Updated September 5, 2026. Quick answer: Hawaii’s rule turns on who funded the pension, not what kind of employer paid it: pensions the employee did not personally fund, which covers most public-employee pensions (state, county, federal civil service, and military retirement) and most noncontributory private pensions, are excluded from Hawaii income tax, while 401(k), 403(b), and traditional IRA distributions funded by the employee’s own elective contributions are taxable.
Federal civil service pensions in Hawaii: does Hawaii tax federal pensions.
More state retirement-income schedules, line by line: Hawaii Form N-11 line 13.
Inherited an IRA? What the state’s own documents say about taxing those withdrawals: Hawaii tax on inherited IRA withdrawals.
Hold a 403(b) or 457(b)? What the state’s own documents say about taxing those withdrawals: does Hawaii tax 403(b) and 457(b) withdrawals.
Married, or planning for a spouse’s death? Whether the state is a community property state, from its own statutes: Is Hawaii a community property state?.
Selling your home? How the state taxes the profit, from its own tax documents: Does Hawaii tax the profit from selling your home?.
The state’s income tax schedule: the Hawaii tax brackets for 2026.
Taking money out of your TSP? How the state taxes it, from its own tax documents: Does Hawaii tax TSP withdrawals?.
Trusts have their own page: does Hawaii tax trust income.
Dividends and interest have their own page: does Hawaii tax dividends and interest.
Inheriting from, or planning for, someone in this state? Whether the state has an inheritance tax, from its own tax documents: Does Hawaii have an inheritance tax?.
Annuity payments have their own page: does Hawaii tax annuity income.
Making a gift or planning an estate? The state’s gift tax answer, from its own tax documents: Does Hawaii have a gift tax?.
Military retired pay has its own page: does Hawaii tax military retirement.
Selling stocks, funds or real estate has its own page: does Hawaii tax capital gains.
Withdrawals from a 401(k) or IRA have their own page: does Hawaii tax 401(k) and IRA withdrawals.
The Hawaii ERS payment options and refund rules, from the system’s own documents: Hawaii ERS retirement decisions.
Confidence note: medium. This page is scoped to pension, IRA and 401(k) taxation specifically. For the state’s full retirement-tax picture (Social Security, tax rates, estate and probate), see how Hawaii taxes retirement income generally.
Pending, not current law: A 2024 bill referenced as HB1572, which would have limited Hawaii’s pension exclusion to pensions earned for past service performed within the state, was deferred by the House Finance Committee on February 21, 2024, according to the Hawaii State Legislature’s measure page, which lists no later action.
How pensions and retirement-account withdrawals are taxed
| Public (state/local government) pensions | Pension and annuity distributions from a public retirement system, meaning a federal civil service, military, or state or county government retirement system, are excluded from Hawaii gross income because Hawaii treats these as employer-funded rather than funded by the employee’s own contributions, per Hawaii Department of Taxation Tax Information Release 96-5 and Hawaii Revised Statutes sec. 235-7. Both documents were read directly from Hawaii government sites on September 30, 2026. |
|---|---|
| Private (employer) pensions | A private employer pension is excluded from Hawaii income tax if the employee did not contribute to the plan, which describes a standard noncontributory defined benefit pension; if the employee made contributions under an elective right, such as a deferred-compensation or 401(k)-type arrangement, distributions are treated as a return on the employee’s own investment and are taxable. |
| Federal government pensions (FERS/CSRS) | Federal civil service pensions (FERS/CSRS) fall under the same public-retirement-system exclusion as other government pensions and are excluded from Hawaii income tax as employer-funded government retirement benefits. |
| Military retirement pay | Military retirement pay is treated as a public-system pension and is excluded from Hawaii income tax under the same rule that exempts other government retirement-system benefits. |
| IRA and 401(k)/403(b) distributions | Traditional IRA distributions and distributions from 401(k)/403(b) plans funded by the employee’s own elective deferrals are treated as returns from an individual investment rather than an excluded pension and are taxable by Hawaii; early distributions from any pension plan that are subject to the federal 10 percent early-withdrawal penalty are also taxable regardless of plan type. |
| General retirement-income exclusion | Hawaii does not add a separate age-based or dollar-capped general retirement-income exclusion on top of the employer-funded-versus-employee-funded pension rule described above. |
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Hawaii does not tax Social Security benefits at all; see the sibling Social Security page for details. Social Security has its own rules in every state; see the full breakdown in how Hawaii taxes retirement income generally.
Figures verified against Hawaii Department of Taxation TIR 96-5, Haw. Rev. Stat. sec. 235-7 and the Hawaii State Legislature measure page for HB1572 on September 30, 2026; the federal 10 percent early-withdrawal rule and the military and federal civil service pension treatment were not re-checked against a Hawaii source.
Statute and sources
Governing citation: Haw. Rev. Stat. sec. 235-7; Hawaii Dept. of Taxation Tax Information Release No. 96-5.
- Hawaii Department of Taxation, TIR 96-5, Taxation of Pensions Under the Hawaii Net Income Tax Law
- Hawaii State Legislature, Hawaii Revised Statutes sec. 235-7
Read September 5, 2026.
Related: how Hawaii taxes retirement income generally · does Hawaii tax Roth conversions? · Roth conversion taxes, all 51 jurisdictions.
General information drawn from each state’s own published statutes and revenue-department guidance, not legal, tax or financial advice. Figures and exemption amounts are current as of the date in the quick answer, are set by state law, and can change by future legislation; any pending bill named on this page is not yet law. This page cannot see your own return, which governs. We are not a law firm, a tax adviser, or a fiduciary, and this is not personalized advice.