If you’re planning to set sail to Hawaii on a cruise next year, your room and board fees could be higher thanks to a new tourism tax.
Hawaii is slated to impose a so-called “green fee” tax next year, which will impact the nightly lodging charges for hotels and vacation rentals. The fee, designed to mitigate climate change in the Aloha State, could impact as many as 300,000 cruise ship passengers annually.
That’s because for the first time, the levies will also target cruise ships docking in Hawaii ports.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Opponents of the proposed 2026 Hawaii tourism tax argue that the additional charges could deter tourists from booking cruises to the islands. They suggest that visitors might choose alternative destinations for significant life events like weddings, family holidays, retirements, and honeymoons.
Before the tax kicks in, some opponents are taking legal action.
Cruise Lines International Association filed a complaint on Aug. 27, arguing that the climate impact fees imposed on cruise ships violate federal law in three ways — conflicting with the Tonnage Clause of the U.S. Constitution, freedom of speech protections, and federal navigation laws.
Meanwhile, the state counters that the “green tax” imposed on tourists' nightly lodging accommodations will fund necessary climate and conservation projects, which are “critical” to the health and safety of locals and visitors.
Here’s what you need to know about Hawaii’s planned tourism tax, and how it may impact your 2026 vacation.
What is Hawaii’s tourism tax?
Hawaii's new "green fee" tax, slated to take effect in 2026, expands the transient accommodations tax (TAT) charged on your nightly lodging at a hotel or vacation rental. For the first time, the levies will also target cruise ships that port in the Aloha State.
The tax, as reported by Kiplinger, aims to create a consistent funding source for conservation and rebuilding initiatives in Hawaii.
The measure (Act 96) was signed into law by Hawaii Gov. Josh Green this spring and raises the TAT by 0.75% to 11% beginning in 2026. In 2027, the fee is expected to increase again to 12%.
That’s not all, 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%. Overall, tourists could be charged a total tax of 14% per nightly accommodation next year.
According to the governor's office, the green fee is projected to generate $100 million annually. As mentioned, the measure will fund projects including environmental stewardship, climate and hazard resiliency, and sustainable tourism.
For more information: Hawaii Approves First-of-its-Kind ‘Green Fee’ for Tourists.
Cruise operators and local businesses challenge Hawaii tourism tax
Hawaii's new climate impact tax would impose nightly lodging fees on cruise ships as high as 14% starting next year.
A new lawsuit challenges Hawaii's expanded transient accommodations tax, with a major cruise industry group and local tourism businesses claiming the measure is unconstitutional.
Opponents of the tax seek to prevent the so-called “green fee” from taking effect in 2026.
The plaintiffs, led by Cruise Lines International Association, a global advocacy group representing most cruise lines, note the law would also authorize Hawaii counties to collect an additional 3% surcharge, bringing the total tourism tax to 14%.
- Gov. Green says the fee will translate to visitors paying an additional $3 per night on a $400 room stay in a Hawaii hotel, cruise ship, or other rental vacation lodging.
- You may want to keep that in mind if you’re planning to book a popular trip like the Hawaii Disney Cruise Line adventure for you and your loved ones next year.
One of the main concerns of those challenging Hawaii’s new green fee tax is that the new charge may “cause many potential visitors to vacation elsewhere.”
According to the lawsuit, the cruise industry brings in thousands of visitors to Hawaii each year, supporting thousands of local jobs and contributing to an annual economic growth of over $600 million.
The plaintiffs argue that the new tax could have a “devastating” impact on cruise ship operators and local businesses.
As reported first by the Associated Press, the plaintiffs are seeking a preliminary injunction to declare Act 96’s cruise-related provisions unconstitutional and block its enactment on January 1, 2026.
If they are successful in blocking the measure, that could potentially save tourists a couple of hundred dollars in vacation taxes next year.
“No other State imposes comparable fees — and for good reason,” wrote attorneys representing the Cruise Lines International Association in a motion, the AP reported. They added that ports shouldn’t be used by states for their own “revenue-raising interests.”
The defendants, which include state and county finance officials and the Hawaii Department of Taxation, have yet to release a statement on the pending litigation.
For now, stay tuned for developments as we cover how this may impact your travel plans to the Aloha State next year.
Related
-
The Rule of the Shrinking Dollar in RetirementAlas, we must all follow the rule of the shrinking dollar once we hit retirement. Here's how to hold onto your hard-earned money over many years.
-
Design Your Second Home to Pay for ItselfSmart interior design can transform your vacation home into an income-generating rental without sacrificing comfort or style.
-
Tax Brackets 2025 Quiz: How Much Do You Know?Quiz Test your knowledge of IRS rules that impact how much money you keep in your wallet.
-
Retirees Face a Growing Capital Gains Tax Trap: What's Next?Home Sales A changing housing market and unchanged IRS exclusion amounts can add up to a headache for many homeowners. Will Congress offer a fix?
-
New York Inflation Refund Checks Are Coming Soon: What to Know NowTax Relief Inflation relief checks are on the way for over 8 million New York taxpayers. Here's a full breakdown of who gets a payment and when you may expect yours.
-
Mortgage Refinance in 2025? These Tax Breaks Can Boost Your SavingsTax Breaks Refinancing your mortgage comes with tax implications, but also opportunities to deduct certain expenses on your return.
-
IRS Paper Checks Deadline: What Happens After September 30?Tax Changes Avoid delays when IRS tax refunds and Social Security paper checks are cut off. Here’s what to know.
-
New IRS Start Date for Mandatory Roth Catch-Up ContributionsRetirement Savings The IRS has clarified some questions surrounding new catch-up contribution rules for retirement savings plans.
-
The Most Tax-Friendly States for Investing in 2025 (Hint: There Are Two)State Taxes Living in one of these places could lower your 2025 investment taxes — especially if you invest in real estate.
-
The Final Countdown for Retirees with Investment IncomeRetirement Tax Don’t assume Social Security withholding is enough. Some retirement income may require a quarterly estimated tax payment by the September 15 deadline.
