Questions & Answers

Which distributions are eligible for the Hawaii Pension Exclusion?

Hawaii does not tax qualifying distributions from an employer-funded pension plan. For a distribution to qualify, it must be paid by a pension plan by reason of retirement, disability, or death.

The following three types of distributions are not taxed by Hawaii:
  1. Pension or annuity distributions from a public (i.e., government) retirement system (e.g., federal civil service annuity, military pension, state or county retirement system), unless voluntary contributions were made by an employee under an elective right.
  2. Distributions from a private employer pension plan received upon retirement (including early retirement and disability retirement) if the employee did not contribute to the pension plan.
  3. Distributions from a pension plan that are made to comply with the federal mandatory payout rule whether or not the employee is still working full time.
Distributions from a private employer pension plan received upon retirement are partially taxed by Hawaii if the employee contributed to the pension plan. Early distributions from a pension plan that are subject to the 10% federal penalty tax do not qualify and should not be subtracted.

We've provided your total pension distributions that are federally taxable. Only subtract federally taxable amounts. If you have multiple distributions and only some qualify for this exclusion, you can generally find the federally taxable amount of each distribution in Box 2a of your 1099-R.

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