I Asked ChatGPT How Much I’d Pay in Taxes If I Retired in Hawaii: Here’s What It Said

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Retiring in Hawaii conjures images of golden sunsets, quiet beaches and a life that finally slows down. Tax paperwork is the last thing anyone wants to picture. Still, in one of the country’s most expensive states, ignoring taxes isn’t an option.

I wanted to know what the real bill might look like for retirees, so I turned to ChatGPT. The answer seemed convincing at first glance, but I went back to Hawaii’s tax code to see if it actually held up. Below is what I found out.

Also here are five reasons retirees are leaving Hawaii.

What ChatGPT Predicted

ChatGPT broke Hawaii’s tax treatment of retirees into five main points:

• Social Security benefits are not taxed
• Employer-funded pensions are not taxed
• IRA and 401(k) withdrawals are fully taxable
• Investment income, such as capital gains and dividends, is taxable at regular income rates
• Hawaii uses a progressive income tax system ranging from 1.4% to 11%, with a $5,000 standard deduction for single filers and $10,000 for couples (these numbers were incorrect, as we’ll explore below)

To simplify what this would look like, ChatGPT gave an example: a retiree withdrawing $50,000 a year from an IRA would likely owe between $2,700 and $3,150 in Hawaii state income taxes.

That sounds reasonable, but let’s take a closer look to see if the AI math is accurate.

Reality Check: What Hawaii Actually Taxes

Social Security Benefits

This one checks out. According to the Hawaii Department of Taxation, Hawaii fully exempts Social Security benefits from state income tax. For retirees who depend mainly on Social Security, that exemption could mean thousands saved each year.

Pensions

ChatGPT was mostly right on this point. Hawaii does not tax pensions that are fully employer-funded, including military, federal civil service and state or county pensions. Private employer pensions also qualify for the exemption if the employer made all the contributions. However, if you contributed to the plan yourself, the portion tied to your contributions may still be taxable, according to TaxSlayer.

IRA and 401(k) Withdrawals

ChatGPT got this one correct as well. Hawaii taxes IRA and 401(k) distributions as ordinary income, just like wages. According to SmartAsset, these withdrawals are fully taxable at the state level. For many retirees, this is where Hawaii’s taxes take the biggest bite, since retirement accounts are often the primary source of savings.

Investment Income

Another correct point for ChatGPT. Dividends, capital gains and interest are subject to Hawaii’s state income tax at the same rates as regular income. According to TurboTax, retirees who rely on brokerage accounts or taxable investments will see these earnings included in their state taxable income.

Hawaii’s Tax Rates

ChatGPT’s outline of Hawaii’s tax system was close, but not entirely accurate. Hawaii uses a progressive income tax system with rates ranging from 1.4% to 11%, according to the Tax Foundation. However, the standard deduction is lower than ChatGPT suggested ($5,000 for single filers and $10,000 for married filing jointly).  It is $4,400 for single filers (or married filing separately) and $8,800 for married couples filing jointly, per the Hawaii Department of Taxation as of 2025.

Example: $50,000 IRA Withdrawal

To see how this plays out in practice, consider a single filer withdrawing $50,000 from an IRA in one year:

• Start with $50,000 in income
• Subtract the $4,400 standard deduction
• That leaves $45,600 in taxable income
• Applying Hawaii’s brackets results in a tax bill of roughly $2,700 to $3,150

In other words, about six cents of every dollar withdrawn would go to state taxes. By contrast, someone living only on Social Security and an exempt pension could owe no state income taxes at all.

Recap: What’s Taxed and What Isn’t

In short, Hawaii fully exempts Social Security and employer-funded pensions, but it taxes retirement account withdrawals and investment income at regular rates.

The Verdict

So how well did ChatGPT do? Overall, it provided an accurate snapshot of Hawaii’s retirement tax rules. It correctly identified what’s exempt and what isn’t and its example calculation lined up with Hawaii’s official brackets.

The gaps were minor but worth noting. ChatGPT didn’t point out that some pensions may be partially taxable and it skipped over deductions or credits beyond the standard deduction that could reduce a retiree’s bill.

The bottom line? ChatGPT is a useful starting point, but retirement tax planning is too important to rely on AI alone. Confirm details with the Hawaii Department of Taxation or a trusted advisor before making decisions.

Should You Retire in Hawaii?

Hawaii may be one of the most expensive states in the nation, but its tax rules can be more forgiving than you might think. Retirees relying on Social Security and pensions may owe little to nothing in state income tax, while those depending on IRAs, 401(k) plans or investments will face steeper bills.

ChatGPT’s explanation was largely accurate, but the real takeaway is this: know how your Social Security benefits, pension income, IRA withdrawals and investments will be taxed in Hawaii before you make the leap. That clarity can help turn the dream of retiring in paradise into a realistic plan.

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