Hawaii’s proposed “Green Tax,” which imposes a 11% tax on all tourist accommodations, including cruise passengers, was been halted by a federal appeals court just a day before it was set to go into effect on Jan. 1. The Hawaii Legislature passed the bill SB1396 in January of 2025, a measure hoping to curb the effects of climate change in the state.
The legislation expanded upon an established law, Hawaii’s Transient Accommodation Tax (TAT,) which was established in 1986. The tax sat at around 10.25% before the bill including the fee increase was signed by Hawaii’s governor Josh Green in May of 2025.
The federal block is considered a win for big cruise lines, who had pushed back against the measure for months leading up to its implementation. According to Travel Weekly, the Cruise Lines International Association (CLIA) sued the state of Hawaii in August over the new legislation.
Hawaii has struggled against the effects of mass tourism for years now, going so far as to discourage tourists from visiting. The tax is another measure the state has taken in an attempt to level out the effects of tourism on Hawaii’s natural environment and local communities. Governor Josh Green said “visitors who benefit from our island’s resources have a shared responsibility to help preserve them.”
However, the CLIA argued that the tax violated the Constitution and federal laws concerning taxation on ships. The federal government also backed the lawsuit on CLIA’s behalf late last year, claiming the suit “preys upon American businesses and tourists,” Travel Weekly reports.
Studies published by the University of Prince Edward Island evaluating Hawaii’s history, culture and tourism have reported “the sheer amount of tourism in Hawaii has surpassed a sustainable level and is causing more harm than good to the islands.” At the time of the study, tourists outnumbered residents in Hawaii by a 6:1 ratio. Native residents and local wildlife are among those who are most impacted by an influx in tourism. With development destroying ancient land valued by Hawaiians.
According to TravelPulse, state officials have estimated the tax increase would have generated nearly $100 million per year to help pay for shoreline erosion, wildfire response, and other climate-related challenges in Hawaii.
