In a post last May I reported that Hawaii’s governor signed SB1396, creating the climate impact fee, or “green fee,” that will help the islands to mitigate the impacts of climate change and the roughly 10 million annual visitors it welcomes to its shores. The legislation boosts a tax imposed on hotel room and vacation rental stays in order to raise money to address eroding shorelines, wildfires and other consequences of climate change.
Beginning January 1, the measure adds an additional 0.75 percent to the daily room rate tax—a modest extra $3 tax on a $400 hotel room rate. It also levies a new 11 percent tax on cruise ship bills starting this July, prorated for the number of days the vessels are in Hawaii ports, to bring cruise ship taxes in line with room taxes on land.
With the new law, the state’s existing 10.25 percent tax on short-term accommodations has climbed to 11 percent. Together with other state and county taxes, visitors now pay a substantial 19 percent levy on their accommodations.
According to HawaiiNewsNow, it is estimated the fee will raise $100 million annually to provide disaster mitigation for the Aloha State. The green fee will fund projects like coral reef protections, replenishing sand on eroding beaches and clearing flammable invasive grasses like those that fed the Lahaina wildfires.
Cruise Line Assn. Sued Over the Tax
According to a December 29, 2025, report on USA Today, “Leading industry trade group Cruise Lines International Association (CLIA) sued over the tax in August, arguing that the change violates federal law, partly because it conflicts with the U.S. Constitution’s Tonnage Clause. Honolulu Ship Supply Co., Kaua’i Kilohana Partners and Aloha Anuenue Tours LLC were also listed as plaintiffs.”
“If Act 96’s unconstitutional fees are permitted to take effect on January 1, 2026…they will increase the cost of Hawaii bound cruises substantially and cause many potential visitors to vacation elsewhere,” the August 27, 2025, lawsuit read.
Judge Jill A. Otake declined to halt the implementation of the tax, according to a December 23 filing in the District of Hawaii.
Following Otake’s decision, CLIA told USA Today in an emailed statement that the “case involves important questions about how federal and state laws interact in regulating maritime commerce—principles rooted in long-standing constitutional safeguards that protect free and open ports nationwide.”
“On behalf of its member cruise lines, CLIA will continue to pursue this matter constructively through the courts while working with Hawaii to support local communities and sustainable tourism,” the organization said.
