Would you support the idea of your guests paying more daily room rate taxes to help mitigate the impacts of climate change in your area? A first of its kind in the U.S., that is exactly what will happen in Hawaii after Governor Josh Green signs 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.
SB1396 will increase the state’s portion of the Transient Accommodation Tax collections from 10.25 percent to 11 percent as of January 1, 2026. According to HawaiiNewsNow, the green fee will be added to each county’s 3 percent lodging tax and a 4.7 percent general excise tax. That would push a visitor’s tax bill to more than 18.7 percent, among the highest in the U.S. 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.
The tax increase will impact hotels, vacation rentals and other short-term accommodations.
Governor Green has until July 9, 2025, to sign the bill into law. He has repeatedly indicated his intention to do so, as it has been a priority piece of legislation for his administration.
Cruise Ship Visitors Also Taxed
The bill also imposes an 11 percent tax on cruise ship bills for each night the ship is in a Hawaiian port.
“Hawaii is truly setting a new standard to address the climate crisis, and I want to thank lawmakers for their unrelenting work these past two years in bringing this to fruition,” Green said.
Green told The Associated Press that he predicts visitors will be willing to pay taxes that help to protect the environment.
In that same Associated Press report, Jerry Gibson, President of the Hawaii Hotel Alliance, which represents the state’s hotel operators, said the industry was pleased lawmakers didn’t adopt a higher increase that was initially proposed.
“I don’t think that there’s anybody in the tourism industry that says, ‘Well, let’s go out and tax more.’ No one wants to see that,” Gibson said. “But our state, at the same time, needs money.”
The silver lining, Gibson said, is that the money is supposed to beautify Hawaii’s environment. It will be worth it if that’s the case, he said.
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