Hawaii’s new tourist tax called “illegal extortion” by DOJ, faces federal pushback

Hawaii plans to use the “Green Fee” for conservation efforts

Hawaii just became the first state in America to charge tourists a fee for climate protection. Governor Josh Green signed the law in May 2025, and it takes effect January 1, 2026.

Hotels will pay a little more. Cruise ships will pay a lot more. The hotel industry said yes. The cruise industry said no and filed a federal lawsuit.

Now the U. S. Department of Justice has stepped in, and the outcome could change how every coastal state funds climate projects.

Maui Fires Made This Urgent

On August 8, 2023, wildfires tore through the town of Lahaina on Maui. The flames killed 102 people and caused $13 billion in damage.

Investigators traced the destruction partly to invasive grasses that had spread across former agricultural land. Those grasses burn fast and hot.

The disaster showed Hawaii how vulnerable the islands are to climate-driven threats, and it gave Governor Green the momentum he needed to push his climate fee across the finish line.

Green Tried for Three Years

Governor Josh Green started pushing for a visitor climate fee in 2022, his first year in office. The idea went nowhere.

He tried again the next year. Still nothing.

After the Maui fires, Green created a Climate Advisory Team led by business executive Chris Benjamin. The team recommended using the existing hotel tax as a funding source.

That approach finally got enough support, and the legislature passed Senate Bill 1396 in spring 2025.

Hotels Pay $3 More Per Night

Starting January 1, 2026, Hawaii’s transient accommodations tax rises from 10. 25% to 11%.

On a $400 hotel room, that works out to about $3 extra per night. Over a week-long vacation, you’re looking at roughly $21 more than you would have paid in 2025.

The hotel industry supported the bill because the money goes to protecting the beaches, reefs, and trails that draw visitors in the first place.

Cruise Ships Pay for First Time

The bigger change hits cruise passengers. Hawaii had never taxed cruise ships under the lodging tax before.

Now they will pay the 11% state rate, prorated for the number of days they spend docked at Hawaiian ports. Counties can add another 3% on top of that, bringing the total to 14% of the cruise fare.

Norwegian Cruise Line estimated the new tax would add $350 per person to Hawaii cruise tickets.

$100 Million for Climate Projects

The state expects the Green Fee to bring in about $100 million every year. That money will go into a dedicated fund for environmental projects.

Governor Green appointed a 10-member advisory council in August 2025 to decide how to spend it.

The list of possibilities includes coral reef restoration, wildfire prevention, native forest protection, and strengthening roads and infrastructure along eroding coastlines.

The council has to make its first recommendations by January.

Hotels Said Yes to the Fee

The hotel industry backed the Green Fee even though it means higher costs for their guests. Industry leaders said they understood the connection between healthy natural resources and healthy tourism.

Hawaii’s beaches, reefs, and hiking trails are the main reason people visit. If those attractions deteriorate, tourism suffers.

The Hawaii Lodging and Tourism Association called the fee a strategic investment in the long-term health of the industry.

Cruise Lines Filed a Lawsuit

The cruise industry took a different view. On August 27, 2025, Cruise Lines International Association filed a federal lawsuit in Honolulu seeking to block the tax.

Three Hawaii businesses that depend on cruise passengers joined the suit.

CLIA argued that the Constitution’s Tonnage Clause prohibits states from taxing ships just for entering their ports.

They also cited the Rivers and Harbors Act of 1884, which limits what states can charge vessels on navigable waters.

The Feds Took the Cruise Side

In mid-November 2025, the U. S. Department of Justice filed a motion to intervene in the case. That was a significant move.

It signaled that federal officials believe the lawsuit raises questions about national maritime law, not just Hawaii policy.

The DOJ’s involvement suggests the government may agree with the cruise industry’s argument that states cannot impose this kind of tax on ships without federal approval. Hawaii officials said they will defend the law vigorously.

Bookings Already Dropping

The uncertainty is already affecting travel plans.

Norwegian’s Pride of America is the only cruise ship that sails year-round in Hawaii, and its 2026 bookings have dropped 30% compared to 2025.

That decline came up during an October court hearing as evidence that the Green Fee is already hurting the industry.

Cruise passengers appear to be choosing other destinations rather than paying the higher fares that would result from the new tax.

Other States Are Watching Closely

Hawaii is not the only place thinking about visitor fees for climate protection. Oregon lawmakers debated a similar bill this year to fund conservation through lodging taxes.

Other coastal states face the same challenge: climate change is damaging their natural attractions, but state budgets cannot cover the cost of protection and repair.

If Hawaii’s Green Fee survives the lawsuit, it becomes a model. If the cruise industry wins, states lose one of their best funding options.

January 1 Will Settle Nothing

The Green Fee takes effect on January 1, 2026, but that date will not end the fight. The federal court has not ruled yet, and the case could take months or years to resolve.

Hotels will start collecting the higher tax regardless. Cruise ships may or may not, depending on what the court decides.

For travelers planning Hawaii trips next year, the only certainty is uncertainty. The price of paradise is still being negotiated.

This article was created with AI assistance and human editing.

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