Island living. Tradewinds ruffle the fronds of swaying palm trees. Turquoise waters lap against golden sands. Rainbows dot the skies as showers green the landscape.
Ten dollar gallons of milk. One of these things is not like the others. There are a lot of beautiful things about living on Maui.
The cost of living is the trade-off. However, for those considering making Maui their home or even planning an extended stay, it’s crucial to understand the Maui cost of living.
Whether you’re looking at new listings in Maui or considering renting, housing costs are just one aspect of the overall expenses you’ll need to consider.
In this blog, we’ll examine the various aspects that contribute to the expenses of living on Maui, including housing, transportation, food, and entertainment. By the end of this post, we will provide a clearer picture of the expenses you might encounter and give some ideas as to how people manage and create an enjoyable lifestyle.
Key Features:
- High Housing Costs: Maui’s housing is expensive due to high demand and limited inventory.
- Increased Daily Expenses: Groceries, dining, and transportation cost more because most goods are imported.
- High Utilities: Residents pay top dollar for electricity and healthcare services.
- Taxes: Hawaii’s tax system includes high-income and general excise taxes.
- Valued Lifestyle: Despite these costs, Maui’s beauty and lifestyle make it a coveted living destination.
Factors That Affect The Maui Cost of Living
Several key factors contribute to the high cost of living in Maui, making it one of the most expensive places to reside in the United States. Understanding these factors can help you better navigate the island’s economic landscape and plan accordingly.
1. Housing
Maui’s housing market is notoriously expensive, with limited inventory and high demand driving up prices. Whether you’re looking to rent or buy, expect to pay a premium for a place to call home. The median home price in Maui is well above the national average, and rental rates are equally steep.
2. Transportation
Maui’s remote location means that most goods, including food and fuel, must be shipped to the island, increasing prices. Additionally, the costs to own and maintain a vehicle on Maui can be substantial, with higher gas prices and higher costs to service your vehicle.
3. Food
Dining out in Maui can be expensive, with many restaurants catering to tourists and charging resort prices. Even grocery shopping can be costly, as most food items must be imported from the mainland or other islands, leading to higher prices than you might find elsewhere.
4. Utilities
Electricity rates in Maui are among the highest in the nation, as the island relies heavily on imported oil for power generation.
5. Taxes
Hawaii has a relatively high tax burden, with a progressive state income tax and a general excise tax (GET) that applies to most goods and services. These taxes can add up quickly, contributing to the overall high cost of living in Maui. (More on Maui taxes later)
Despite these factors, many residents find that the unparalleled natural beauty, warm climate, and laid-back lifestyle of Maui make the higher costs worthwhile. By understanding the factors that contribute to the cost of living on the island, you can better prepare yourself for the financial realities of life on the Valley Isle.
Comparison of Cost of Living in Maui vs Mainland U.S.
When considering a move to Maui, it’s essential to understand how the cost of living on the island compares to that of the mainland United States. In general, living in Maui is significantly more expensive than in most mainland cities, except for a few high-cost areas like San Francisco or New York City.
Housing
The most significant difference in cost between Maui and the mainland is housing. According to data from Zillow, the median home price in Maui County in the first quarter of 2024 was $1,327,961, more than three times the national median of $420,800.
The median price of a non-vacation rental condo on Maui was $707,000. Renting is also more expensive, with a one-bedroom apartment in Maui averaging about $2,350 monthly. The Lahaina Fire compounded the island’s housing scarcity and affordability issue.
Food
Groceries and dining out in Maui are also more expensive than on the mainland. According to The Motley Fool, grocery prices in Hawaii are about 50% higher than the national average, largely due to the cost of importing goods to the islands. A meal at a mid-range restaurant in Maui can easily cost $30-$50 per person, compared to $15-$30 in most mainland cities.
Transportation
Gas prices in Maui are consistently higher than on the mainland, typically ranging from 20-40% above the national average. Then again, if you are coming from California or some other West Coast community, you will find that our gas can be less expensive.
The island’s compact size means that most residents drive fewer miles than their mainland counterparts, which can help offset the higher fuel costs. Buying a car tends to be more expensive than on the mainland. With a limited number of dealerships in Hawaii, there isn’t much competition.
Utilities
Hawaii has the highest electricity rates in the nation, with residents paying about 2-3 times more per kilowatt-hour than the national average. Hawaii’s seclusion and using imported oil in our power plants drive this cost. It also explains why photovoltaic systems are so prevalent on homes.
Healthcare
One area where Maui’s cost of living compares favorably is the cost of health insurance premiums. This is particularly true if you have an employer-sponsored health plan.
The state has the nation’s lowest premium and deductible for employer-sponsored healthcare. The state also boasts some of the best public health outcomes in the nation, with high life expectancy and low rates of obesity and smoking. The one area where healthcare can get more expensive is if you need to travel off-island for specialized care.
What Are Taxes Like For Maui?
When planning your budget for living in Maui, it’s important to factor in the various taxes you’ll be required to pay. Hawaii has a unique tax structure that can catch some newcomers by surprise, so it’s essential to understand what to expect.
