Hawaii Enacts Landmark Law to Fund Climate Action Through Tourism

Overview

On May 27, Hawaii Governor Josh Green signed nation-leading legislation (H.B.1077 / S.B.1396) to raise the state’s visitor lodging tax to fund projects that mitigate the impacts of climate change and support economic development. Hawaii’s bill was based on a community-informed recommendation from the state’s Climate Advisory Team to use the Transient Accommodations Tax (TAT) to fund climate resilience. The new law reflects Hawaii’s continued leadership on climate action and serves as a promising framework for other states to improve funding for environmental priorities. The primary sponsors of the bill were Hawaii House Speaker Nadine Nakamura and State Senate President Ronald Kouchi.

• Why It Matters: Amid growing climate threats and uncertainty around federal programs, states are in need of enhanced funding to mitigate climate impacts. Tourism remains vital to Hawaii’s economy, but the high volume of visitors has increasingly strained natural resources, while the recent Maui wildfires put a spotlight on the need for proactive climate solutions to improve community resilience and limit economic damages. By linking tourism revenue directly to climate and infrastructure investments, the bill is expected to generate almost $100 million annually and allow for tourism to support the protection of Hawaii’s natural beauty for generations to come.

Key Components of Hawaii’s Bill

Hawaii’s H.B.1077 / S.B.1396 will increase the state’s Transient Accommodations Tax (TAT) and allocate a portion of the revenue to projects that address climate change impacts and support economic development. Here is how it will be implemented:

• Tax Rate Increase: The TAT rate will increase by 0.75% to 11% beginning January 1, 2026, applied to hotel stays, vacation rentals, timeshare units, and similar living accommodations rented for less than 180 consecutive days by visitors. A new 11% tax will also be applied to cruise ships, prorated for the days docked in Hawaii ports.
  
• Dedicated Climate and Natural Resource Funding: The additional revenue generated by the TAT increase will be used to 1.) protect natural resources, 2.) make infrastructure more resilient to climate-related disasters while also performing hazard mitigation, and 3.) to improve the visitor experience and mitigate the impacts of tourism on natural resources.
• Complementary Investments: These allocations are in addition to existing TAT distributions that support natural resource protection and tourism.

National Context: Linking Tourism to Climate Resilience

In 2025, at least 25 states have introduced legislation to adapt to or mitigate the impacts of climate change, with Hawaii being among the 10 states that have enacted bills into law thus far. While Hawaii’s bill is a first of its kind in many regards, other states across the country are also exploring how to leverage tourism revenue to fund sustainability goals. For example, a proposed bill in Oregon (HB 2977) would increase the state’s lodging tax to fund wildlife conservation.

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