Hawai’i SB 1396 (2025): A Green Fee to Mitigate Climate Impacts and Build Resilience in Hawai’i
On May 27, 2025, Hawai’i’s governor signed the nation’s first “Green Fee” into law, in an effort to “build resiliency against the impacts of climate change by providing a stable source of funding for environmental stewardship, hazard mitigation, and sustainable tourism.” The State also acknowledges that this tax is necessary to support Hawai’i’s environmental and economic future, as their economy heavily relies on eco-tourism and recreational activities that require maintaining a healthy environment.
To safeguard these resources and increase climate resilience, Hawai’i Senate Bill 1396 sets forth four goals:
- Increase the existing Transient Accommodations Tax (TAT) by 0.75%;
- Expand the TAT to include cruise ships that port in the State;
- Require the governor to submit an annual budget request allocating the cruise ship TAT collection for climate mitigation and resilience projects; and
- Amend existing law to allow for the TAT to fund climate-related projects.
The TAT is an existing program that previously taxed only hotels and lodging establishments in the State. Those funds were allocated to the Special Land and Development Fund to be used for a myriad of projects relating to the lease or development of public lands and the conservation of natural resources. SB 1396 not only increases the existing TAT (to 10%) and pushes for stricter enforcement on independent short-term rental operators, but also levies an 11% TAT on cruise ships and uses the funds generated from the additional TAT to create a dedicated revenue stream for climate change mitigation and resilience efforts in the State.
The additional TAT on cruise ships is projected to generate $100 million annually by taxing cruise ship operators 11% of all gross rental proceeds collected from passengers while they are docked at any port in the State. This, essentially, treats cruise ships as floating hotels from which the State is collecting the TAT, as they would any other rental on the islands. Following the Governor’s annual budget request, the proceeds will fund projects that protect and restore Hawai’i’s natural resources, including their forests and coasts; increase infrastructure resilience to natural disasters and sea level rise; perform hazard mitigation for floods and wildfires; and mitigate the impacts of tourism on Hawai’i’s environment.
The Green Fee became effective on January 1, 2026 and the Governor’s Administration “will work with the legislature to confirm projects next session as revenue becomes available.”
Publication Date: May 27, 2025
Related Organizations:
- State of Hawaii
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