Hawaii climate cruise ship tax temporarily halted, but hotel levies go ahead

A federal appeals court ruling on New Year's Eve blocked Hawaii from enforcing a climate change tourist tax on cruise ship passengers, a levy that was set to go into effect at the start of 2026.

Cruise Lines International Association challenged the fee in a lawsuit, arguing that the new law violates the US Constitution by taxing cruise ships for entering Hawaii ports.

They also argued it would make cruises more expensive. The lawsuit notes that on top of the 11 per cent levy, the law authorises counties to collect an additional 3 per cent surcharge, bringing the total to 14 per cent of prorated fares.

Why is Hawaii bringing in a tourist tax?

On 1 January 2026, a range of new levies were due to come into force.

Increased rates on hotel room and vacation rental stays have gone ahead, but a new 11 per cent tax on the gross fares paid by cruise ship passengers, prorated for the number of days the vessels are in Hawaii ports, has been temporarily halted.

In the nation’s first such fee to help cope with a warming planet, Hawaii Governor Josh Green signed legislation in May that raises tax revenue to deal with climate-related problems.

Officials estimate the tax would generate nearly $100 million (€85 million) annually.

The money will be used for projects like replenishing sand on eroding Waikiki beaches, promoting the use of hurricane clips to secure roofs during powerful storms and clearing flammable invasive grasses like those that fueled Lahaina’s wildfire.

Green has long said the 10 million visitors who come to Hawaii each year should help the state's 1.4 million residents protect the environment.

He believes travellers will be willing to pay the increased tax because doing so will enable Hawaii to “keep the beaches perfect” and preserve favourite spots like Maui's road to Hana and the coastline along Oahu's North Shore.

Hawaii cruise ship tax 'will be vindicated'

US District Judge Jill A. Otake last week upheld the law and the plaintiffs appealed to the 9th US Circuit Court of Appeals. The US government intervened in the case and also appealed Otake's ruling.

The order by two 9th Circuit judges granted both requests for an injunction pending the appeals.

“We remain confident that Act 96 is lawful and will be vindicated when the appeal is heard on the merits,” Toni Schwartz, spokesperson for the Hawaii attorney general's office, told AP in an email.

The order temporarily halts enforcement of the law on cruise ships while the appeals process moves forward, her email noted.