Here’s What Hawaii’s New Green Tax Means For Your Vacation

WDC NEWS 6 STAFF 4 weeks ago

12 4 minutes read

Here’s What Hawaii’s New Green Tax Means For Your Vacation

If you’re planning a Hawaii vacation soon, expect a new tax coming your way.

That’s because Hawaii just became the first state to impose a so-called “Green Fee” or “green tax” for tourists.

The fee, designed to help protect Hawai’i’s natural ecosystem from the impacts of climate change, will raise the state’s transient accommodations tax (TAT) for nightly lodging. It will apply to hotel stays, cruise ship cabins, and short-term rentals.

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Since the Aloha State welcomes roughly 10 million visitors yearly, state officials say the fee could raise around $100 million annually.

A portion of the revenue from the climate impact fee will be directed toward Hawaii’s response to future disasters, like the Maui wildfire of 2023.

“Hawaii is at the forefront of protecting our natural resources, recognizing their fundamental role in sustaining the ecological, cultural, and economic health of Hawaiʻi,” said Gov. Josh Green in a press statement.

So, how much will the so-called “Green Fee” add to your stay in Hawaii?

Here’s what you need to know, along with some other taxes you can expect when booking a trip.

Hawaii Act 96 approves ‘green tax’ for tourists

Hawaii’s new climate impact fee will go into effect next year, in 2026. As mentioned, the fee is designed to mitigate climate change impacts by addressing wildfire risks and protecting vulnerable environments.

Gov. Green, who signed Act 96 into law, says the fee will translate to visitors paying an additional $3 per night on a $400 room stay.

“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,” Green said in a statement.

If you’re planning to travel to Hawaii, here are some added fees you can expect for your nightly stay at a hotel and short-term rentals.

Note: Cruise ships that port in the state will also face TAT taxes for the first time.

The tax that travelers pay for their hotel or vacation rental rooms — called the Transient Accommodation Tax (TAT) — is set to go up in Hawaii. Right now, it’s 10.25%, but next year it will be 11%. In 2027, it’s expected to rise again to 12%.
Hawaii’s four counties can add an extra tax on top of the state TAT. All of them have decided to add the maximum possible, which is another 3%. When you add that to the new state TAT, you could end up paying a total tax of 14% for your accommodations.
The General Excise Tax (GET) is also part of the bill, added to your room rate. That changes depending on which island you’re on, ranging from 4% to 4.5%.

New Hawaii ‘green fee’ to raise $100 million a year

Hawaii’s new “green tax” will apply to cruise ships that visit the island in 2026. Currently, cruises are exempt from the state’s transient accommodation tax, which is 10.25%.

(Image credit: Getty Images)

The climate impact fee is expected to usher in $100 million annually. Gov. Green’s administration will work with the state legislature to select projects and determine which local groups will benefit.

According to the governor’s office, some key projects will likely include environmental stewardship, climate and hazard resiliency, and sustainable tourism.

Meanwhile, some groups and local reporters are concerned that part of the ‘green fee’ revenue could go to the state’s general fund.

Originally, the governor’s proposal directed climate fee revenue to two new special funds: the Climate Mitigation and Resiliency Special Fund and the Economic Development and Revitalization Special Fund.
However, after negotiations with the state Senate Ways and Means Committee, the final bill removed those special funds and put the revenue into the general fund instead.
The bill requires the governor to request an amount close to the extra TAT revenues in the executive or supplemental budget to use the funds for projects addressing climate change, environmental protection, or tourism impact mitigation.

Why does this matter? Sometimes, when new taxes or fees are placed into the general fund, there is a risk that the money may be allocated to other shifting state priorities or unrelated projects, rather than the intended goals.

That uncertainty has led to questions about whether the climate fee will truly support the environmental and climate-related objectives it is designed to address.

Why Hawaii’s climate fee is a historic win

Though general tourist taxes aren’t new, Hawaii is the first U.S. state to create a tax to address the rapid impact of climate change and mitigate the impact tourism can have on the environment.

The legislature found that the Aloha State is experiencing a climate emergency, with effects of climate change already impacting its residents and natural ecosystems. Some events have included rising temperatures, prolonged droughts, and destructive weather events that have impacted the islands.

Lawmakers also found that economic development couldn’t be separated from environmental stewardship, as most of Hawaii’s economy is dependent on its natural resources.

The measure comes two years after a deadly wildfire engulfed some areas of the island of Maui and destroyed more than 2,200 structures in its wake. The U.S. Fire Administration reported that the natural disaster resulted in about $5.5 billion in damages. In Lahaina, more than 100 lives were lost.

Taking action now, through enacting a ‘green fee,’ could be a proactive step to safeguard the environment, residents, and businesses of the islands. Though Hawaii is the first state to usher in a tax of this kind, and the benefits remain to be seen, perhaps more states will follow.

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