2025 employer payroll updates are required to ensure that your employees benefit in a timely manner from the revised tax rates for Hawaii’s individual income taxes which go into effect January 2025. These changes are part of the 2024 Tax Cut Bill enacted last year, which makes incremental adjustments to the standard deduction amount and income tax brackets beginning in tax year 2024 through tax year 2031.
Here’s what employers need to do now:
Step 1: Update your payroll system to ensure you are using the latest withholding amounts. The new 2025 withholding tables are in the State of Hawaii DOTax Booklet A. If you use a payroll service provider, check to make sure they are applying the new rates correctly.
Step 2: Notify your employees that they will have more take-home pay when the withholding tables are updated.
Repeat Steps 1 and 2 each year since withholding tables are scheduled to update yearly through 2031.
For more information on Withholding Tax, see https://tax.hawaii.gov/payrollupdate/