Hawaii Approves Groundbreaking Lodging Tax Increase to Fund Climate Resilience Efforts
The bill, which is expected to be signed into law by Governor Josh Green, introduces a 0.75% surcharge on top of Hawaii’s existing tax on hotel stays, vacation rentals, timeshares, and other short-term accommodations.
It also establishes a new 11% tax on cruise ship bills, calculated based on the number of days the vessels are docked in Hawaii’s ports.
State officials estimate the new taxes will generate nearly $100 million each year. Rooftops during major storms, and clearing out invasive, highly flammable grasses—like those that contributed to the devastating wildfire in Lahaina in 2023.
The legislation passed both chambers of the Democrat-controlled state legislature with broad support.
Policy experts note that this measure marks the first time a U.S. state has created a lodging tax specifically dedicated to environmental and climate resilience projects.
Altogether, travelers will soon face a total tax rate of 18.712% on lodging—one of the highest in the United States.
He emphasized that many tourists come to Hawaii specifically for its natural beauty and are likely to support investments that help protect the islands’ ecosystems and communities.
“The more we prioritize strong environmental policies and invest in the quality of our shared spaces, the more we’re likely to attract travelers who are deeply committed to returning.
Importantly, only the new 0.75% lodging tax and the 11% cruise ship tax will be earmarked specifically for environmental protection and climate resilience.
Zane Edleman, a tourist from Chicago, said the higher costs could push some travelers to consider more affordable destinations like Florida. However, he noted that the impact would largely depend on how transparently the state communicates how the new funds are used.
“If the focus is clearly on protecting the climate, and there’s real evidence showing where the money is going and the results it’s producing, I think people will be more willing to support it,” Edleman said.
An earlier version of the bill proposed a steeper tax increase, but lawmakers ultimately scaled it back.
“We listened to concerns about maintaining the health of our tourism industry while still finding ways to fund environmental sustainability,” said Democratic Rep. Linda Ichiyama, vice speaker of the House. “It was about finding the right balance.”
Still, he expressed concern about the long-term impact on tourism.
“The question is whether we’re pricing tourists out of choosing Hawaii,” Pele said. “That’s something we’ll have to watch closely.”