Hawaii · LLC tax election
Hawaii LLC: S corp or C corp?
Hawaii's corporate rate looks low next to its personal rate, and that gap shapes the whole decision.
See Hawaii at a glanceShort answer
Hawaii follows your federal S election and has no separate state form. A C corporation pays 4.4% to 6.4% on a three-step scale, while S corporation profit lands on your own return, where Hawaii's rates run from 1.4% to 11%. The S election usually helps only if you take the profit out anyway.
Last checked .Hawaii at a glance
What is different about Hawaii?
Hawaii has an odd shape. A C corporation pays at most 6.4% on income over $100,000, while an individual can pay up to 11%. Elect S status and the company's profit flows to your return, where it stacks on top of your salary at the personal scale. Keep it as a C corporation and the first $25,000 is taxed at just 4.4%. That does not mean C wins: dividends get taxed again on your return. But it does mean the usual 'S corporation always saves tax' line needs a real calculation here. Hawaii also offers an optional 9% pass-through entity tax for S corporations, which can help with the federal state-tax deduction cap.
Does Hawaii recognize a federal S corp election?
Hawaii recognizes a valid federal S election, so the S corporation itself does not pay the corporate income tax. There is no separate Hawaii election form; you file Form N-35 each year and the state can ask for evidence of the federal election. Your share of income, deductions and credits goes on your own Hawaii return. You can also elect, on Form N-362E filed with the N-35, to pay a 9% pass-through entity tax at the company level.
Does my LLC need a separate Hawaii election or form?
Hawaii has no separate S election; S corporations file Form N-35 on or before the 20th day of the fourth month after the close of the taxable year.2
Is a Hawaii LLC taxed as a C corp ever better?
A Hawaii C corporation pays 4.4% on taxable income up to $25,000, 5.4% on the next slice up to $100,000, and 6.4% on everything above. These are the rates in the Department of Taxation's Form N-30 instructions, and we found no flat minimum. The tax is only the first layer, because profit paid out as dividends is taxed again on your personal return.
Run your Hawaii numbers
The S election pays when you would otherwise be paying yourself most of the profit anyway, since that avoids the second layer of tax and trims payroll tax on the part taken as distributions. If you plan to leave profit in the company, Hawaii's low corporate scale may beat your personal bracket. Run both numbers before electing.
Result
How much would a Hawaii LLC owner save as an S corp?
| Taxed as | At $80,000 profit | At $150,000 profit |
|---|---|---|
| Default LLC | $11,304self-employment tax $11,304 | $21,194self-employment tax $21,194 |
| S corp | $9,344payroll tax $7,344 + $2,000 payroll and prep | $15,770payroll tax $13,770 + $2,000 payroll and prep |
| C corp | $17,232payroll tax $7,344 + Hawaii tax $1,478 + federal $6,410 + $2,000 payroll and prep | $30,732payroll tax $13,770 + Hawaii tax $2,990 + federal $11,972 + $2,000 payroll and prep |
Assumes a 60% salary6 and a single filer. Income tax is left out. C corp dividends are taxed again. Hawaii entity-level taxes are not included: we could not confirm them on an official Hawaii source.
When is the Form 2553 deadline for a Hawaii LLC, and what if I miss it?
Late relief: federal steps, deadline guide.
What to do next
How to start one, or have us form it from $123.75.
Registered agent $74.25/yr, annual report.
LLC vs S corp guide, election deadline, Form 2553 filed for $165.
More on Hawaii: How to start a Hawaii LLC · How to start a Hawaii corporation · Hawaii LLC cost · Hawaii annual report · Annual report late fees by state
File the S-Corp Election for your Hawaii LLC
We file Form 2553 for a flat $165.
Get the S-Corp ElectionCommon questions
Does Hawaii recognize an S corporation election?
Yes. The Department of Taxation's Form N-35 instructions say a valid federal S election is automatically effective for Hawaii income purposes without a separate election.
What form does a Hawaii S corporation file?
Form N-35, the Hawaii S corporation return. Shareholders then report their share of income, deductions and credits on their own Hawaii returns.
What is the Hawaii corporate income tax rate?
4.4% on the first $25,000 of taxable income, 5.4% on income from $25,000 to $100,000, and 6.4% above $100,000, per the Department of Taxation's Form N-30 instructions.
What is Hawaii's pass-through entity tax for S corporations?
It is an optional entity-level tax. The Department of Taxation sets the rate at 9% for tax year 2024 and forward. You elect it on Form N-362E filed with the N-35.
Sources 7 links, checked Nov 6, 2026
- Hawaii honors a valid federal S election for its own income tax, with no separate state election. files.hawaii.gov, checked Nov 6, 2026
- Hawaii has no separate S election; S corporations file Form N-35 on or before the 20th day of the fourth month after the close of the taxable year. files.hawaii.gov, checked Nov 6, 2026
- On Hawaii Form N-30, a corporation with taxable income of $25,000 or less pays 4.4%; over $25,000 up to $100,000 it pays 5.4% less $250; over $100,000 it pays 6.4% less $1,250. files.hawaii.gov, checked Nov 6, 2026
- Hawaii taxes individuals on a progressive scale from 1.4% up to 11%. tax.hawaii.gov, checked Nov 6, 2026
- IRS: Form 1120 instructions, C corp rate irs.gov, checked Nov 6, 2026
- IRS: S corp reasonable compensation irs.gov, checked Nov 6, 2026
- IRS: Form 2553 instructions irs.gov, checked Nov 6, 2026
Last verified Nov 6, 2026.
This page explains the rules; it is not tax advice. Run your numbers with a CPA or enrolled agent before you elect.
Last verified Nov 6, 2026.