HONOLULU (KHON2) — Starting in 2026, visitors to Hawaiʻi will be paying a bit more for paradise. But it’s not more than another price hike; it’s a major shift in how the state funds its future.
Under a new law passed by the Hawaiʻi State Legislature, the transient accommodations tax (TAT) will increase for hotels; short-term rentals; time shares; and, for the first time, cruise ship passengers.
Why the change? Climate change is already hitting Hawaiʻi hard. Droughts, flooding, hurricanes and rising seas threaten the islands’ environment, infrastructure and economy.
Lawmakers believe that protecting Hawaiʻi’s natural beauty is good for the earth and it’s essential to the state’s economy and identity.
Here’s what you need to know about the new tax, why it’s happening and what it means for residents and visitors alike.
1. The tax rate is going up for most short-term stays
Starting Jan. 1, 2026, the state TAT will rise from 9.25% to 10% for hotels, short-term vacation rentals and time shares. That means if your room costs $300 a night, you’ll pay $30 in state taxes. this is not including county surcharges, which vary from county (island/s) to county.
This is the first state-level increase in more than a decade. The goal is to use the added revenue for balancing the budget and much, much more. Lawmakers have tied it directly to environmental goals and better visitor management.
2. Cruise ships will pay their fair share
For the first time, cruise passengers will be taxed on the portion of their fare tied to time spent in Hawaiʻi. The new tax will be 11% of the prorated cruise fare for days docked in the islands. In 2024, Hawaiʻi saw nearly 1 million cruise passenger port calls; but until now, cruise companies didn’t pay TAT on those visits.
The new law defines a “cruise fare” to include lodging and most onboard services but not optional extras like spa treatments or off-ship excursions. Lawmakers say this levels the playing field with hotels and rentals and makes sure all visitors contribute to Hawaiʻi’s upkeep.
3. The money will fund climate resilience and tourism management
Here’s where it gets different from a regular tax increase: the new revenue is earmarked. Beginning July 1, 2025, the governor must request that a matching amount of general funds — equal to the estimated revenue from the increased TAT — go to specific projects.
These include:
- Protecting native forests, reefs and coastlines.
- Making buildings and infrastructure more climate-resilient.
- Reducing damage from wildfires and flooding.
- Improving parks, trails and beaches.
- Making tourism more sustainable and less harmful.
The bill legally requires this spending plan be part of the state’s budget each year.
4. Tourism is being redefined as part of the solution
This law reflects a big shift in how the state views tourism. For decades, Hawaiʻi’s economy has depended heavily on visitor spending. But unchecked tourism has put intense pressure on natural and cultural resources.
This legislation states clearly: economic growth must support, not undermine, environmental health. That includes investing in “destination management”. That’s a strategy that focuses on quality over quantity of visitors, encouraging respectful behavior and giving residents more say in how tourism is handled.
5. Native ecosystems and Native Hawaiian culture are central
Hawaiʻi’s natural environment is incredibly scenic and sacred. The bill makes clear that protecting forests, coral reefs and freshwater sources is also about protecting ʻŌiwi culture and practices. By restoring native ecosystems, the state helps ensure that traditional knowledge systems and cultural practices from hula to farming and fishing can continue.
That cultural connection sets Hawaiʻi apart from other destinations, and it’s something lawmakers say have decided to support rather than sideline.
6. Environmental inaction costs more in the long run
While this is about being green, it’s more importantly about math. Lawmakers indicate that failing to act now will lead to far greater costs later. Think: damaged roads and buildings, rising insurance costs, declining biodiversity and health issues from heat and pollution.
In other words, prevention is cheaper than disaster recovery and smarter, too.
7. This law positions Hawaiʻi as a global leader in sustainable tourism
By linking tourism revenue directly to climate action and cultural preservation, Hawaiʻi is setting a model other destinations may follow. The law invites sustainable businesses and investors to see Hawaiʻi as a hub of innovation and stewardship as well as a vacation spot.
It also responds to a shift in what many travelers now want: experiences that are responsible, meaningful and in harmony with local communities and nature.
8. The new tax is about direction as much as it’s about dollars
Hawaiʻi is choosing to invest in its future and is asking visitors to understand their responsibility to their visiting destination.
You can click here to read the Senate Bill 1396.
The next time you come to the islands, your stay will cost a bit more. But a commitment to the land, the people and Hawaiʻi’s future.