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In a landmark move aimed at tackling the worsening effects of climate change, Hawaii Governor Josh Green signed new legislation on Tuesday that raises the state’s tax on hotel rooms and vacation rentals, marking the first law of its kind in the United States.
The new tax is expected to generate nearly $100 million annually to fund various climate-focused projects, including rebuilding eroded beaches, preventing wildfires, and protecting native ecosystems.
“There will be no way to deal with these crises without some forward-thinking mechanism,” Green said during the bill signing in Honolulu, flanked by lawmakers and environmental advocates.
What the New Tax Means for Visitors
Starting January 1, 2025, the daily room rate tax on hotels and short-term accommodations will increase by 0.75%, raising Hawaii’s total room tax from 10.25% to 11%. Including other county and state levies, travelers could see nearly 19% in total accommodation taxes, among the country’s highest rates.
For example, a $400 hotel room will now carry about $3 more in daily taxes.
The law also introduces a new 11% tax on cruise ship bills beginning in July 2026, prorated for the number of days ships spend in Hawaii ports. This brings maritime tourism taxation closer to land-based accommodations.
A Response to Real-World Climate Disasters
The law comes nearly two years after the devastating Lahaina wildfire that killed 102 people and destroyed much of the historic Maui town. That tragedy, fueled by invasive grasses and worsened by extreme weather, highlighted the urgent need for proactive climate measures.
Revenue from the new tax will support:
- Replenishing eroded beaches like Waikiki
- Clearing flammable invasive plants
- Building firebreaks and hiring a new state fire marshal
- Protecting native plants and forests
- Mitigating tourism’s environmental impact
“This is about ensuring there’s still something left to visit,” said State Rep. Adrian Tam, who chairs the House Tourism Committee. “If we don’t act now, our natural environment and visitor economy will suffer.”
Tourism Industry’s Surprising Support
Despite the added cost to visitors, Hawaii’s tourism and hospitality sectors backed the bill, recognizing the long-term benefit of protecting the environment, which draws millions to the islands annually.
“The visitor industry will struggle if we do not take action now,” Tam added. “Nothing will be left for them to showcase to the world if wildfires take over our towns and beaches are washed away.”
Gov. Green originally wanted the tax revenue to go into a dedicated climate fund, but the Legislature opted to direct funds into the general fund instead. Still, the law requires the governor to request that the funds be allocated to climate-related projects formally, a compromise both sides agreed to manage collaboratively.
Setting a National Example
Gov. Green sees Hawaii’s move as a model other states may follow.
“This law isn’t just about tourism. It’s about climate leadership,” Green said. “Other states and countries are watching what we do.”
As climate disasters escalate across the globe, Hawaii is now leading the way by turning a tourism tax into a tool for environmental survival.
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