Running payroll in Hawaii isn't hard once you know what's required — but there are more moving parts here than in most states. You've got federal obligations and Hawaii-specific ones, and they don't always run on the same schedule. Miss a registration or a filing deadline and you're looking at penalties from two different agencies.
This checklist is organized by timing: what you do before your first paycheck, what happens every pay period, and what falls monthly, quarterly, and annually. Bookmark it. The key dates page has the full calendar if you want specific due dates by month.
Before Your First Payroll
These are the registrations and setups that have to happen before any money moves. Don't skip ahead — if you haven't registered as a Hawaii withholding agent before you start withholding, you're already behind.
- Get your federal EIN from the IRS (apply at IRS.gov, takes minutes online). Every payroll registration that follows will ask for it.
- File Form BB-1 with the Hawaii Department of Taxation. This is your general excise tax registration — required for any business operating in Hawaii.
- File Form HW-1 (Hawaii Employer's Withholding Registration) with DoTax. This registers you to withhold Hawaii income tax. You'll get an assigned filing frequency (monthly or quarterly) once registered.
- File Form UC-1 (Report to Determine Liability) with the Hawaii DLIR. This establishes your unemployment insurance (SUI) account. New employers start at a base rate — typically around 2.4% on the first $56,700 of each employee's wages in 2026 — until you have enough history to be experience-rated.
- Collect Form W-4 (federal) and Form HW-4 (Hawaii Employee's Withholding Allowance Certificate) from every new employee before the first paycheck. Both are required. Federal withholding is based on the W-4; Hawaii withholding uses the HW-4, which has its own allowance structure.
- Verify employee classification. Misclassifying an employee as an independent contractor is one of the more expensive mistakes a small business can make. Hawaii follows the ABC test for UI purposes, and the IRS has its own multi-factor test. When in doubt, treat the person as an employee.
- Set up your payroll method — whether you're handling it yourself, using software, or outsourcing to a local payroll service. Set up direct deposit authorization forms for employees who want it.
- Confirm TDI and PHC coverage. Hawaii requires Temporary Disability Insurance and Prepaid Health Care coverage for eligible employees. You'll need both plans in place before eligible employees reach their coverage thresholds.
When You Hire Someone New
Each new hire triggers a separate set of actions beyond just adding them to payroll.
- Report the new hire to DLIR within 20 days of their start date. Hawaii requires employers to submit the employee's name, address, and Social Security number plus your federal EIN. This feeds the state's child support enforcement system. Missing this deadline can result in fines.
- Complete Form I-9 (federal employment eligibility verification). You must complete Section 1 on or before day one and Section 2 within 3 business days. Keep these on file — you don't file them with anyone, but they must be available for inspection.
- Track hours from day one for PHC eligibility. Prepaid Health Care coverage is required once an employee works 20 or more hours per week for 4 consecutive weeks. That clock starts on the first day. If you're not tracking it, you may not notice when coverage becomes mandatory.
- Enroll eligible employees in TDI. Employees become eligible for TDI coverage after working 14 weeks in the preceding 52-week period and earning at least $400 in wages during that time. The employee contribution is up to 0.5% of wages; you can cover more if you choose.
Every Pay Period
This is the core cycle — what has to happen each time you pay employees.
- Calculate gross pay for each employee: regular hours, overtime (time-and-a-half for hours over 40 in a workweek), commissions, bonuses, or any other compensation.
- Withhold federal income tax using the employee's Form W-4 and the IRS withholding tables in Publication 15-T.
- Withhold Social Security (6.2%) and Medicare (1.45%) from each employee's wages. Remember the additional 0.9% Medicare surtax applies to wages above $200,000 in a calendar year for a single employee.
- Withhold Hawaii state income tax using the employee's HW-4 and the current Hawaii withholding tax tables. Hawaii's tax tables update periodically — verify you're using the current year's tables.
- Apply any other deductions in the correct order: pre-tax deductions (401(k), health insurance premiums, FSA contributions), then mandatory deductions (garnishments, child support orders), then post-tax deductions.
- Make federal tax deposits on schedule. Monthly depositors send one payment per month; semi-weekly depositors must deposit by Wednesday (for payroll on Saturday–Tuesday) or by Friday (for payroll on Wednesday–Friday). The IRS assigns your deposit schedule based on prior-year tax liability — check your schedule in your IRS account.
- Process direct deposits or cut checks and maintain a payroll register for each pay period. Keep these records for at least four years.
