Hawaii Lottery Tax Calculator - 9% State Tax

Hawaii imposes a flat 9% state income tax on all lottery winnings, tying Maryland and Minnesota for among the highest state lottery tax rates in the nation. On a $60 million lump-sum jackpot, Hawaii's 9% equals $5.4 million in state taxes alone. For Hawaii residents, this represents a significant disadvantage compared to no-tax states. A Hawaii winner loses millions more to state taxes than a Florida or Texas resident with the same jackpot. For example: Florida winner with $60M lump sum after federal tax = ~$37.8M. Hawaii winner with same prize = ~$32.4M. Difference: $5.4 million—the exact amount of Hawaii's state tax.

On a $100 million advertised jackpot: (1) Lump sum is ~60% = $60 million. (2) Federal tax at 37% = $22.2 million. (3) Hawaii state tax at 9% = $5.4 million. (4) Total taxes = $27.6 million. (5) Federal withholding already taken = $14.4 million (24%). (6) Additional tax due by April 15th = $13.2 million. You'd take home roughly $32.4 million—a 68% reduction from the advertised jackpot. Hawaii's combined 46% state and federal rate (37% + 9%) is among the highest tax burdens on lottery winnings in the nation.

Hawaii is known for high income taxes (top rate 11% on regular income) and has extended this tax philosophy to lottery winnings at 9%. The state funds education, healthcare, and various social programs through taxation. Hawaii's 9% lottery tax is consistent with its broader high-tax policy. For lottery winners, this means the state captures a significant portion of sudden wealth. The high tax rate reflects Hawaii's fiscal model: funding public services through comprehensive taxation including on windfall income events.

Hawaii's 9% ties for the highest with Maryland and Minnesota. Here's how Hawaii compares: (1) New Jersey and New York: 11% (highest in nation). (2) Oregon: 10%. (3) Hawaii, Maryland, Minnesota: 9%. (4) Vermont: 9%. (5) Connecticut, Massachusetts: 5%. (6) No-tax states (12): 0%. Hawaii sits in the second-highest tier nationally. A Hawaii winner with a $60 million lump sum owes $5.4 million in state taxes, compared to only $3 million for a Connecticut resident ($60M × 5%) or $0 for a Florida resident.

When you claim a Hawaii lottery prize: (1) Federal withholding of 24% is deducted by the lottery (IRS-mandated). (2) Hawaii withholds 9% for state taxes. Your actual federal liability is 37%, creating a 13% federal tax gap (37% owed minus 24% withheld). The $5.4 million Hawaii state tax on our $60 million example is already deducted at payment, so you won't owe additional state taxes—but you will owe roughly $7.8 million federally beyond the initial withholding.

Hawaii taxes both payout types at 9%. However, your decision should consider federal implications. A lump sum means a one-time large federal tax hit at 37% plus Hawaii's 9% = 46% combined. An annuity spreads payments over 30 years, potentially helping manage your annual income and federal tax brackets (though each annual payment is still subject to 9% Hawaii tax). Many Hawaii winners find the annuity attractive to spread both federal and Hawaii's 9% state tax across decades, reducing the one-time tax shock.

The Hawaii Lottery generates revenue for state programs, education, and infrastructure. Hawaii's island economy relies on taxation to fund services that mainland states might finance differently. Understanding Hawaii's fiscal model provides context: the state depends on comprehensive taxation including on lottery winnings to fund public services in an island environment with unique infrastructure and cost-of-living challenges.

If you win a Hawaii lottery prize: (1) Don't claim immediately—consult a tax attorney and CPA experienced in high-tax state planning. (2) Understand your complete tax obligation: 37% federal + 9% Hawaii = 46% combined on a lump sum. (3) Calculate the federal tax gap and arrange financing to cover it. (4) Seriously evaluate annuity vs. lump sum: the annuity may help spread the 46% combined tax burden across 30 years. (5) Consider whether to form an entity for privacy if permitted. (6) Plan post-claim investments carefully to manage federal brackets. (7) Understand that Hawaii's 9% is one of the highest in the nation—relocation after winning could significantly impact your tax burden if you move to a no-tax state.