Hawaii General Excise Tax Food Business

GET Is Not a Sales Tax

Hawaii does not have a conventional sales tax. It has a General Excise Tax — a privilege tax on your gross business income. The distinction matters because GET is assessed on your total receipts, including any tax you pass on to customers. This creates a compounding effect that most new food business owners do not account for, leading to a cash shortfall every filing period.

Every home food business in Hawaii must register for a GET license, even if you are operating under the homemade food exemption with no DOH permit. GET applies to all business gross income, regardless of whether you hold a food establishment permit.

How to Register

File Form BB-1 (Basic Business Application) through the Hawaii Tax Online (HITAX) portal. The one-time registration fee is $20. HITAX assigns you a GET license number and a periodic filing frequency — monthly, quarterly, or semi-annually — based on your projected annual gross revenue. Most new cottage food businesses start on quarterly filing.

You can complete the registration online in about 15 minutes. Digital license issuance takes 5 to 7 business days. If you file the paper form by mail instead, expect 4 to 6 weeks.

The Rate

The state GET base rate is 4.0% for retail transactions. All four counties add a 0.5% surcharge, bringing the combined nominal rate to 4.5% statewide:

• Honolulu County (Oahu): 4.5%
• Hawaii County (Big Island): 4.5%
• Maui County: 4.5%
• Kauai County: 4.5%

If you sell wholesale to a permitted retailer (grocery store, restaurant, cafe), the transaction qualifies for the reduced wholesale rate of 0.5%. To claim this rate, you must obtain a completed Form G-17 (Resale Certificate) from the purchasing business.

The 4.712% Pass-On Formula

Here is where most new operators lose money. Because GET is assessed on your total gross receipts — and that total includes any tax amount you add to the customer's bill — charging a flat 4.5% creates a shortfall. The tax is taxed.

The correct customer pass-on rate uses the gross-up formula:

Pass-On Rate = Combined Rate ÷ (1 - Combined Rate)

Pass-On Rate = 0.045 ÷ 0.955 = 4.712%

A practical example on a $10.00 jar of jam:

At $0.02 per transaction the loss looks trivial. Scale it to 500 transactions a month and you are short $10. Over a year at that volume — $120 that comes out of your margin for no reason.

The 4.712% rate is the maximum legal pass-on amount. You are not required to pass GET on to customers at all, but if you do, this is the ceiling.

Filing Schedule

Based on your filing frequency, you submit Form G-45 (Periodic Return) each period. At the end of the tax year, file Form G-49 (Annual Return and Reconciliation).

Late filings carry a penalty of 5% of the tax due per month, up to a maximum of 25%, plus interest. Even if you owe a small amount, file on time — the penalty percentage does not scale down for small balances.

Track your sales by county. If you sell at a Honolulu farmers market on Saturday and a Maui market on Sunday, each sale is reported under the county where the transaction occurred. The rate is currently 4.5% statewide, but your G-45 requires county-level breakdowns, and the surcharge rates can change independently by county.

GET for Wholesale

If you wholesale your cottage food products to a permitted retailer, you can charge the 0.5% wholesale rate instead of the 4.5% retail rate. This prevents tax pyramiding — the retailer will charge GET on the final sale to the consumer, so you do not both pay the full retail rate.

To qualify, get a completed Form G-17 from the purchasing business before or at the time of the first wholesale transaction. Keep the G-17 on file — DOTAX can request it during an audit.

The Tracker in the Guide

The Hawaii Cottage Food & Home Food Business Guide includes a GET calculation worksheet with the gross-up formula pre-built, plus a batch production log that tracks revenue by county and filing period. It takes the manual math out of your quarterly filings.

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