What payroll deductions are employers required to withhold?

Payroll Tax Deductions Employers Must Withhold in Hawaii

In Hawaii, employers have specific payroll tax withholding responsibilities to ensure compliance with state and federal regulations. Properly managing these deductions is essential for smooth payroll operations and avoiding penalties.

Required Payroll Deductions

• Federal Income Tax: Employers must withhold federal income tax based on employee Form W-4 information and IRS tax tables.
• Social Security and Medicare Taxes (FICA): Employers are required to withhold Social Security tax at 6.2% and Medicare tax at 1.45% from employee wages.
• Hawaii State Income Tax: Hawaii requires withholding of state income tax based on employee Form HW-4 and the Hawaii withholding tax tables.
• Hawaii Temporary Disability Insurance (TDI): Employers must withhold TDI contributions from employee wages. As of 2026, the withholding rate is set by the Hawaii Department of Labor and Industrial Relations and subject to wage limits.
• Unemployment Insurance (UI): While UI taxes are generally employer-paid, it's important to track these contributions for accurate payroll accounting and reporting.

Operational Considerations

• Employee Classification: Correctly classify workers as employees or independent contractors to determine withholding obligations accurately.
• Recordkeeping and Reporting: Maintain detailed payroll records and submit withholding reports to the Hawaii Department of Taxation and the Department of Labor as required.
• Automation: Utilize payroll software that integrates federal and Hawaii state tax tables to automate withholding calculations and updates.
• Compliance Updates: Stay informed on changes to withholding rates and wage limits, especially for TDI, by regularly consulting official Hawaii state resources.

By following these operational steps, Hawaii employers can ensure accurate payroll tax withholding, maintain compliance, and streamline their payroll processes.