An ad valorem tax is a tax that is calculated as a percentage of the value of something—such as tangible (physical) personal property (goods in a warehouse, office furniture, computer and telephone systems, inventory, etc.).
For example, county tax assessors often place a value on a business's tangible personal property and assess an ad valorem tax on the property.
In Hawaii, ad valorem taxes are applied to real property (land and improvements) but not generally to tangible personal property. Hawaii does not impose a state property tax; instead, property taxes are administered by the individual counties (Hawaii, Maui, Honolulu, and Kauai). Each county has its own system for assessing property value and determining tax rates, which are applied to real property. Businesses in Hawaii are subject to the General Excise Tax (GET) on their business income rather than a tax on tangible personal property. The GET is a gross receipts tax and is not directly comparable to a sales tax or an ad valorem tax on personal property. However, when it comes to tangible personal property, certain items may be subject to other specific state taxes or fees, but not in the form of an ad valorem property tax as is common in many other states.