Hawaii is set to become the first state in the United States to impose a mandatory “Green Fee” for tourists beginning in 2026. This innovative climate impact tax, officially termed Act 96, is designed to address the urgent challenges posed by climate change and the significant pressures exerted on the state’s natural environment by the tourism sector. With approximately 10 million visitors flocking to the islands every year, state officials anticipate this fee could generate around $100 million annually, which will be allocated toward disaster preparedness and environmental preservation initiatives.
The imposition of this fee comes in the wake of escalating climate-related disasters, notably the devastating wildfires in Maui in 2023, which resulted in extensive loss of life and significant destruction. As Hawaii grapples with the ramifications of climate change—including rising sea levels, increased storm intensity, and prolonged droughts—Gov. Josh Green underscored the necessity of safeguarding the islands’ natural resources, stating, “Hawaii is at the forefront of protecting our natural resources, recognizing their fundamental role in sustaining the ecological, cultural, and economic health of Hawai’i.”
Under the new legislation, travelers will be required to pay an additional $3 per night for hotel stays, short-term rentals, and cruise ship accommodations. This increase in the state’s transient accommodations tax (TAT) marks a significant shift in tourism policy in Hawaii, reflecting a growing recognition of the ecological cost of tourism on the islands. Currently pegged at 10.25%, the TAT will rise to 11% in 2026, and is projected to reach 12% by 2027. Further augmenting this tax burden, Hawaii’s four counties are implementing an additional local tax, bringing the total tax rate on accommodations to 14% after adding a General Excise Tax (GET), which varies by island and generally falls between 4% and 4.5%.
As the state prepares for these changes, there is apprehension among some stakeholders regarding the allocation of the revenues generated from the Green Fee. Initially, the proposal outlined separate special funds specifically for climate mitigation and economic development. However, following negotiations, the final legislation will channel these funds into the state’s general budget. This has raised concerns about whether the generated revenue will be specifically earmarked for environmental initiatives and disaster response. Critics argue that without a dedicated funding mechanism, there is a risk of the money being diverted to unrelated state priorities, potentially undermining the intended purpose of the fee.
The introduction of the Green Fee represents a historic step for Hawaii, which has become a beacon for environmental stewardship amidst a changing climate landscape. Hawaii’s legislature reached a consensus that the state is in the midst of a climate emergency, facing dire consequences that impact its residents and ecosystems. This recognition has led to a broader understanding that economic growth cannot be disentangled from the need for sustainable environmental practices, particularly given that tourism is a cornerstone of Hawaii’s economy.
Governor Green’s administration intends to collaborate with state legislative bodies to ensure that the revenue from these taxes is effectively utilized for projects aimed at climate resilience, sustainable tourism practices, and environmental protection. Proposed initiatives include restoring beaches and shorelines, improving infrastructure to withstand climate impacts, and addressing wildfire risks—one of the most pressing challenges following the extensive damages in Maui.
Tourism-related taxes are not new; however, Hawaii takes a pioneering stance as the first state to implement a tax of this nature directly associated with climate change mitigation. The implications of this decision could resonate beyond the Aloha State, potentially setting a precedent for other states grappling with similar environmental challenges.
In emphasizing the importance of climate readiness and environmental sustainability, Hawaii is signaling to both residents and tourists alike that proactive measures are essential in addressing the threats posed by climate change. As other states consider their own approaches to tourism and environmental responsibility, Hawaii’s model may provide valuable insights into managing the complex interplay between economic development and ecological conservation. The effectiveness and transparency in utilizing the funds generated by the Green Fee will likely be scrutinized in the years to come, as stakeholders monitor its impact on both the natural environment and the local economy.