Planning a trip to Hawaii? Get ready to pay higher tax to visit the island
To combat the affects of climate change and the pressure of tourism on natural resources, Hawaii will be imposing a higher tax on hotels and other rentals.
Hawaii’s legislature has passed a new law that will raise taxes on hotels and vacation rentals.
The additional revenue will fund upgrades, initiatives, and projects aimed at addressing the impacts of the climate crisis on the islands. Lawmakers emphasized that both climate change and the environmental mismanagement of Hawaii’s natural resources pose serious threats to the state’s economy. As the law states, “investing in Hawaii’s environment is, in itself, economic development.”
How high is the new tax rate and when will it go into effect?
The tax will increase by 0.75 percentage points, bringing the total to 10 percent, effective January 1, 2026. The current rate of 9.25 percent has remained unchanged since 2010.
Though this legislation is the first of its kind in the United States, lawmakers, including Hawaii’s governor, Josh Green, are optimistic that other states will follow suit. The law notes that if tourism is to remain a cornerstone of Hawaii’s economy, then “successful mitigation of and adaptation to climate change are imperative.”
Tourism, travel, and the cost of living crisis in Hawaii
Tourism is Hawaii’s primary source of revenue, but its environmental toll is significant. Oʻahu, with a population of under one million, welcomed nearly 6 million visitors in 2024. Statewide, 18.6 percent of workers are employed in the hospitality and leisure sector, underscoring the scale of the industry’s labor demands.
At the same time, about 1 in 10 Hawaiians lives in poverty—a figure that advocates argue is likely an undercount. According to the Hawaiʻi Appleseed Center for Law & Economic Justice, “Hawaiʻi’s wages, when adjusted to consider the high cost of living here, are the lowest in the nation.” The organization works to reduce economic inequality and improve living standards across the islands.
A 2023 report from the group found that tourism accounts for 23 percent of Hawaii’s economy, and argued that “the state’s dependence on [the sector] is one of the primary reasons why low-wage jobs remain prevalent.” Nationally, hospitality and leisure jobs are among the lowest paid, and in Hawaii, the report noted, there are few “opportunities for local workers to enter higher-paying careers.”
Lawmakers are beginning to recognize that tourism and climate change carry environmental costs that must be addressed. The new tax represents a first step toward generating the revenue needed to meet those costs. However, the conditions faced by many workers in the sector and across the broader economy reveal a social cost that is already being paid by the local population. While some visitors may balk at higher prices, it’s worth considering that if those who make their vacations possible were paid a living wage, the economic cost of a Hawaiian getaway might be much higher.
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