“Hawaii Really Does Tax Your Hotel Room to Fight Climate Change — Sort Of”
Hawaii's Act 96 of 2025 added 0.75 percentage points to the state's transient accommodations tax, marketed as the nation's first 'Green Fee' for climate resilience. The rate hike is real, but the money legally flows into the general fund and only about a third is directed to climate adaptation.
From Per-Visitor Fee to Lodging Tax
Hawaii's 'Green Fee' began as a much bolder idea: a 2021 bill proposing a flat $40 per-visitor conservation charge, pitched on the argument that Hawaii invested roughly $9 per tourist in its natural capital while destinations like New Zealand and Ecuador spent hundreds. Constitutional worries about taxing travelers directly killed that approach, so lawmakers pivoted instead to a small bump to the lodging tax everyone already pays.
Lahaina Wildfire Made It Politically Inevitable
The 2023 Lahaina wildfire turned the proposal from an environmentalist wish into a political inevitability. Governor Josh Green signed it on May 27, 2025, calling it a generational commitment to the 'āina.
No Earmark Just a Governor Request
To survive Hawaii's constitutional budget rules, legislators refused a hard earmark. The tax revenue simply lands in the general fund, and the statute merely obliges the governor to ask for a comparable sum each budget cycle — split three ways, with one slice going to tourism marketing-adjacent 'visitor experience' work.
Cruise Industry Sues Wins Temporary Reprieve
The cruise industry sued within months; a district judge let the law proceed, but the Ninth Circuit froze the cruise-fare portion on New Year's Eve 2025, hours before it was to begin. Hotels pay. Cruise ships, so far, don't.
Where the story gets it wrong
Many assume the 0.75% surcharge is a legally ring-fenced climate fund. In fact, all TAT revenue flows into the state general fund; the statute only requires the governor to request an approximately equal appropriation each budget cycle, split evenly among natural resource protection, climate/disaster resilience, and visitor-experience improvements.
Some believe the fee is a separate, itemized line on the hotel bill. It isn't — it's folded into the existing lodging tax rate, invisible to guests, who never see it charged separately.
Others picture it as a flat per-visitor charge, like the original $40 proposal that was scrapped, or assume it already applies to cruise passengers. Neither is accurate: the enacted fee is a percentage added to the lodging tax, and the cruise-fare portion is currently blocked by a federal appellate injunction, not being collected.
Act 96, Session Laws of Hawaii 2025 (SB 1396, CD2) amends HRS §237D-2 to raise the state transient accommodations tax from 10.25% to 11% effective January 1, 2026, and assesses the TAT on gross rental proceeds derived from cruise fares (prorated for days in Hawaii ports). Section 2 requires the governor to request, in the executive or supplemental budget, that an amount of general funds approximating the additional TAT revenue be expended equally to (1) protect, manage and restore natural resources including native forests, aquatic resources, coastal lands and freshwater; (2) increase the resilience of structures and infrastructure to natural and climate-related disasters such as hurricanes and sea level rise, and perform hazard mitigation such as wildfire and flood mitigation; and (3) improve the visitor experience while mitigating tourism's environmental impact. Counties may separately levy up to 3% under HRS §237D-2.5.
- Current status
- Actively Enforced
- Enacted
- May 27, 2025
- Penalty
- Not a criminal offense — a tax. The 0.75% increase raises the state lodging tax to 11% (about $3 per night on a $400 room); operators who fail to remit face standard Hawaii tax delinquency penalties and interest under HRS chapters 231 and 237D.
- Jurisdiction
- State of Hawaii, USA. Applies statewide to hotels, timeshares and short-term vacation rentals. Counties may add a separate surcharge of up to 3%. The cruise-fare component is enjoined pending Ninth Circuit appeal.