Are any types of investment income non-taxable?

Yes, certain types of investment income are non-taxable in Hawaii. Generally, investment income that is considered to be capital gains is non-taxable. Capital gains are defined as the profits realized through the sale of an asset, such as stocks, bonds, mutual funds, or real estate. In Hawaii, capital gains are taxed at a rate of 0.37%, which is significantly lower than the tax rate for other types of income. In addition to capital gains, any income that is received from a municipal bond is non-taxable. Municipal bonds are debt obligations issued by state and local governments, and the interest earned on these bonds is free of state and federal tax. Other types of non-taxable investment income include income received from qualified retirement accounts, such as 401(k)s and IRAs, as well as Social Security benefits. While this income may be subject to federal taxes, it is exempt from taxable income in Hawaii. Finally, any income earned from a 529 college savings plan is non-taxable, as long as the money is used to pay for qualified educational expenses. 529 plans are a great way to save for college since any earnings and contributions are exempt from both federal and state taxes.

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Are any types of investment income non-taxable?

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