Hawaii may hike its tax on tourists and vacationers for climate change fund

A new bill has passed the Senate in The Aloha State to raise the tourist tax in an effort to “reduce climate change.”

Senate Bill 1396 aims to raise the tourist tax on Hawaii hotels to 11% starting Jan. 1 — which would then increase to 12% the following year, according to the text of the bill.

Portions of the revenue raised would go into the “Climate Mitigation and Resiliency Special Fund” and the “Economic Development and Revitalization Special Fund,” according to the bill.

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Funds to the “Climate Mitigation and Resiliency Special Fund” may be used for projects that mitigate, adapt to or increase resiliency against climate change, along with funding consultants and personnel.

Experts say Hawaii is believed to be the first U.S. state to “undertake such action,” according to Travel Tomorrow.

The Hawaii Senate has passed a bill to raise the tourist tax to 11% in 2025. It would then increase to 12% in 2026. (iStock)

“The legislature further finds that given the scale and impact of the climate emergency, the state must invest in bold actions to prepare for, mitigate, and adapt to climate change, including resiliency to intensifying natural disasters,” according to the bill’s text.

In August 2023, a fire spread through Lahaina, killing 101 people. The fire was caused by electric equipment damaged by high winds, Fox News Digital reported earlier.

It killed at least 102 people and caused more than $5 billion in damage.

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Hawaii already has a 10.25% tax on short-term rentals. The state’s counties each add their own 3% surcharge on top of the state’s tax, according to FOX 13.

“Hawaii already imposes what some believe are high taxes on the hospitality sector and short-term stays,” said Travel Tomorrow.

New legislation in Hawaii would raise tourist tax rates to 11% by next year, generating revenue for climate resilience efforts, the state says. (iStock)

“On top of the new rate of 11%, various Hawaii counties add a 3% tax. There is also a combined rate of nearly 5% on goods and services, making a total duty of nearly 19%.”

State Representative Adrian Tam shared his support for the bill at a session on Friday.

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“Our residents and communities deserve to be protected,” said Tam.

He added, “As we continue to invite visitors to Hawaii to share the beauty of this land, this bill is a huge step in ensuring adequate funding is set aside to steward and protect our delicate ecosystems for visitors, our constituents and communities for generations to come.”