Hawaii has more employer compliance requirements than most states. Between state income tax withholding, unemployment insurance, the Prepaid Health Care Act, and TDI, there's a lot to track before you ever deposit a paycheck. This guide walks through the Hawaii payroll process in the order you actually need to handle things — from first-time registration through recurring deadlines.
We've been processing payroll for Hawaii employers since 1969. The requirements below are what every employer doing business in Hawaii needs to know.
Step 1: Register with Hawaii DoTax Before Your First Payroll
Before you can withhold state income taxes, you need a withholding account with the Hawaii Department of Taxation (DoTax).
Form BB-1 is the Basic Business Application. One BB-1 can register you for general excise tax (GET) and for your employer withholding account. If you already have a GET license, file a BB-1 to add the withholding account.
The withholding account gives you the Hawaii Tax I.D. number you use on every withholding return and payment. Register before the first payroll, not after. You can file the BB-1 online through Hawaii Tax Online (hitax.hawaii.gov).
Step 2: Register for Unemployment Insurance with DLIR
Separately from DoTax, you need to register with the Hawaii Department of Labor and Industrial Relations (DLIR) for unemployment insurance coverage.
File Form UC-1 (Report to Determine Liability) with the DLIR Unemployment Insurance Division, or register online, within 20 days after employment begins. Once registered, you'll receive a UI account number and an initial tax rate. New employers pay 2.4% on the first $64,500 of each employee's wages in 2026 (rates and wage base change each year — confirm current figures with DLIR).
Step 3: Collect the Right Forms from Every Employee
Two withholding forms. Both are required.
Federal Form W-4 tells you how much federal income tax to withhold. The 2020 redesign removed allowances, so employees now enter dollar amounts for deductions and other income adjustments.
Hawaii Form HW-4 is the state equivalent. It works on an allowance system, similar to the old federal W-4. Employees claim allowances for themselves, a spouse, and dependents. The HW-4 defaults if an employee doesn't submit one — single filing status, zero allowances. That's usually more withholding than necessary, so encourage employees to complete it.
Keep both forms on file. You don't submit them to any agency, but you need them if DoTax asks.
Step 4: Know Hawaii's Minimum Wage — And When It Changes
As of January 1, 2026, Hawaii's minimum wage is $16.00 per hour. The next scheduled increase is January 1, 2028, when it goes to $18.00 per hour.
Hawaii's tip credit is small. An employer may pay a tipped employee up to $1.25 an hour less than the minimum wage ($14.75) only if the employee customarily receives more than $20 a month in tips and their wages plus tips total at least $7.00 above the minimum wage ($23.00 an hour). Otherwise servers, bartenders, and valets must receive the full minimum wage on top of their tips. This catches some restaurant and hospitality operators off guard if they're used to the federal $2.13 cash wage.
None of the four counties has its own higher minimum wage; the state rate applies on every island.
Step 5: Report New Hires Within 20 Days
Hawaii requires employers to report every new hire to the Child Support Enforcement Agency (CSEA) within 20 days of hire. The reports form the state directory of new hires, which is used for child support enforcement and shared with the national directory.
You'll report the employee's name, address, Social Security number, and first day of work, plus your business name, address, and federal employer identification number (FEIN). A W-4 or equivalent form can serve as the report. This requirement applies to rehires as well if there's been a gap of 60 days or more. Failing to report can bring a $25 civil penalty.
Step 6: Understand Your Recurring State Filing Deadlines
Once you're running payroll, three state filings recur on a regular schedule. Missing any of them generates penalties.
HW-14 — Quarterly State Withholding Return
Every Hawaii employer files Form HW-14 quarterly. It's due by the 15th of the month after the quarter — April 15, July 15, October 15, and January 15. The form reports total wages paid and total Hawaii income tax withheld for the quarter. Payments are separate: quarterly if your annual Hawaii withholding is $5,000 or less, and monthly by the 15th of the following month (with Form VP-1 or online) if it is more than $5,000 but not more than $40,000.
If your annual withholding is more than $40,000, you pay semi-weekly, on the same Wednesday/Friday pattern as federal semi-weekly deposits. Track your own withholding total so you see the change coming. Missing a payment frequency change is one of the more common compliance errors for growing businesses.