Monthly
- File Form HW-14 (Hawaii Withholding Tax Return) and remit Hawaii withholding by the 20th of the following month. If December 20 falls on a weekend or holiday, the deadline moves to the next business day. Monthly filing is the default for most new employers.
- Remit Hawaii state withholding deposit with the HW-14. The return and the payment go together.
- Review your payroll register for accuracy — catch transposition errors, missed deductions, or classification issues before they compound. A 10-minute review each month is worth hours of cleanup later.
Quarterly (Jan 31 / Apr 30 / Jul 31 / Oct 31)
- File IRS Form 941 (Employer's Quarterly Federal Tax Return) by the last day of the month following each quarter. If you've deposited all taxes on time and in full, you get an extra 10 days. Form 941 reports total wages, federal income tax withheld, Social Security, and Medicare.
- File Hawaii Form UC-B6 (Quarterly Wage, Contribution and Employment and Training Assessment Report) with the DLIR. This covers all employees including corporate officers — Hawaii specifically requires corporate officers to be included. The due date matches the federal 941 deadline.
- Reconcile your quarterly payroll totals. Match what you reported on 941 and UC-B6 against your payroll register. Discrepancies are much easier to find and fix quarterly than at year-end.
- Check your SUI rate if you're approaching a rate change period. Hawaii recalculates experience-rated SUI annually, but knowing what's coming helps you budget.
Annual
Year-end is the busiest payroll period. These all stack up in January, so plan ahead.
- File IRS Form 940 (Federal Unemployment Tax Return) by January 31. FUTA is 6% on the first $7,000 of wages per employee, but you get a credit of up to 5.4% if you've paid your state unemployment taxes on time — making the effective federal rate 0.6% for most employers.
- Prepare and distribute W-2s to all employees by January 31. Employees need their W-2 to file their own taxes. File Copy A with the Social Security Administration (along with Form W-3) by January 31 as well.
- File Form HW-3 (Hawaii Employer's Annual Return and Reconciliation) with Hawaii DoTax by February 28. HW-3 reconciles all the monthly HW-14 filings for the year. Attach copies of the Hawaii W-2 withholding data.
- Issue 1099-NEC forms to independent contractors paid $600 or more during the year. Due January 31 to the contractor and to the IRS.
- Verify minimum wage compliance. Hawaii's minimum wage is $16.00/hour as of January 1, 2026, rising to $18.00/hour on January 1, 2028. Review all hourly rates each January.
- Pull the new Hawaii tax withholding tables. Hawaii DoTax releases updated withholding tables each year. Switch to the new tables at the start of the new year — using prior-year tables leads to under-withholding and unhappy employees at tax time.
- Ask employees to update their HW-4 and W-4 if their personal or financial situation has changed. Neither form expires, but life events like marriage, divorce, or a second job can make old allowance elections wrong.
Keeping It Manageable
Hawaii has more payroll-specific requirements than most states — the Prepaid Health Care Act, TDI, the HW-14 filing cycle, the UC-B6 with corporate officers included. None of it is complicated, but all of it requires attention. The employers who get in trouble aren't the ones who don't know the rules — they're the ones who know the rules but rely on memory instead of a system.
If you're setting up payroll for the first time or taking it back in-house, our services page covers what we handle and how the handoff works. We've been doing this in Honolulu since 1969. Get a free quote if you'd like to talk through your situation.
Frequently Asked Questions
Do I need to file both federal and Hawaii state payroll registrations separately?
Yes. Federal registration (EIN from the IRS) and Hawaii state registration are completely separate. With the state, you'll file a BB-1 for your general excise tax license, an HW-1 to register as a Hawaii withholding agent, and a UC-1 with the DLIR to establish your unemployment insurance account. All three are required before you run your first payroll.
When do I have to report new hires in Hawaii?
Hawaii employers must report new hires to the DLIR within 20 days of the employee's start date. You'll report the employee's name, address, Social Security number, and your federal EIN. This feeds the state's child support enforcement database.
How often do I file the Hawaii withholding return (HW-14)?
Most small businesses file the HW-14 monthly, due by the 20th of the month following the pay period. If your withholding liability is small enough, Hawaii DoTax may allow quarterly filing instead. Check your filing frequency assignment letter from DoTax — it's not automatic.
What is the Hawaii minimum wage in 2026?
Hawaii's minimum wage is $16.00 per hour as of January 1, 2026. It rises to $18.00 per hour on January 1, 2028. Tipped employees have a lower cash wage floor, but total compensation including tips must always reach the minimum wage or you must make up the difference.