A ruling by a federal judge has allowed Hawaii to proceed with plans to include cruise ship passengers in a new tourist tax intended to help the state respond to climate change, with the measure scheduled to take effect at the beginning of 2026.
U.S. District Judge Jill A. Otake rejected an effort to block enforcement of the law, declining to halt its application to the cruise sector. The decision removes a key legal obstacle to what state officials describe as the nation’s first levy designed specifically to fund climate adaptation.
The legislation, signed in May by Governor Josh Green, is intended to generate additional revenue to address shoreline erosion, wildfire risk, and other climate-related pressures. State estimates place annual receipts from the tax at close to US$100 million. While the law raises existing taxes on hotel rooms and vacation rentals, it also introduces a new charge on cruise travel: an 11% tax on the gross fares paid by passengers, calculated on a prorated basis according to the number of days a vessel spends in Hawaiian ports.
The Cruise Lines International Association, joined by a Honolulu-based ship supplier and tour operators from Kauai and the Big Island, challenged the measure in court. The plaintiffs argued that the law amounts to an unconstitutional tax on cruise ships for entering Hawaii’s ports. They also maintained that higher costs would dampen demand for cruise travel to the islands. Court filings noted that counties are authorized to add a further surcharge of up to 3%, potentially increasing the total levy on prorated fares to 14%.
In public statements submitted to the court, industry representatives emphasized the scale of cruise tourism’s economic contribution to Hawaii, citing nearly US$1 billion in overall impact and thousands of jobs, while asserting that continued growth depended on a lawful and sustainable regulatory framework.
Court records indicate that the plaintiffs intend to appeal the ruling. State officials, meanwhile, have said they will continue to defend the law, describing it as a requirement that cruise operators contribute their share of transient accommodation taxes to help address climate-related threats facing the islands.
The case drew federal attention when the U.S. government intervened, characterizing the tax as a measure that conflicts with federal law by unfairly burdening American citizens and businesses for the benefit of a single state. Following the ruling, attorneys for both the plaintiffs and the Department of Justice sought orders to preserve existing conditions while the appeal proceeds, but Judge Otake denied those requests, allowing the law’s implementation timetable to remain unchanged.