Updated October 4, 2026. Quick answer: Yes, but the tax on a net capital gain is capped. Hawaii taxes gains as income at graduated rates, 1.40% to 11.00%, and HRS 235-51(f) says “the tax imposed by this section shall not exceed the sum of” an amount that includes “A tax of 7.25 per cent of the amount of taxable income” attributable to the gain.
Selling your home? How the state taxes the profit, from its own tax documents: Does Hawaii tax the profit from selling your home?.
The same question for dividends and interest: does Hawaii tax dividends and interest.
How Hawaii treats capital gains
| Item | What the documents say |
|---|---|
| Treatment | Graduated rates, with the tax on net capital gain capped at 7.25% (an alternative tax, not an exclusion) |
| Cap | 7.25% of the net capital gain (HRS 235-51(f)); the 2025 N-11 worksheet multiplies the eligible gain by 7.25% (.0725) |
| When the worksheet applies | Only if taxable income is over $24,000 for single and married filing separately ($36,000 head of household; $48,000 joint) |
| Ordinary rates, single filer, 2025 | 1.40% on the first $9,600 rising to 11.00% over $325,000 |
A $50,000 long-term gain
On a $50,000 net capital gain the capped tax is at most computed as $50,000 x 7.25% = $3,625. A filer whose bracket rates are lower pays less.
What changes in 2026
The statute prints no change to the 7.25% cap for 2026.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal tax on gains in Topic no. 409, Capital Gains and Losses and Publication 550, Investment Income and Expenses.
Related: whether Hawaii taxes pensions, how Hawaii taxes retirement income, the capital gains tax by state table, and the federal capital gains tax calculator.
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Answer againSources
- HRS section 235-51 Tax imposed on individuals; rates: https://data.capitol.hawaii.gov/hrscurrent/Vol04_Ch0201-0257/HRS0235/HRS_0235-0051.htm
- 2025 Form N-11 Resident Income Tax Instructions: https://files.hawaii.gov/tax/forms/2025/n11ins.pdf
- Income Tax Law, HRS Chapter 235 (Unofficial Compilation as of 12/31/2025): https://files.hawaii.gov/tax/legal/hrs/hrs_235.pdf
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.