Hawaii lawmakers have passed the First Act law to fund environmental protection and enhance disaster preparedness by increasing the state’s accommodation tax. Supported by Governor Josh Green, the law raises the existing tax on hotels and short-term rentals by 0.75% and introduces an 11% tax on cruise ship bills for their stay in Hawaiian ports. The estimated revenue of $100 million per year will support projects aimed at mitigating climate-induced disasters, including invasive species management and erosion control.
The state already has a 10.25% tax on short-term rentals, which will rise to 11% in January, plus additional county and excise taxes, resulting in a total of 18.712%—the highest in the U.S. Green believes tourists will accept the increase, given its environmental benefits. However, concerns exist about the potential impact on tourism, with some expressing that high costs could deter visitors.
Despite initial proposals for larger tax increases, lawmakers opted for a more balanced approach to address environmental needs while sustaining the tourism industry. The funds from the new taxes will be dedicated solely to climate initiatives, while existing taxes will continue to support general state expenditures, such as infrastructure projects.
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