Breaking Down Hawaii GET: What You Need to Know for Your Construction Project
General Excise Tax or the privilege of doing business in Hawaii tax
Something that can sneak up on you if you’re not paying attention—the Hawaii General Excise Tax (GET). This little tax can make a big difference in how much your construction project ends up costing, so let’s dive into what you need to know to keep things under control.
What’s the Deal with Hawaii GET?
Alright, so Hawaii GET isn’t just your regular sales tax. It’s a tax on the total income businesses make, which includes all the work contractors and subs do. Whether you’re the one running the show as a general contractor, a subcontractor working the job, or even a homeowner calling the shots, GET is something you’ve got to understand.
The General Contractor Advantage
Here’s where things get interesting. According to Hawaii Revised Statutes (HRS) Section 237-13(3)(C), if you’re a subcontractor working under a licensed general contractor, you don’t have to worry about paying that 4% GET on the money you make from that project. The general contractor handles the GET for the whole shebang, which can save everyone some hassle—and money.
Why This Matters:
• Smooth Sailing with Taxes: The general contractor deals with the GET, so you don’t have multiple layers of tax piling up. Makes life easier, right?
• Keeping Costs Down: Since the tax is handled at the top level, you’re less likely to see surprise costs creeping into your project budget.
What If You’re Dealing Directly with Subs?
Now, if you’re an owner or owner-builder and you’re paying subcontractors directly, things change. Those subs are going to have to pay the 4% GET on what they earn from you, and guess what? They might just pass that cost right back to you on their invoice.
Key Points:
• Subs and GET: If subs are working directly for you, they’ve got to cover their GET. That’s probably coming out of your pocket unless you plan ahead.
• Impact on Your Budget: Whether you’re managing a project or paying the bills, knowing how GET works can keep your budget from getting blown out of the water.
A Quick Note on GET Rates by County:
So, here’s something you should keep in mind—the GET rate isn’t exactly the same everywhere in Hawaii. The base rate is 4%, but if you’re doing business on Oahu, there’s an additional 0.5% county surcharge, bringing the total to 4.5%. This little bump can make a difference in your overall costs, especially on bigger projects. In some cases, you might hear about a 4.16% effective rate, which is how the tax is calculated when you include it in the gross income.
County Breakdown:
• Oahu: 4.5% (with the county surcharge)
• Maui, Big Island, Kauai, etc.: 4% (no surcharge)
Knowing which rate applies to your project location can help you plan your budget more accurately and avoid any surprises.
Tips to Keep Your Costs in Check:
• Ask the Right Questions: Make sure you know whether the prices you’re getting include GET. If you’re the general contractor, it’s on you. If you’re the owner, double-check what you’re being charged for.
• Clear Communication: Make sure everyone on the project—subs, suppliers, clients—knows how GET is being handled. No surprises means smoother sailing.
• Get Professional Advice: If you’re not sure how GET applies to your project, it’s worth talking to a local tax pro who knows Hawaii’s rules inside and out.
The Bottom Line: Know Your GET
Whether you’re a general contractor, a sub, or a homeowner taking on a big project, getting a handle on Hawaii GET is key to keeping your costs under control. This tax isn’t going away, but knowing how it works and who’s on the hook can help you stay on budget and avoid those nasty surprises.
So before you jump into your next project, make sure you’ve got a solid understanding of how GET is going to play into your costs. A little knowledge now can save you a lot of headaches (and cash) down the road!