Hawaii is set to see an increase in visitor expenses as the Transient Accommodations Tax (TAT) is scheduled to rise next year. The Hawaii Legislature has passed SB1396, a legislation aimed at combating climate change by boosting the state’s share of the TAT from 10.25% to 11%. This change will take effect in January 2026, and counties will also have the option to raise their TAT by an additional 3%.
With this adjustment, Hawaii aims to attract travelers who prioritize environmental sustainability. The bill underscores the importance of sustainable tourism practices, highlighting the state’s commitment to investing in conservation and renewable energy. The legislation could help Hawaii sustain its competitive position in the global tourism market while protecting its natural resources for future generations.
The bill is currently awaiting the approval of Governor Josh Green, who has until July 9 to sign it into law. In a recent statement, the governor expressed his intention to endorse the measure, referring to it as a groundbreaking commitment to ecological preservation. “This legislation represents a generational commitment to protect our aina [land] and sets a new standard in the fight against the climate crisis. I extend my gratitude to lawmakers for their relentless efforts over the past two years,” he stated in a news release.
Notably, for the first time, cruise ship passengers will also be subject to the TAT starting January 2026. This decision follows a recent law expansion that included the TAT for alternative accommodations, such as camper vans, which became effective this year.
Despite the legislative progress, some stakeholders worry about the potential repercussions of the tax increase on the tourism sector. Testimonies opposing the bill point out that climate change impacts everyone in Hawaii, suggesting that the financial burden should not rest solely on the tourism industry. Concerns have been raised that elevated taxes might adversely affect the already fragile tourism recovery post-COVID-19 and after the devastating wildfires in August 2023.
The president of the Maui Chamber of Commerce voiced objections, highlighting that Hawaii already holds the distinction of having the highest visitor taxes globally. In her testimony, she noted, "In addition to taxes on accommodations, visitors face general excise taxes, rental car fees, and various fees for activities—an increase could further impede our economic recovery, which has yet to reach pre-pandemic levels."
Conversely, Governor Green states that this measure is essential for managing risks associated with climate change, including wildfires. "It is foundational to our ability to provide a safe and secure Hawaii for our children, residents, visitors, and the environment," he asserted in a statement.
As Hawaii navigates these changes, travelers should be aware of the impending TAT increase that is set to impact their stays in the beautiful islands. The interplay between tourism, sustainability, and economic health will be a central theme as Hawaii moves forward with these new policies.
