Hawaii lawmakers on Friday passed groundbreaking legislation that will raise lodging taxes across the state to fund environmental restoration and protect communities from the growing threats of climate change.
Gov. Josh Green has expressed support for the measure and is expected to sign it. The bill will add a new 0.75% fee to Hawaii’s existing state tax on short-term accommodations, including hotels, vacation rentals, and timeshares. Additionally, it imposes an 11% tax on cruise ship passengers, calculated based on how many days the ship spends in Hawaii ports.
Supporters estimate the legislation will generate nearly $100 million a year. That money will be dedicated specifically to efforts such as replenishing eroded beaches, encouraging the installation of hurricane clips on rooftops, and clearing flammable invasive grasses — like those linked to the 2023 wildfire that devastated Lahaina.
According to policy experts, this is the first lodging tax in the U.S. specifically aimed at raising money for climate resilience and natural resource protection.
“This is to save the climate,” said Zane Edleman, a tourist from Chicago. He said whether visitors embrace the cost increase may depend on how well the state demonstrates where the money goes. “If you really focus on the point … and actually have proof that this is where the funds are going … I think people could buy into it.”
Hawaii already levies a 10.25% state tax on lodging, plus a 3% county lodging tax and a 4.712% general excise tax. Starting Jan. 1, the state lodging portion will increase to 11%, bringing the total lodging-related tax burden at checkout to 18.712%—one of the highest in the country.
Gov. Green said he believes the added fee is modest enough that it won’t discourage travelers. “The more you cultivate good environmental policy … the more likely it is we’re going to have actually lifelong, committed travelers to Hawaii,” Green said.
While the additional 0.75% and cruise ship tax revenue will be set aside specifically for environmental and climate-related initiatives, revenue from the existing lodging taxes will continue funding other priorities, including the state’s general fund and the construction of Honolulu’s rail system.
The bill passed both chambers of the Democrat-controlled Legislature with broad support, though lawmakers did scale back the original proposal, which called for a larger increase.
“We heard the concerns about how do we make sure that we are able to sustain our industry as well as find new resources,” said Rep. Linda Ichiyama, the House vice speaker. “So it was a balance.”
John Pele, executive director of the Maui Hotel and Lodging Association, acknowledged widespread support for the environmental goals of the tax, but said the potential long-term impact on tourism is still unclear.
“Will we be taxing tourists out of wanting to come here?” he said. “That remains to be seen.”
©2025 Cox Media Group
