 session). Its stated purpose is “to remove exemptions from the estate tax granted to a nonresident whose taxable estate is exempt under the law of the state where the nonresident is domiciled,” and it amends the exclusion text in HRS 236E-6. The printed effective date is July 1, 2050, and we found no record that it passed. Its findings say the tax “applied to only forty-nine estates in 2022” and raised $57,400,000; that is a legislative statement, not an audited count.

If SB 721 were enacted as drafted, the reciprocity exemption described above would go. Re-check both bills before relying on a date of death after the 2026 session.

What a reader can do with this

What you can check before talking to anyone:

• Find the taxable estate (home, rentals, fund and LLC interests, retirement accounts, life insurance you own, less debts, expenses and marital or charitable gifts) and run it through the tables above.
• Add back earlier taxable gifts to see how much of the $5,490,000 is left.
• If you are married, find out whether the first spouse’s estate filed a Hawaii return. Without it, the second $5,490,000 does not exist.
• If you own Hawaii property from the mainland, write down the gross estate, the value of the Hawaii property and the title (personal name, single-member LLC, other entity), then compare with the nonresident table.
• Plan the cash for the nine-month due date.

The decision, and who makes it. The estate plan is drafted by an estate-planning attorney who practices in Hawaii, the returns are prepared by that attorney or a CPA, and appraisals by credentialed appraisers. A financial adviser’s part is how the tax would be paid and whether a gift or trust fits the rest of the plan. Nothing here is a recommendation to change a plan.

This is analysis of public documents, not investment, legal or tax advice.

FAQ

Sources, read and saved on October 22, 2026: Hawaii Revised Statutes 236E-2, 236E-3, 236E-4, 236E-6, 236E-7, 236E-8 and 236E-9 (capitol.hawaii.gov, copies saved October 21, 2026); Hawaii Department of Taxation, Form M-6 (Rev. 2025) and Instructions for Form M-6 (Rev. 2025); Rev. Proc. 2025-32 (irs.gov); H.B. No. 2329, H.D. 1, S.D. 1, C.D. 1, Thirty-Third Legislature, 2026 (Internal Revenue Code conformity); S.B. No. 721, S.D. 1, Thirty-Third Legislature, 2025. The tax tables, the nonresident cases and the comparisons are our arithmetic, with the assumptions stated. This is analysis of public documents, not investment, legal or tax advice.