The Weekly Community Newspaper of Associations, CVBs, and Hotels
Hawaii Imposes Landmark Lodging Tax to Address Climate Change
Also Adds Fee to Cruise Ship Bills
By Jonathan Trager
Hawaii has become the first U.S. state to levy an additional tax on hotel rooms, vacation rentals, and cruise stays aimed at funding projects that mitigate the impact of climate change.
Signed into law by Gov. Josh Green on May 27, the “Green Fee” will raise the state’s current transient accommodations tax by 0.75% for a total of 11%. The tax goes into effect on January 1, 2026.
An 11% tax will also be found on cruise ship bills starting in July 2026. That amount will be prorated for the number of days the vessels are in Hawaii ports.
“As an island chain, Hawaii cannot wait for the next disaster to hit before taking action,” said Hawaii Gov. Josh Green. “We must build resiliency now, and the Green Fee will provide the necessary financing to ensure resources are available for our future.”
The new tax is projected to generate $100 million annually. The funded projects are to be confirmed next legislative session but will span environmental stewardship, climate and hazard resiliency, and sustainable tourism.
In 2024, following devastating Maui wildfires, Green established a Climate Advisory Team (CAT) to develop policy recommendations. A key measure from the group was to secure a funding source for climate change mitigation and disaster relief.
“The Green Fee bill marks a historic investment in climate disaster resilience and environmental protection,” said Chris Benjamin, the leader of CAT. “Using the TAT to fund resiliency projects ensures that the financial burden of safeguarding our aina (island) and people doesn’t fall upon residents alone. We thank the legislature, industry and countless community groups and individuals who advocated tirelessly for this bill.”
Although officials admit that such fees “may not be the most popular method of revenue generation, stakeholder dialogue has affirmed that visitors are willing to pay a climate impact fee in order to support Hawaii’s environmental protection efforts and preserve the beauty and cultural heritage of the islands for future generations.”
“I mahalo the tourism industry for stepping up and collaborating on this initiative, which will preserve Hawaii for kamaāina and visitors alike,” said Green. “The fee will restore and remediate our beaches and shorelines and harden infrastructure critical to the health and safety of all who call Hawaii home, whether for a few days or a lifetime.”