Court blocks Hawaii’s new cruise tax just before it takes effect

A federal appeals court blocked Hawaii's new tax on cruises and other travel accommodations just one day before it was meant to go into effect at the start of 2026.

On Dec. 31, the Ninth Appellate Court granted motions for preliminary injunctions from leading industry trade group Cruise Lines International Association (CLIA) and the U.S. Department of Justice following Judge Jill A. Otake's decision last week to uphold the implementation of the country's first "Green Fee."

The higher rate would apply to hotels, vacation rentals and – for the first time – cruises starting Jan. 1. The state passed the climate change tax last May, increasing its transient accommodations tax by 0.75% to 11% to finance climate change resiliency projects and other environmental efforts. Officials estimated revenue of up to $100 million annually from the tax.

"We must protect and preserve Hawaii's natural resources and safeguard the health of our residents. Visitors who benefit from our island’s resources have a shared responsibility to help preserve them," said Hawaii Gov. Josh Green in a Dec. 23 statement. "The Green Fee ensures that the resources needed to protect Hawaii are available for future generations."

The court's decision temporarily blocks enforcement of the tax on cruises as the appeals process continues, although the fee is now active for hotels and vacation rentals.

KAHULUI, HAWAII - OCTOBER 06: The Norwegian Spirit cruise ship is moored at Kahului Harbor in Maui during a tourism visit on October 06, 2023 in Kahului, Hawaii.

CLIA said in a statement that it is "gratified" by the appeals court decision. "This case involves important questions about how federal and state laws interact in regulating maritime commerce – principles rooted in long-standing constitutional safeguards that protect free and open ports nationwide," CLIA continued.

The organization sued over the tax in August, arguing that the change violates federal law, partly because it conflicts with the U.S. Constitution’s Tonnage Clause. Honolulu Ship Supply Co., Kaua’i Kilohana Partners and Aloha Anuenue Tours LLC were also listed as plaintiffs.

Cruise tourism contributes almost $1 billion to Hawaii's economy, according to CLIA. "On behalf of its member cruise lines, CLIA will continue to pursue this matter constructively through the courts while working with Hawaii to support local communities and sustainable tourism," said the organization in a statement.