Hawaii’s ‘Green Fee’ Becomes Law, But New Legal Fight Begins Over Tourist Tax Hike
The islands of Hawaii are taking a bold, first-of-its-kind step to combat the devastating effects of the climate crisis, but not everyone is happy about the price tag. After years of debate and several legislative attempts, Governor Josh Green officially signed the state’s “Green Fee” into law, creating a new funding stream dedicated to environmental protection and disaster resilience. The landmark measure, known as Act 96, makes Hawaii the first state in the nation to impose a climate impact fee on tourists.
The heart of the new policy is an increase in the state’s Transient Accommodations Tax, or TAT, which visitors already pay on their lodging. The new law adds a 0.75% levy to that tax, which will see the state’s portion of the TAT rise from 10.25% to 11% starting on January 1, 2026. For a traveler paying $400 a night for a hotel or short-term rental, the new fee translates to roughly $3 extra per evening.
State officials are projecting this increase, combined with a new tax on cruise ships, will generate an estimated $100 million annually. These millions are earmarked for a special fund focused on crucial initiatives: restoring fragile beaches like Waikiki, protecting vulnerable natural areas, and strengthening defenses against climate-fueled disasters. The push for a stable, dedicated funding source gained significant momentum following the catastrophic Maui wildfires in 2023, with officials emphasizing the need to mitigate future hazards, such as clearing invasive, flammable grasses.
Governor Green hailed the signing as a generational commitment to protect the land, or ‘āina, stating that Hawaii is setting a new standard for addressing the climate crisis. The fee’s structure is a clever workaround of earlier legal concerns. Initial proposals for a flat fee on all arriving visitors faced hurdles over constitutional questions. This new iteration, however, ties the charge directly to visitor accommodations, a form of taxation that has precedent.
However, the clearing of one legal hurdle has led directly to another. The law’s extension of the new tax to the cruise ship industry has prompted immediate pushback. The Cruise Lines International Association, or CLIA, filed a lawsuit challenging the measure just months after it was enacted. CLIA argues that the tax, which imposes a new 11% rate on cruise ship bills prorated for the time spent in port, violates the U.S. Constitution and federal law. The association contends that taxing cruise passengers threatens to deter tourism, which is a major economic driver for the islands.
For now, the law remains on the books, set for implementation at the start of next year. The dispute will likely play out in the courts, determining whether the state can successfully use tourism as a key financial tool in its fight for environmental and climate resiliency. Travelers planning a trip to the Aloha State in 2026 and beyond should prepare to factor the extra nightly levy into their vacation budget, all while keeping an eye on the legal battle heating up on the high seas.