2026 Hawaii Labor Law Updates: New Rules for Employers
Mallory Martin
Corporate Counsel / Director of Legal Operations, ProService Hawaii
Hawaii employers are starting 2026 with several important labor law changes that affect wages, payroll, benefits, and federal compliance requirements. From a higher minimum wage to updated IRS mileage rates and new rules under the One Big Beautiful Bill Act (OBBBA), these updates require employers to review policies and payroll processes to stay compliant.
Here’s a breakdown of the most important 2026 Hawaii labor law updates and what employers need to know.
2026 Hawaii Labor Law Updates: At a Glance
- Hawaii minimum wage increased to $16/hour (effective January 1, 2026)
- New federal compliance requirements under the One Big Beautiful Bill Act (OBBBA)
- IRS mileage reimbursement rate updated to 72.5¢ per mile for business use
- Higher 401(k) and Flexible Spending Account (FSA) contribution limits for 2026
Hawaii Minimum Wage Increase in 2026
As of January 1, 2026, Hawaii’s minimum wage has increased to $16 per hour, with another increase to $18 per hour scheduled for 2028. Employers should review pay structures, payroll settings, and roles that may be impacted by wage compression or tip credit considerations.
OBBBA (One Big Beautiful Bill Act): What Employers Need to Know
The One Big Beautiful Bill Act introduces several federal changes that may affect payroll reporting, benefits administration, and compliance processes for employers.
New Tip Income Reporting Requirements
OBBBA introduces new rules for how tip income must be tracked and reported. Employers with tipped employees should ensure payroll systems and recordkeeping processes accurately capture tip income in compliance with federal requirements.
Overtime Pay Tracking and Reporting
Overtime pay must now be tracked and reported separately for certain federal deductions. This change may require updates to payroll systems and additional oversight to ensure overtime is calculated and reported correctly.
Medicaid Verification Requirements
The law adds new Medicaid verification requirements that employers may need to account for as part of their compliance processes. Employers should understand how these requirements may affect employee documentation and administrative workflows.
Expanded Benefits and Savings Programs
OBBBA expands access to certain benefits and savings programs, including updates related to Flexible Spending Accounts (FSA), student loan repayment assistance, and other federally supported accounts.
Increased Immigration Enforcement
The legislation includes increased immigration enforcement measures, raising the importance of accurate documentation and proper I-9 verification practices.
Why OBBBA Increases Compliance Risk for Employers
Taken together, these changes significantly increase compliance complexity. Without updated payroll systems, policies, and training, businesses may face a higher risk of errors, penalties, or audits.
Learn more about OBBBA:
• Read our full breakdown
• Watch our on-demand webinar
Mileage Reimbursement Rates Adjusted
New IRS mileage rates for 2026:
- 72.5¢ per mile for business use (up from 70¢)
- 20.5¢ per mile for medical use (up from 21¢)
- 14¢ per mile for charitable use (unchanged)
Employers should confirm that reimbursement policies, payroll settings, and expense systems reflect these new rates to avoid discrepancies or employee confusion.
New Limits for Benefits & Compensation
Several benefit limits have increased in 2026, offering more savings potential for your team:
Retirement Plans (401(k), etc.)
- $24,500 employee deferral limit (up from $23,500)
- $8,000 catch-up (age 50+)
- $11,250 catch-up (age 60–63)
Flexible Spending Accounts (FSA)
- Dependent Care FSA: $7,500 per household (up from $5,000)
- Healthcare FSA: $3,400 (up slightly)
What Hawaii Employers Should Do to Stay Compliant in 2026
- Review payroll settings, wage rates, reimbursement policies, and benefit limits
- Train managers on updated state and federal compliance requirements
- Communicate changes clearly to employees
How ProService Supports Hawaii Employers in 2026
At ProService Hawaii, we help employers stay ahead of changing regulations—without adding more work to your plate. From payroll updates to HR compliance guidance, our team monitors these changes so you don’t have to.
To support you in the year ahead, we’ve created practical tools designed specifically for Hawaii employers to help you start 2026 compliant and confident.
2026 Payroll & HR Cheat Sheet
Looking for a quick reference you can share with your payroll, HR, or leadership team? Our 2026 Payroll & HR Cheat Sheet breaks down key wage, benefit, and reimbursement updates in one easy-to-use resource. It includes:
• Minimum wage and payroll updates
• OBBBA compliance highlights
• Mileage reimbursement and benefit limit changes
Download the 2026 Payroll & HR Cheat Sheet
Whether you’re navigating these changes on your own or with ProService by your side, having the right information—and the right support—can make all the difference.
FAQ: 2026 Hawaii Labor Law Updates
What is Hawaii’s minimum wage in 2026?
Hawaii’s minimum wage is $16 per hour as of January 1, 2026.
When did Hawaii’s 2026 minimum wage increase take effect?
The increase took effect on January 1, 2026.
What is OBBBA and how does it affect employers?
OBBBA is a federal law that introduces new requirements related to payroll reporting, benefits programs, and compliance processes.
What is the IRS mileage reimbursement rate for 2026?
New IRS mileage rates for 2026 include 72.5¢ per mile for business use, 20.5¢ for medical use, and 14¢ for charitable use.
What are the 2026 401(k) contribution limits?
The employee deferral limit is $24,500, with catch-up contributions of $8,000 for age 50+ and $11,250 for ages 60–63.
Do Hawaii employers need a new labor law poster in 2026?
Employers should ensure workplace postings are current and reflect 2026 federal and Hawaii requirements.
Important Disclaimer
This information is provided for informational purposes only and does not constitute legal advice. Employment laws and regulations are subject to change. Employers should consult with qualified legal or HR professionals regarding their specific circumstances.
