Hawaii has passed a first-of-its-kind piece of legislation that will see a 0.75% increase to the state’s tax on tourists, specially earmarked to raise money for protection against climate change and natural disasters.
“This legislation, which I intend to sign, is the first of its kind in the nation and represents a generational commitment to protect our ‘āina [land],” Hawaii’s governor, Josh Green, said in a May 2 release. “Hawai’i is truly setting a new standard to address the climate crisis.”
Don’t miss
- I’m 49 years old and have nothing saved for retirement — what should I do? Don’t panic. Here are 5 of the easiest ways you can catch up (and fast)
- Gain potential quarterly income through this $1B private real estate fund — even if you’re not a millionaire. Here’s how to get started with as little as $10
- This is how American car dealers use the ‘4-square method’ to make big profits off you — and how you can ensure you pay a fair price for all your vehicle costs
In 2023, wildfires tore through Maui, devastating the town of Lahaina, a popular resort town. The new “green fee,” as the release puts it, is in part a response to that tragic fire, which meteorologists and climate researchers attributed to a number of environmental causes.
“We had a $13 billion tragedy in Maui and we lost 102 people. These kind of dollars will help us prevent that next disaster,” said the governor in an interview referenced by NBC News.
The new tourism tax
Hawaii already taxes tourist lodgings at a rate of 10.25% for hotel stays, timeshares, vacation rentals and other short-term accommodations. In addition to this, the counties in the state add a 3% lodging tax and 4.712% excise tax on goods and services.
The governor feels that the additional 0.75% will likely not deter tourists from vacationing in Hawaii, noting that the tax will go towards efforts like “keep[ing] the beaches perfect” and preserving many of the natural sites that tourists flock to, NBC News says.
“The more you cultivate good environmental policy, and the more you invest in perfecting our lived space, the more likely it is we’re going to have actually lifelong, committed travelers to Hawaii,” he told the Associated Press.
NBC reports Green also said he heard from thousands of people across the U.S. after the Maui wildfire, asking how they could help. He says that visiting the state and paying the additional 0.75% tax is a significant way they can.
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
Response from the hotel industry
Jerry Gibson, president of the Hawaii Hotel Alliance, has a balanced and hopeful response to the new tax, saying that the industry was pleased lawmakers adopted the tax rate that was initially proposed, and didn’t opt for a higher rate.
“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,” he told NBC. “But our state, at the same time, needs money.”
He also noted in his interview with NBC that using the money to beautify Hawaii’s environment is a silver lining for the tourism industry.
Climate change in Hawaii
The state of Hawaii reports that tourism to its coral reefs brings in $385 billion each year. However, rising temperatures are bleaching the reefs at an alarming rate. If carbon emissions continue unchecked, coral reef loss in Hawaii will result in an economic loss of up to $1.3 billion per year by 2050, according to the state’s projections.
The United States Environmental Protection Agency (EPA) reported in 2016 that Hawaii’s Waikīkī Beach brings in $2 billion per year in visitor spending alone. However, the report noted that shoreline erosion is threatening Hawaii’s beaches and adding to the likelihood of natural disasters.
The EPA reported that the sea level has risen between two and eight inches on Hawaii’s shoreline since 1960. In the last 100 years, erosion has affected more than 70% of Kauai and Maui’s beaches. This erosion not only destroys natural habitats for animals, but also makes high waves, hurricanes, tsunamis and extreme tides more likely and more devastating.
A government report from 2023 also noted that sea level rise is projected to cost the state $19 billion in loss of land and structures, not counting the possible damage to infrastructure or the costs of supporting citizens after natural disasters.
The need to raise funds to protect Hawaii is only growing. The governor has maintained that the state’s 10 million annual visitors should help protect the environment, according to NBC.
Care for ‘Āina Now, an environmental advocacy group, calculated that there is roughly a $560 million gap between Hawaii’s current conservation funding needs and money actually spent each year.
NBC says Governor Green acknowledged in an interview that the revenue from the tax, projected to hit $100 million, falls well short of this, but plans to issue bonds to leverage the money it raises.
How the tax affects tourists
The new tax hike goes into effect on January 1, 2026. Including all existing taxes, the tax bill for hotel rooms and other short term stays will total nearly 19%.
NBC reports that the only other major U.S. cities with higher state and local lodging tax rates are Omaha, Nebraska (20.5%) and Cincinnati (19.3%).
Tourists considering Hawaii for the first time next year may need to revisit their travel budget and plan accordingly. It’s a good idea to get final quotes from your accommodation options before booking to avoid any costly surprises at checkout.
With Bloomberg reporting that the U.S. will lose $12.5 billion in travel revenue in 2025, creating a 7% decline in visitor spending year over year, it’s unclear whether this trend will continue into 2026.
Since World Travel & Tourism Council President and Chief Executive Officer Julia Simpson told Bloomberg tourism represents 9% of the U.S. economy, Hawaii’s new tax law has the potential to further the decline of travel revenue — but by how much remains to be seen.
What to read next
- JPMorgan sees gold soaring to $6,000/ounce — use this 1 simple IRA trick to lock in those potential shiny gains (before it’s too late)
- Robert Kiyosaki warns of a ‘Greater Depression’ coming to the US — with millions of Americans going poor. But he says these 2 ‘easy-money’ assets will bring in ‘great wealth’. How to get in now
- Here are 5 ‘must have’ items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you?
Like what you read? Join 200,000+ readers and get the best of Moneywise straight to your inbox every week. Subscribe for free.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
