Honolulu Real Property Tax Credit 2025: Cap Your Taxes at 3% of Income

Living in paradise is expensive. For many kupuna (seniors) and working families in Honolulu, rising property values mean rising property taxes.

The Honolulu Real Property Tax Credit is the city’s way of ensuring you don’t get taxed out of your home.

It is a simple promise: You should never pay more than 3% of your income in property taxes.

If your tax bill is higher than that, the City pays the difference.

Example:

Your household income is $50,000.
3% of your income is $1,500.
Your property tax bill is $3,500.
The Credit: The City gives you a $2,000 credit. You only pay $1,500.

Key Details at a Glance

Detail	Information
Benefit	Caps property tax at 3% of Gross Income
Income Limit	$80,000 (Combined for all titleholders)
Deadline	September 30, 2025 (Must apply annually)
Property Limit	Must not own any other property anywhere
Value Limit	Home value (net taxable) must be under $1,000,000
Who Qualifies	Homeowners with a valid Home Exemption

What This Opportunity Offers

1. Immediate Tax Relief This isn’t a deduction you file next April. It is a direct credit applied to your current tax bill.

If approved, the credit appears on your July 1, 2026 tax bill (for the 2026-2027 tax year).

2. Protection from Assessment Spikes If your neighborhood suddenly becomes “hot” and assessments skyrocket, your tax bill won’t explode—as long as your income stays the same. Your tax is tied to your wallet, not the market.

Who Should Apply

1. Fixed-Income Seniors If you bought your home in Manoa or Kaimuki 40 years ago, it might be worth $1.5 million now, but your pension hasn’t changed. This credit is designed specifically for you.

2. Working Families If you earn under $80,000 and own a condo or small home, you likely qualify.

3. Multi-Generational Households If you live with your kids or parents, be careful. The income limit applies to all titleholders. If Grandma is on the deed but lives in a nursing home, her income might still count.

Insider Tips for a Winning Application

1. The “Other Property” Trap You cannot own any other property.

Scenario: You own your home in Kalihi, but you also inherited 10% of a vacant lot on the Big Island.
Result: Denied. You must be a single-property owner.

2. Gross Income Means EVERYTHING The $80,000 limit is “Gross Income,” not “Taxable Income.”

You must include: Social Security (even the untaxed part), Pensions, COLA, Wages, Interest, and Dividends.
Mistake: People often leave out their Social Security because they don’t pay federal tax on it. The City counts it.

3. Apply Every Single Year This is not automatic.

Even if your income hasn’t changed, you must file a new application by September 30. If you forget, you pay full price.

4. Check Your “Home Exemption” You must have a valid Home Exemption filed.

Tip: Look at your last tax bill. If it doesn’t say “Home Exemption: $120,000” (or $160k for seniors), you need to fix that first.

Application Timeline

July 1, 2025: Application period opens.
September 30, 2025: DEADLINE. Applications must be postmarked or received by 4:30 PM.
October - December: City reviews applications.
July 1, 2026: Credit appears on your next tax bill.

Required Materials

Form BFS-RP-P-54: The official application.
Tax Returns: Federal (Form 1040) and State (Form N-11) for 2024.
Social Security Statement (SSA-1099): For all titleholders.
Proof of Other Income: Pension letters, W-2s, etc.
Birth Certificate: (If applying for the age-related Home Exemption for the first time).

Common Mistakes to Avoid

1. Missing the Deadline The deadline is September 30. Unlike the IRS, the City is very strict. Late applications are rejected.

2. Forgetting Titleholders If your son is on the deed “just in case,” his income counts toward the $80,000 limit.

Fix: If he doesn’t live there and doesn’t pay the mortgage, consider removing him from the title (consult a lawyer first!).

3. Renovating Too Much If you add a second story and your “Net Taxable Value” goes over $1,000,000, you lose the credit.

Note: This is “Net Taxable,” meaning Assessed Value minus your Home Exemption.

Frequently Asked Questions

What if I rent out a room? You can still qualify, but the rent you collect counts as income.

Is the $80,000 limit going up? Maybe. There is a proposal (Bill 45) to raise it to $100,000, but it hasn’t passed yet. For 2025, assume the limit is $80,000.

Do I need to hire a CPA? No. The form is one page. If you have your tax returns, you can do it yourself. Satellite City Halls can also help.

How to Apply

Download Form: BFS-RP-P-54.
Gather Docs: 2024 Tax Returns and SSA-1099s.
Mail or Drop Off:
- Mail: Division of Treasury, P.O. Box 4200, Honolulu, HI 96812.
- Drop Off: Any Satellite City Hall.

Official Honolulu Tax Credit Page