N-158: Investment Interest Expense Deduction (2025)
Hawaii · Hawaii DoTax · Used for tax years 2025
Hawaii Form N-158 figures your investment interest expense deduction for 2025 and the disallowed expense you can carry forward to future years. It reports investment interest expense and net investment income, which limits the deduction.
Who files this form
Individuals, estates, and trusts must file Form N-158 to claim an investment interest expense deduction for 2025.
You do not have to file Form N-158 if all three conditions apply:
- Your investment income from interest and ordinary dividends is more than your investment interest expense.
- You have no other deductible investment expenses.
- You have no carryover of disallowed investment interest expense from 2024.
What you'll need
Have the following information and applicable forms available:
- Your name and Social Security number or employer identification number, as shown on your return.
- Investment interest expense paid or accrued in 2025.
- Your 2024 Form N-158, line 7, if you have disallowed interest to carry forward.
- Investment income, gains, losses, capital gain distributions, and capital loss carryovers.
- Allowed investment expenses other than interest.
- Schedules K-1 from partnerships or S corporations reporting investment interest, income, or expenses.
- The applicable Itemized Deductions Worksheet from the Form N-11 or N-15 instructions, if your investment expenses are included there.
If deductible investment interest relates to an activity for which you are not at risk, you must also use federal Form 6198 to figure the deductible amount.
How to file
Attach Form N-158 to Form N-11, N-15, or N-40. The supplied text does not give a mailing address or e-filing directions.
Common mistakes
- Putting investment sale gains on line 4a. The form cautions you to report net gain from the disposition of investment property on line 4b instead.
- Electing to include net capital gain without considering the tax effect. Any net capital gain you elect to include in investment income on line 4e is not eligible for the 7.25% maximum capital gains tax rate.
Questions people ask
How much investment interest can I deduct for 2025?
Your deduction is limited to your net investment income. On line 8, enter the smaller of total investment interest expense on line 3 or net investment income on line 6.
What happens to interest I cannot deduct this year?
Line 7 figures the disallowed investment interest expense carried forward to 2026. Subtract line 6 from line 3. If the result is zero or less, enter zero.
Can I include net capital gain in investment income?
Generally, net capital gain from investment property is excluded. You may elect to include part or all of it by entering the elected amount on line 4e. That amount is not eligible for the 7.25% maximum capital gains tax rate.
What if I used one loan for several purposes?
You may have to allocate the interest. Different rules apply to investment interest, personal interest, trade or business interest, home mortgage interest, and passive activity interest.