Some officials are worried the tax could hurt locals, too. Photo: Unsplash
On May 27, Hawaii Governor Josh Green signed a new bill into law that will levy higher taxes on tourists visiting the island chain. Tourism activities, including hotel rooms and cruise ship stays, will see price hikes to build the state’s resilience against the impacts of climate change.
Taking effect January 1, 2026, Hawaii’s Transient Accommodation Tax (TAT) will rise by 0.75 percent (10.25 percent to 11 percent), which, in other words, will increase the nightly price of your hotel or Airbnb stay. The law will also apply TAT to cruise ship stays, which were previously exempt from the tax. The 11 percent tax will be charged to cruise passengers for the days they are docked on the island.
The additional tax revenue created by Hawaii’s 10 million annual visitors is estimated to total $100 million. The funding will be allocated to initiatives that include protecting native flora and fauna, making infrastructure more climate resilient, reducing damage from wildfires and flooding, improving parks, trails, and beaches, and making tourism more sustainable.
“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,” Governor Green said in a press release.
The governor’s press release claims that dialogue with stakeholders led them to believe that visitors are willing to pay this fee, and there will be no harm to the tourism industry. However, some stakeholders are skeptical that it could cause a downturn in tourism spending and could end up affecting locals who travel between islands.
“There’s nothing like a Hawaii vacation and that is 100 percent true. But that doesn’t mean that (the tax) won’t affect visitor spending and the attractiveness of Hawaii as a destination,” said Malia Hill, the policy director at the Grassroots Institute of Hawaii, which has opposed the bill. “We travel interisland, for work, to see family, to see friends. So it is a tax on locals, and you cannot get away from that.”
The president of the Hawaii Hotel Alliance, Jerry Gibson, was relieved that an even higher, initially proposed tax was not adopted.
“I don’t think that there’s anybody in the tourism industry that says, ‘Well, let’s go out and tax more.’ No one wants to see that,” said Gibson. “But our state, at the same time, needs money.”
In 2023, previous iterations of a tourism tax proposed a $50 entrance fee for tourists to visit Hawaii, but it didn’t materialize as lawmakers deemed it would be unconstitutional.
An environmental advocacy group, Care for Aina Now, has estimated that Hawaii’s conservation spending falls short by $561 million of the amount needed. Governor Green acknowledged that shortfall, but added that Hawaii will allocate some of the funding for bonds to pay for long-term infrastructure projects.
Hawaii is not unique in its increased tourist tax. It’s been a tool used by other popular destinations, such as Greece, New Zealand, Bali, Amsterdam, Italy, and Iceland, to counterbalance the increased impact of tourism.
