Core Points - Hawaii's tax environment for retirees is complex and requires careful consideration, especially given the state's high cost of living [1][2] Tax Treatment of Retirees - Social Security benefits are fully exempt from state income tax, providing significant savings for retirees relying on these benefits [4] - Employer-funded pensions, including military and federal pensions, are not taxed, while private pensions may be partially taxable depending on contributions made by the retiree [5] - Withdrawals from IRA and 401(k) accounts are fully taxable as ordinary income, representing a significant tax burden for many retirees [6] - Investment income, such as capital gains and dividends, is subject to regular income tax rates [7] - Hawaii employs a progressive income tax system with rates ranging from 1.4% to 11%, alongside standard deductions of $5,000 for single filers and $10,000 for couples [7]