UC-B6 — Quarterly Unemployment Insurance Wage Report
Form UC-B6 reports wages paid to each individual employee during the quarter. Due dates are the last day of the month following each quarter:
- Q1 (January–March): due April 30
- Q2 (April–June): due July 31
- Q3 (July–September): due October 31
- Q4 (October–December): due January 31
The UC-B6 requires per-employee detail — each worker's name, Social Security number, and gross wages for the quarter. Corporate officers must be included. This is where a lot of national payroll providers slip up: they generate a summary report when DLIR wants individual records. File through DLIR's HUI Express portal.
Form 941 — Federal Quarterly Payroll Tax Return
The IRS Form 941 covers federal income tax withheld plus the employer and employee shares of Social Security and Medicare taxes. It follows the same quarterly schedule as the UC-B6 — due by the last day of the month following each quarter (April 30, July 31, October 31, January 31). Your federal deposit schedule (monthly or semi-weekly) is separate from this filing and depends on your lookback period tax liability.
Step 7: Annual Filings — W-2 and HW-30
By January 31 each year, you must:
- Distribute Form W-2 to each employee (reporting prior year wages and withholding)
- File W-2s with the Social Security Administration (SSA)
- File copies of the W-2s with Hawaii DoTax — electronically, or on paper with Form HW-30 (Employer's Annual Transmittal of Hawaii Income Tax Withheld from Wages). Hawaii no longer uses the HW-3 reconciliation.
The January 31 deadline applies to both W-2 distribution and filing; when it falls on a weekend it moves to the next business day (February 2 in 2026, February 1 in 2027). Effective January 1, 2026, Hawaii requires electronic filing for employers with 10 or more W-2s. Federal penalties for late W-2s run $60–$340 per form for forms due in 2026, depending on how late they are ($680 for intentional disregard).
See our Hawaii payroll calendar for a full year of filing deadlines.
Step 8: Comply with the Hawaii Prepaid Health Care Act
This is the requirement that surprises most out-of-state business owners expanding to Hawaii. The Hawaii Prepaid Health Care Act (PHC) requires employers to provide qualifying health insurance coverage to employees — not just full-time employees. The trigger is:
- The employee works 20 or more hours per week and earns at least 86.67 times the minimum wage a month ($1,387 in 2026)
- The employee has been employed for four consecutive weeks
Once those two conditions are met, you must offer qualifying coverage. "Qualifying" means a plan that meets minimum benefit standards set by the Hawaii Prepaid Health Care Act — not just any health insurance plan.
The employer pays at least half of the premium, and the employee's contribution is capped at 1.5% of their wages. So if an employee earns $800/week, their maximum contribution is $12/week. If the plan costs $10/week, they pay at most $5 (half the premium). The employer covers the rest.
There is no small-employer exemption. One employee who crosses the 20-hour/4-week threshold triggers the requirement. Get the plan in place before that happens, not after. DLIR's Disability Compensation Division administers PHC compliance, and penalties run at least $25, or $1 per employee per day, whichever is greater.
Step 9: Set Up Hawaii TDI Coverage
The Hawaii Temporary Disability Insurance (TDI) law requires Hawaii employers to provide TDI coverage for their employees. TDI pays partial wage replacement when an employee can't work due to a non-work-related illness, injury, or pregnancy.
Hawaii has no state-run TDI plan. You have two main options:
- Insured Plan: Buy a TDI policy from an authorized insurance carrier. You may withhold up to half the cost from eligible employees, capped at 0.5% of weekly wages ($7.50 a week in 2026).
- Self-Insured Plan: Pay benefits directly under a plan approved by DLIR's Disability Compensation Division, with proof of financial solvency.
Employees qualify for TDI benefits after at least 14 weeks of Hawaii employment in the prior 52 weeks, with 20 or more paid hours in each of those weeks and at least $400 in wages. Benefits start after a 7-day waiting period. The benefit rate is 58% of average weekly wages, up to a maximum weekly benefit that's updated annually ($871 in 2026). TDI is separate from Workers' Compensation — Workers' Comp covers work-related injuries; TDI covers everything else.
