Overview

• Hawaii's Legislature is poised to pass a bill increasing hotel and vacation rental taxes from 9.25% to 10% and imposing an 11% tax on cruise ship cabins.
• The new taxes are expected to generate $100 million annually to fund climate mitigation projects, including beach restoration, storm-proofing infrastructure, and native forest restoration.
• Governor Josh Green has pledged to sign the bill, describing it as essential to safeguarding Hawaii's environment and addressing the impacts of climate change.
• The cruise industry plans to challenge the 11% cabin tax in court, though the hotel and rental tax increase is likely to proceed without legal hurdles.
• If finalized, the new tax rates will take effect on January 1, 2026, marking Hawaii as the first U.S. state to earmark lodging tax revenue specifically for environmental protection.