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.
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 located this session, but whether it passed, stalled in committee, or was carried over could not be confirmed against a primary Hawaii legislature source this session.
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. Direct fetch attempts against tax.hawaii.gov, files.hawaii.gov, and capitol.hawaii.gov were all blocked (HTTP 403) despite roughly eight attempts using different URLs and an alternate proxy, so this reflects search-tool extraction of the text of those official documents rather than an independently rendered fetch, and should be treated as needing a follow-up direct-source check. |
|---|---|
| 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. |
Coordinate this with your overall retirement plan
An adviser can help weigh how much of a pension or IRA withdrawal to take this year, whether a Roth conversion makes sense before or after a move, and how state tax interacts with the rest of your plan, but that does not replace the numbers in your own return.
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Social Security
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.
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 (direct fetch blocked this session; content via search-engine extraction of the same document)
- Hawaii State Legislature, Hawaii Revised Statutes sec. 235-7 (direct fetch blocked this session; content via search-engine extraction of the same document)
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.