What Single-Owner LLCs in Hawai‘i Need to Know for Tax Year 2025

If you’re operating a single-owner LLC in Hawai‘i (disregarded entity, taxed through your individual return), there are some important state law changes to watch as you prepare your 2025 taxes (to be filed in 2026). Hawaii has made several adjustments that could affect your state income tax, deductions, and whether you might benefit from the new pass-through entity provisions. Here are the top 5 changes.

Top 5 Hawai‘i Tax Changes Single-Owner LLCs Should Know for 2025

1. Hawaii Individual Income Tax Bracket & Standard Deduction Increases
   1. Hawai‘i has passed Act 46, SLH 2024, which raises the standard deduction and adjusts tax brackets for individual income. (Hawaii Governor’s Office)
   2. For single filers, that means your tax thresholds are higher before you hit higher rates—good news for reducing state tax liability. (Gusto)
2. Pass-Through Entity (PTE) Tax Changes & “Qualified Members” Rules
   1. Although this mostly affects partnerships and S-Corps, single-owner LLCs (treated as disregarded entities) are qualified members under the PTE rules in many cases. (Hawaii Files)
   2. With Act 58, SLH 2025, effective for taxable years beginning after December 31, 2024, Hawai‘i requires that any qualified member claiming a credit for PTE tax must add back the qualified member’s share of taxes paid by the PTE to their taxable income. (Hawaii Department of Taxation)
3. PTE Tax Rate & Credit Carry-Forward
   1. Under Act 50, SLH 2024, the PTE tax rate is 9%. (Hawaii Department of Taxation)
   2. Also, if the credit you receive as a qualified member of an electing PTE exceeds your liability, Hawai‘i now allows nonrefundable carry-forward of unused credits to later years. (Hawaii Department of Taxation)
4. “Add-Back” Requirement for Single-Owner LLCs (Qualified Members)
   1. Because of Act 58, Hawaii requires that the share of PTE taxes paid be added back into taxable income for members claiming the credit. If your LLC is a “qualified member,” this means you’ll need to carefully track what portion of the PTE’s tax you’re getting credit for and then adjust your state taxable income accordingly. (Hawaii Files)
5. Standard Filing & Deadlines / Administrative Rules
   1. Hawaii’s Department of Taxation has updated administrative rules governing PTEs (temporary rules issued January 2, 2025) that affect how the election must be made, payment deadlines, estimated payments, and electronic filing requirements. (Hawaii Department of Taxation)
   2. Also, because these changes are relatively new (2024-2025), expect more guidance and possible revisions keeping good records is essential. (Hawaii Department of Taxation)

What You Should Do Now

• Run your 2024 income through projections with the new Hawaii brackets & standard deductions to see what your 2025 state liability might look like.
• If your LLC is treated as disregarded, confirm whether you qualify as a “qualified member” under Hawaii’s PTE rules.
• If a PTE election is being considered (even if your LLC is a single-member), evaluate whether the net state tax benefit after add-back rules is positive.
• Keep spaced, detailed records of the PTE tax paid, the share of taxes credited to you, and all related deductions.
• Watch for updated guidance from the Hawai‘i Department of Taxation for any further clarifications.

Conclusion

The evolving laws in Hawai‘i offer opportunities for single-owner LLCs to reduce state income tax burdens especially via higher standard deductions and better structuring but also introduce complexity through PTE election, credits, and add-back requirements. Early attention, accurate tracking, and proactive planning will help you make the most of the changes and avoid surprises when you file.

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