Hawaiʻi’s ambitious "Green Fee," codified in Act 96 (Senate Bill 1396), is set to launch on January 1, 2026, marking a significant shift in how the state addresses climate change impacts and finances environmental initiatives. The announcement from the state Department of the Attorney General, confirming the fee's implementation after the dismissal of legal challenges, signals a new era for businesses across the islands. Maui Now's recent report detailed the legal victory, solidifying the fee's future.
The Green Fee, a first of its kind in the nation, increases the Transient Accommodations Tax (TAT) rate by 0.75%, and crucially, extends the TAT to cruise ships that port in Hawaiʻi governor.hawaii.gov. The funds generated, projected to reach $100 million annually, will be earmarked for environmental stewardship, climate and hazard resilience, and sustainable tourism projects. This has significant implications for tourism-related businesses, which will need to factor in the increased tax burden. According to the Governor's office, the Green Fee’s goal is to ensure that visitors share in the responsibility for environmental stewardship and sustainable tourism.
For entrepreneurs and investors in Hawaiʻi, this means considering the Green Fee’s impact on profitability and cost structures. Hotels, vacation rentals, and other tourism-focused businesses will likely need to adjust pricing strategies to accommodate the added tax, potentially affecting competitiveness, especially as the industry recovers post-pandemic. Furthermore, the Green Fee's focus on initiatives like beach restoration and infrastructure hardening could create investment opportunities for companies specializing in these areas. The Green Fee Advisory Council is already in place to help guide the appropriation of funds. The council will be focusing on environmental conservation, disaster resilience, and sustainable tourism in Hawai'i hawaiiclimateadvisoryteam.org.
The implementation of the Green Fee also raises important questions about the long-term economic effects. While proponents, including Governor Josh Green, highlight the importance of investing in resilience and environmental protection governor.hawaii.gov, critics have expressed concerns. The Hawaii Free Press published negative arguments regarding the use of the new taxes. Regardless, businesses must be prepared for the Green Fee, as it represents a significant shift in the financial landscape of doing business in Hawaiʻi.