Putting It All Together: Hawaii Payroll Process Checklist
Here's a quick-reference sequence for getting set up and staying current:
- Register with Hawaii DoTax: File BB-1 (GET and withholding)
- Register with DLIR: File UC-1 (unemployment insurance)
- Collect W-4 (federal) and HW-4 (state) from each employee
- Report new hires to the Child Support Enforcement Agency within 20 days of hire date
- Verify employees are paid at least $16.00/hour (2026 minimum wage)
- Set up PHC health insurance for any employee working 20+ hours/week and earning $1,387+/month, after 4 consecutive weeks
- Set up TDI coverage from your first hire
- Pay Hawaii withholding on your schedule (monthly payers by the 15th) and file HW-14 quarterly by the 15th after each quarter
- File UC-B6 quarterly (April 30, July 31, October 31, January 31)
- File Form 941 quarterly (same deadlines)
- Distribute W-2s and file W-2 copies with the SSA and Hawaii DoTax (HW-30 if on paper) by January 31
Our full list of payroll tax filing services covers each of these in more detail if you want specifics on any step.
Common Mistakes Hawaii Employers Make
After 55 years of processing payroll in Hawaii, we see the same errors come up:
- Missing the PHC trigger. Employers track part-time employees loosely and miss when someone crosses 20 hours for four consecutive weeks. By the time they realize it, they're months into a coverage violation.
- Wrong Hawaii withholding payment frequency. Growing businesses go over the $40,000 annual withholding threshold and don't realize their payment schedule has changed to semi-weekly.
- Omitting corporate officers from UC-B6. Officers are employees for UI purposes and must be included in the quarterly wage report.
- Using mainland tip credit rules. Hawaii's tip credit is only $1.25 an hour, and only when the tip conditions are met.
- Late new-hire reporting. The 20-day window is short. It slips when you're busy onboarding.
Should You Handle This Yourself or Work with a Payroll Service?
That depends on how many employees you have and how much time you want to spend tracking filings. With one or two employees, a careful owner can manage it manually — but you need to stay current on deadline changes and rate updates. Hawaii minimum wage is on a schedule through 2028. The PHC wage threshold moves with the minimum wage. TDI maximum weekly benefits change.
Most business owners find that after a few employees, the risk of a missed filing outweighs the cost of outsourcing. A late HW-14 return draws a penalty of 5% of the tax per month (up to 25%) plus interest. A late UC-B6 payment draws a penalty of 10% of the contributions due or $100, whichever is greater, plus interest.
If you're weighing the decision, our Hawaii payroll services page explains exactly what we handle and how our pricing works. Or contact us directly — most Hawaii businesses get a quote same-day.
Frequently Asked Questions
What forms do I need to register as an employer in Hawaii?
Two registrations: Form BB-1 with Hawaii DoTax, which covers both your general excise license and your state withholding account, and Form UC-1 with Hawaii DLIR to register for unemployment insurance. Both can be completed online. Register for withholding before your first payroll; DLIR requires UI registration within 20 days after employment begins.
What is the Hawaii minimum wage in 2026?
$16.00 per hour as of January 1, 2026. The next increase is to $18.00 per hour on January 1, 2028. Hawaii's tip credit is limited to $1.25 an hour ($14.75 cash wage), and only for employees who customarily receive more than $20 a month in tips and whose wages plus tips total at least $23.00 an hour.
When is the HW-14 state withholding return due?
The HW-14 is filed quarterly, by the 15th of the month after each quarter (April 15, July 15, October 15, January 15). Payments follow your annual Hawaii withholding: quarterly if $5,000 or less, monthly by the 15th if more than $5,000 but not more than $40,000, and semi-weekly if more than $40,000.
Does the Hawaii Prepaid Health Care Act apply to my business?
If you have any employee working 20 or more hours per week and earning at least $1,387 a month (2026), yes, after four consecutive weeks of employment. There is no small-employer exemption. The employee's contribution is the lesser of half the premium or 1.5% of their wages.
What is Hawaii TDI and which employees does it cover?
Temporary Disability Insurance pays partial wage replacement for non-work-related illness or injury. Employees qualify after 14 weeks of Hawaii employment in the prior 52 weeks, with 20 or more paid hours each week and at least $400 in wages. Hawaii has no state plan: you buy a policy from an authorized carrier or self-insure with DLIR approval.