Updated October 29, 2026. Quick answer: No, with one exception the instructions state. The 2025 N-11 instructions say “Hawaii does not tax qualifying distributions from an employer-funded pension plan.” They name the federal civil service annuity as an example and add that this holds “unless voluntary contributions were made by an employee under an elective right”.
What Hawaii does with a FERS or CSRS annuity
| Question | What the Hawaii documents say |
|---|---|
| What the source says | Hawaii does not tax pension or annuity distributions from a government retirement system such as the federal civil service annuity, unless voluntary contributions were made by an employee under an elective right. |
| Amount or limit | The full qualifying pension amount included in federal AGI is entered as a subtraction on Form N-11 line 13; no dollar cap is printed. |
| Change for 2026 | No 2026 change is printed in the state documents cited here. |
In the Hawaii documents’ own words
- “not taxed by Hawaii and should be included on line 13” (2025 Form N-11 Individual Income Tax Return instructions)
- “partially taxed by Hawaii if the employee contributed to the pension plan” (2025 Form N-11 Individual Income Tax Return instructions)
- “Any compensation received in the form of a pension for past services;” (HRS 235-7 Exclusions from gross income, adjusted gross income, and taxable income)
How this differs from other pensions in Hawaii
A private employer pension is also exempt if the employee did not contribute to the plan, but it is partially taxed by Hawaii if the employee contributed. The federal civil service annuity is exempt unless voluntary elective contributions were made. See also Does Hawaii tax pensions? and military retirement pay.
FERS, CSRS and your TSP
The 2025 instructions list the Federal Thrift Savings Plan among deferred compensation plans whose distributions may be partly or fully taxable. For the Thrift Savings Plan itself, see Does Hawaii tax TSP withdrawals? and the TSP calculator.
Where this rule sits on the Hawaii return
The subtraction is entered on Form N-11 line 13, and the exemption rests on HRS 235-7, which excludes compensation received as a pension for past services.
Checks before you rely on this answer
- Ask your retirement office whether any of your contributions were voluntary and made under an elective right, because that is the stated exception.
- Keep TSP withdrawals separate from the annuity, since the instructions treat deferred compensation plans on their own terms.
- Compare your line 13 entry with the pension amount on your federal return.
What the Hawaii documents leave open
The instructions print no age test, dollar cap or income limit for the federal civil service exemption. Hawaii Administrative Rules section 18-235-7-02, which the instructions cite, was not read, and the rate schedule is a table not published here.
Common mistakes
- Assuming a TSP withdrawal is exempt like the annuity. The instructions list the Federal Thrift Savings Plan among deferred compensation plans whose distributions may be partly or fully taxable.
- Overlooking voluntary contributions made under an elective right. They are the stated exception.
Related: Does Hawaii tax pensions?, Hawaii military retirement pay, Hawaii retirement deduction line by line, and FERS, TSP and Social Security sequencing.
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Answer againSources
- 2025 Form N-11 Individual Income Tax Return instructions: https://files.hawaii.gov/tax/forms/2025/n11ins.pdf
- HRS 235-7 Exclusions from gross income, adjusted gross income, and taxable income: https://data.capitol.hawaii.gov/hrscurrent/Vol04_Ch0201-0257/HRS0235/HRS_0235-0007.htm
Read from the state documents linked above on October 29, 2026. General information, not tax advice.