T-bills and savings bonds in Hawaii: the tax-equivalent yield
Hawaii spreads its income tax over 12 brackets and reaches 7.6 % at middle incomes, so the state exemption on Treasury bills and savings bonds matters to ordinary savers, not only to the rich.
A CD or savings account in Hawaii must pay
4.834 %
to match 4.351 % from a T-bill or savings bond, which Hawaii cannot tax.
| Federal marginal rate (2026 brackets) | 24 % |
| Hawaii marginal rate | 7.60 % |
| State and local tax saved per $10,000 a year | $33.07 |
Worked out by Radif Partners · How we calculate · schedule read on the Hawaii revenue department site, tax year 2026
On $120,000 of taxable income, a single Hawaii resident pays 7.6 % to the state on the next dollar of interest from a bank and 24 % to the IRS. Interest on Treasury bills and U.S. savings bonds is outside Hawaii income tax. The 26-week bill auctioned on October 13, 2026 yields 4.351 %; a certificate of deposit has to offer 4.834 % to leave the same after-tax income. Kept in bills for a year, each $10,000 saves $33.07 of Hawaii tax. The brackets for 2026 are the ones announced by the Department of Taxation after Act 46 of 2024, which said that tax year 2026 would keep the 2025 brackets, and they match the 2025 Form N-11 instructions. Hawaii has no county income tax, so the state rate is the only one that a CD pays and a Treasury avoids. The top rate of 11 % begins at $325,000 for single filers.
12 brackets, with the joint ones exactly double
No other state in our table has as many brackets as Hawaii. The low rates are used up quickly: a single filer is at 7.6 % from $48,000, and the steps above $125,000 come every $50,000 up to the top. Every joint threshold is twice the single one, so a married couple pays the same rate as a single person with half their income.
| Rate | Single, from | Married filing jointly, from |
|---|---|---|
| 1.4 % | $0 | $0 |
| 3.2 % | $9,600 | $19,200 |
| 5.5 % | $14,400 | $28,800 |
| 6.4 % | $19,200 | $38,400 |
| 6.8 % | $24,000 | $48,000 |
| 7.2 % | $36,000 | $72,000 |
| 7.6 % | $48,000 | $96,000 |
| 7.9 % | $125,000 | $250,000 |
| 8.25 % | $175,000 | $350,000 |
| 9 % | $225,000 | $450,000 |
| 10 % | $275,000 | $550,000 |
| 11 % | $325,000 | $650,000 |
Hawaii's 11 % top rate is the second highest in the country, after California. It only matters to a few households. For a single filer with taxable income between $36,000 and $225,000, the rate on bank interest is somewhere between 7.2 % and 8.25 %.
Why the middle of the schedule is what counts
The 7.6 % rate begins at only $48,000 of taxable income for a single filer. That is already higher than the top rate of 31 states that tax interest, in our table of the 50 states and the District. A schoolteacher or a retired civil servant on Oahu therefore gives up more of a bank CD's interest to the state than a millionaire would in those states. At that income the federal rate is 12 %, and the CD that matches the 26-week bill must pay 4.762 %. This is the reason a Treasury bill or a savings bond is worth a look in Hawaii well below the income levels where people usually start thinking about taxes on interest.
A retiree in Hilo, a couple in Honolulu
A single retiree in Hilo with $50,000 of taxable income is already in the 7.6 % bracket, with 12 % federal tax. Against the 26-week bill her break-even CD rate is 4.762 %. If she prefers four-week bills, which yielded 4.068 % at the auction of October 15, 2026, the bank must pay 4.453 %. At the 26-week yield, $10,000 in bills keeps $33.07 a year out of the state's hands.
A married couple in Honolulu with $700,000 of joint taxable income pays the top 11 % and the 35 % federal rate. Their CD must pay 5.237 %; $10,000 held in T-bills saves them $47.86 of Hawaii tax.
Hawaii break-even rate with a four-week bill
A CD or savings account in Hawaii must pay
4.453 %
| Federal marginal rate (2026 brackets) | 12 % |
| Hawaii marginal rate | 7.60 % |
| State and local tax saved per $10,000 a year | $30.92 |
Line 18 of Form N-11
Your federal adjusted gross income includes your T-bill and savings bond interest, and the Hawaii return takes it back out. The 2025 instructions for Form N-11 have you enter interest on federal obligations, Treasury bills and notes included, on line a of the Hawaii Subtractions Worksheet. The worksheet total goes to line 18, other Hawaii subtractions. Savings bond interest you report federally the year you cash the bonds is a federal obligation as well. For the West Coast comparison, see California; for how T-bill yields are quoted, current T-bill rates.