1. Income Tax
Hawaii has a progressive state income tax, with rates ranging from 1.4% to 11%, depending on your income level. The state also doesn’t offer many of the deductions and credits available in other states, which can result in a higher overall tax burden for some residents. That said, the state just passed a large tax cut that increases the standardized deduction for lower to middle-income taxpayers.
2. General Excise Tax (GET)
The GET is a tax on businesses for the privilege of doing business in Hawaii, but it’s often passed on to consumers in the form of higher prices. The GET rate is 4% for most goods and services, with an additional 0.5% surcharge in Maui County, resulting in a total rate of 4.5%. Unlike a traditional sales tax, the GET applies to nearly all transactions, including services, rent, and medical expenses.
3. Property Tax
If you own a home or other real estate in Maui, you’ll be subject to property taxes based on the assessed value of your property. The property tax rate in Maui County is generally lower than in many mainland cities, with rates ranging from approximately 0.15% to 1.5%, depending on the property type, use, and value.
Residents who have paid Hawaii state income taxes for the previous year can apply for the homeowner rate. That is the lowest tax rate.
4. Transient Accommodations Tax (TAT)
If you plan on renting out your Maui property to tourists, you’ll need to collect and pay the TAT, which is currently set at 10.25%. This tax applies to short-term rentals, such as vacation homes and condos, and is in addition to the GET.
5. Other Taxes and Fees
Depending on your specific circumstances, you may also be subject to other taxes and fees, such as the barrel tax on imported oil, the rental motor vehicle surcharge, or the conveyance tax on real estate transfers.
While the tax burden in Maui can be higher than in many mainland locations, it’s important to remember that these taxes help fund essential services and infrastructure on the island, including schools, roads, and public safety.
Tips for Keeping Costs Down
As long-time Maui residents, we can speak to some ways people reduce their expenses. While you can’t avoid paying taxes and there are no shortcuts to affordable housing, some shopping habits, capital investments, and lifestyle changes can help keep more money in your wallet.
Buy A Costco Membership
Lower prices, buying in bulk, and Costco gas make it easy to quickly cover the cost of a Costco membership. Add in an excellent return policy, and getting your Costco card is a no-brainer.
An Amazon Prime membership is another potential avenue to cost savings. While we do our best to shop locally, the free shipping from Amazon Prime and other related deals help keep down costs. It also means discounts at Whole Foods in Kahului.
Shop at Farmer’s Markets of Join a CSA
If you truly want to shop local, there is no better way to do it than at one of the local farmer’s markets. It can also mean lower prices than buying at the grocery store.
If you know you will consistently purchase fresh local produce, you may also want to join a Maui CSA. A CSA, or Community Supported Agriculture, allows you to receive a box or large bag of produce on a weekly basis.
My family has a CSA membership with Pono Grown Farms located in Olinda. It is a good value compared to what you would get at the local grocery store or organic foods store.
Grow Your Own
If you have a green thumb, Maui offers a year-round growing season. If you have the space, time, and patience growing herbs, vegetables, and fruits could help reduce your grocery bill.
Look for Kama’aina Specials
Some businesses will offer discounted prices for local residents. Keep your eyes peeled for companies that advertise Kama’aina discounts or Kama’aina days.
You typically are required to provide proof of residency to obtain a discount. Also, asking every business you visit if they offer Kama’aina discounts is considered poor etiquette. Keep in mind that many small business owners are doing their best to make ends meet.
Alternative Energy
If you are buying a home and plan to live in it long-term, installing a photovoltaic (solar system) may be a wise investment. Our high utility costs can make the payoff on your system happen sooner. It makes that much more sense if you use or plan to convert to an electric vehicle.
Backyard Gatherings
As mentioned earlier in this post, dining out on island can be expensive. While supporting our local restaurants is great, backyard barbecues are a great way to socialize and enjoy good food with a lesser hit on the wallet.
Enjoy The Free Things That Maui Has to Offer
There’s an old saying that the best things in life are free. The same is true of Maui. The beach and county and state parks are free. You can’t go wrong with spending time in nature.
If you aren’t content sitting on the beach or going swimming, some of Maui’s more memorable activities have lower cost barriers to entry. Buy yourself a mask, snorkel, and fins, and you can have countless hours of adventure exploring local reefs. A bodyboard or a used surfboard are relatively low-cost vehicles for days of entertainment in Maui’s waves.
Maui Cost of Living: Worth It?
The Maui cost of living is undeniably high compared to most mainland locations. By understanding the various factors contributing to the high costs, such as housing, food, transportation, and taxes, you can better prepare yourself for the financial realities of island life.
Ultimately, the decision to live in Maui is a deeply personal one that requires weighing the financial challenges against the intangible benefits of being part of this vibrant community and living in one of the planet’s most beautiful places.
If you’re prepared to adapt to the island’s economic landscape, your next step is working with a real estate team that knows this market- Maui Real Estate Team. Contact us today to get started!
