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 two registrations with the Hawaii Department of Taxation (DoTax).
Form BB-1 is the Basic Business Application. This gets you your Hawaii tax ID and registers you for general excise tax (GET). If you're already operating and have your GET license, you're set here.
Form HW-1 opens your employer withholding account. This is what authorizes you to withhold Hawaii state income tax from paychecks and file the associated returns. Without it, you can't legally withhold — or remit. Submit this before the first payroll, not after. Both forms are available 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 (Employer's Registration Form) with the DLIR Unemployment Insurance Division. Once registered, you'll receive a UI account number and an initial tax rate. New employers typically start at 2.4% on the first $56,700 of each employee's wages (rates and wage base are updated periodically — 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 has no tip credit. Tipped employees — servers, bartenders, valets — must receive the full minimum wage on top of whatever they earn in tips. This catches some restaurant and hospitality operators off guard if they're used to doing business on the mainland.
County minimum wages can exceed the state rate, though currently none of the four counties have done so. Still worth checking if you have operations on multiple islands.
Step 5: Report New Hires Within 20 Days
Hawaii requires employers to report every new hire to the DLIR within 20 days of the employee's start date. The report goes to the Hawaii New Hire Reporting Program, which cross-references it with child support enforcement records and helps identify unemployment fraud.
You'll report the employee's name, address, Social Security number, date of hire, and your federal employer identification number (FEIN). The DLIR's online portal accepts these reports directly. This requirement applies to rehires as well if there's been a gap of 60 days or more.
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 — Monthly State Withholding Return
Most Hawaii employers file Form HW-14 monthly. It's due by the 20th of the following month — so January withholding is due February 20, and so on. The form reports total wages paid and total Hawaii income tax withheld for the month.
If your annual withholding reaches $40,000 or more, you'll move to a more frequent deposit schedule — semi-weekly in most cases. Hawaii DoTax will notify you when you hit that threshold, but it's good to track your own withholding total. Missing a deposit 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 Hawaii's UI 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-3
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 Form HW-3 (Hawaii Annual Return and Reconciliation of Income Tax Withheld) with Hawaii DoTax, along with copies of the W-2s
The January 31 deadline is firm for both W-2 distribution and filing. Hawaii DoTax prefers electronic submission for employers with 10 or more W-2s. Penalties for late W-2s run $50–$270 per form depending on how late they are.
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
- For four or more 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 employee's contribution is capped at 1.5% of their wages, not to exceed the actual premium cost of the plan. So if an employee earns $800/week, their maximum contribution is $12/week. If the plan costs $10/week, they pay $10. 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 — retroactive coverage is messy. The DLIR Health Care Assurance Program administers PHC compliance.
Step 9: Set Up Hawaii TDI Coverage
The Hawaii Temporary Disability Insurance (TDI) law requires all Hawaii employers to provide TDI coverage for employees working 20 or more hours per week. TDI pays partial wage replacement when an employee can't work due to a non-work-related illness, injury, or pregnancy.
You have two options:
- State Plan: Enroll through the DLIR. Premiums are split between employer and employee.
- Approved Private Plan: Purchase coverage from an approved Hawaii insurer. Benefits must be at least as good as the state plan.
Employees become eligible for TDI after a waiting period (currently 14 consecutive days of disability). The benefit rate is 58% of average weekly wages, up to a maximum weekly benefit that's updated annually. 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 HW-1 (withholding)
- Register with DLIR: File UC-1 (unemployment insurance)
- Collect W-4 (federal) and HW-4 (state) from each employee
- Report new hires to DLIR 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 for 4+ consecutive weeks
- Set up TDI coverage for employees working 20+ hours/week
- File HW-14 monthly by the 20th
- File UC-B6 quarterly (April 30, July 31, October 31, January 31)
- File Form 941 quarterly (same deadlines)
- Distribute W-2s and file HW-3 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 HW-14 deposit frequency. Growing businesses hit the $40,000 annual withholding threshold and don't realize their deposit schedule has changed.
- 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 has none. Servers must receive the full minimum wage.
- 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. PHC benefit caps adjust. 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 penalty for late HW-14 deposits starts at 5% of the unpaid tax plus interest. One missed quarter on UC-B6 can run $500 or more depending on your payroll size.
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?
Three registrations before your first payroll: Form BB-1 with Hawaii DoTax for your general excise license, Form HW-1 with DoTax to open your state withholding account, and Form UC-1 with Hawaii DLIR to register for unemployment insurance. All can be completed online.
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 has no tip credit — tipped employees must receive the full minimum wage regardless of tips.
When is the HW-14 state withholding return due?
Most employers file monthly, due by the 20th of the following month. If your annual withholding is $40,000 or more, you'll be required to deposit more frequently — usually semi-weekly. Hawaii DoTax notifies you when the threshold is crossed.
Does the Hawaii Prepaid Health Care Act apply to my business?
If you have any employee working 20 or more hours per week for four or more consecutive weeks, yes. There is no small-employer exemption. The employee's contribution is capped at 1.5% of their wages.
What is Hawaii TDI and which employees does it cover?
Temporary Disability Insurance covers employees working 20 or more hours per week once they've completed the waiting period. It pays partial wage replacement for non-work-related illness or injury. You can use the state plan or an approved private plan.