Best Annuity Rates in Hawaii (2026)

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Hawaii is America’s most expensive state to retire in – and its tax treatment of annuity income reflects that complexity. The state’s income tax runs from 1.4% all the way to 11%, one of the steepest top rates in the country. But Hawaii also offers some targeted retirement income exclusions that can reduce the tax bite for retirees who plan carefully. For fixed-income investors, a MYGA from an A-rated carrier provides the guaranteed growth and tax deferral that volatile Hawaii real estate markets cannot.

The rate table below shows today’s best MYGA rates available to Hawaii residents from A-rated carriers, updated daily.

Are Fixed Annuities a Good Choice in Hawaii?

For Hawaii retirees, the core appeal of a fixed annuity is predictability in a state where living expenses are notoriously unpredictable. Groceries, utilities, and healthcare costs in Hawaii can run 30% to 50% above mainland averages. A MYGA that locks in 5.00% to 5.50% for five years gives a retiree certainty about at least one leg of their retirement income.

Consider Ellen, age 66, retired in Honolulu on a fixed income of about $4,000 per month from Social Security and a small pension. She has $120,000 in a savings account earning 2.50%. She moves it into a 5-year MYGA at 5.10%. At maturity, her account reaches approximately $153,907 – a guaranteed gain of $33,907. She deferred all taxes on that growth for five years, and because her overall income stays within the lower Hawaii tax brackets, her effective state tax rate on those eventual withdrawals is well below the 11% top rate. The tax-deferred compounding is a meaningful benefit.

Hawaii does not impose a separate state estate tax – it conforms to federal rules – and annuity death benefits pass outside of probate to named beneficiaries.

Hawaii Guaranty Association: How Your Annuity Is Protected

The Hawaii Life and Disability Insurance Guaranty Association protects Hawaii policyholders if a licensed insurance carrier becomes insolvent. Coverage applies automatically – you do not enroll separately, and there is no additional fee.

If you are placing more than $250,000 in annuities, split the funds between two or more A-rated carriers. Each insurer has its own separate $250,000 protection limit.

Hawaii Life and Disability Insurance Guaranty Association
Website: hawaiiga.com

How Hawaii Taxes Annuity Income

Hawaii taxes most retirement income at the same graduated rates applied to other income, from 1.4% up to 11%. The state does exempt certain government and military pension income, but private retirement income – including withdrawals from non-qualified annuities and IRA-funded annuities – is generally taxable.

Because Hawaii’s top rate is 11%, high earners face a significant state tax burden on annuity income. The key planning strategy is to spread withdrawals across multiple years to stay within the lower brackets (1.4% to 6.4%) rather than triggering the upper brackets. Withdrawals before age 59½ add the 10% federal early withdrawal penalty on top of both federal and Hawaii state income tax.

Hawaii Insurance Division

The Hawaii Insurance Division, part of the Department of Commerce and Consumer Affairs, licenses and regulates all insurance carriers and agents operating in Hawaii. Before buying an annuity, verify that the carrier is licensed in Hawaii and that your agent holds an active life insurance license in the state.

Tips for Buying an Annuity in Hawaii

• Spread withdrawals to avoid upper tax brackets: Hawaii’s 11% top rate applies to income above $200,000 for single filers. If you take large lump-sum withdrawals, you may push yourself into a much higher bracket. Systematic annual withdrawals at lower amounts keep you in the 4.4% to 6.4% range for most retirees.
• Consider tax deferral as a primary benefit: In a high-tax state like Hawaii, the ability to defer taxes on annuity growth for 5 to 10 years has real dollar value. A MYGA’s tax deferral benefit is amplified the higher your current marginal rate.
• Work with an independent broker who knows the Hawaii market: Not all national carriers are licensed in Hawaii, and rate availability varies. An independent broker with Hawaii-specific experience can identify which carriers offer the best rates with Hawaii approval.
• Keep individual carrier exposure under $250,000: If you have a large retirement portfolio, spread annuity investments across multiple A-rated carriers to stay within each carrier’s $250,000 guaranty fund protection limit.
• Use the 10-day free-look: Review the full contract carefully – surrender charge schedules and market value adjustment terms can be significant over a 5- to 10-year term.