Last it was Maui that enacted an additional 3% accommodations tax effective November 1. Maui’s County Council had introduced the bill that was then signed into law by Mayor Victorino. Kauai also approved and implemented a 3% tax hike on accommodations. But now it is Honolulu’s turn.
Honolulu just added 3% to other accommodation taxes.
The bill to add the new 3% tax on all visitor accommodations was approved by the County Council last week. That will be added to the state’s current accommodation tax of 10.25% and the Honolulu GST tax of 4.5%.
A similar bill implementing an additional 3% accommodations tax is going through the Hawaii Island County Council and is expected to pass.
HB862 tax bill created additional taxes.
Hawaii’s legislature kicked off these increases via HB 862. That measure went into effect starting October 1. As a result, the state now has the highest combined accommodation tax in the US. Kauai was the first county to adopt this increase.
In July, the legislature approved the accommodation taxes and funding for the troubled Hawaii Tourism Authority (HTA). These taxes are a significant source of revenue for all the islands and are applied to both your Hawaii vacation rental and Hawaii hotel stays.
Governor Ige initially vetoed the bill designed to halt funding for Hawaii Tourism Authority via accommodation taxes. The legislature feels strongly, given they then overrode the governor and want to fund HTA via its general fund to provide better checks and balances.
We aren’t convinced about HTA’s abilities no matter how it is funded, given a checkered past and not enough to show for the money it has received. See much more on that below.
Each island will tax visitors independently.
For years, the counties have received an allotment of the statewide uniform 10.25% accommodations tax rate, but that will now come to an end. Instead, each county will add its surcharge to that existing statewide tax.
Statewide, Hawaii has the highest combined tax rate in the US.
Our current state accommodations tax is 10.25%. However, with that entire amount going to the state, nothing will be shared with the counties. That is expected to cost the islands over $100 million annually in lost revenue.
The counties are implementing their own charge of 3%, which brings the total accommodation tax to 13.25%, up 29% over the previous rate. That plus 4.17% GST on Maui and 4.712% GST elsewhere in Hawaii. The combined tax on hotels and vacation rentals is to be approximately 18%.
Thus, Hawaii is set to have the highest overall tax on accommodations in the US., according to the National Conference of State Legislatures.
Does the latest tax increase in Honolulu impact you?
Updated 12/6/21.
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I am a frequent visitor to Hawaii. I have visited Hawaii Maui Kona and Oahu. I consider these taxes to be impact fees. Meaning they are used to pay for the infrastructure necessary to service a community made up of less than 200,000 which serves over 2 to four million visitors a year. That is a tremendous strain on infrastructure including roads sewer water electricity and other essential infrastructure needed to support both the tourism industry and the local economy as well as the local people. I have visited foreign countries wherein they have entry fees ranging from $15 to $100. On a multiple country trip I have paid in excess of $500 in these entry fees in addition to the local county state and federal taxes of the country.
We were in Hawaii January 7-15, 2022. Received letter stating new tax would be added to our already completely paid for reservations. Is that legal?
Hi Mindy, my understanding FOR Maui is if you made your reservation before Nov 1, 2021….regardless of when you are visiting/staying then you do not have to pay the tax. Again that is for Maui only, each island/county made their own effective date. Hope that helps.
When does the new tax get added on to the hotel bill in Waikiki? We are here now and they added it in already to our bill said in effect since the 8th of December. Please advise thank you so much.
Hi Daniel.
We commented on this question already. We believe it is January 1 but could not find anything confirming that.
Aloha.
Looks like it’s no longer the Aloha state anymore. May have to change our January travel plans!!!
Thank you for the information…
So, when does Oahu start implementing this?
Hi Kevin.
It has been signed into law, but we did not see an effective date confirmed. We believe it is starting January 1.
Aloha.
Apparently most of the entire Hawaii State politicians have decided for the residents of the islands that they wish to curtail tourism by passing more Tax Increases to those who visit. This also is aided by some of the major property owners who stand to make a bigger bundle when tourist visit and stay at their properties. I used to love to visit the islands and, have on numerous occasions, but poorer people are being priced out! Residents: Is this really what you want or what politicians wan
Actually residents want less tourists I’m part of a group that is titled enough tourists already so if the taxing works then so be it
Be careful what you wish for….as Covid went on the economy in Hawaii was devastated, I get perhaps limiting the number of tourists but on the other hand if Hawaii thinks it can do this by raising the fees/taxes etc eventually the majority of people will decide it’s not worth it and of course your tourism authority will once again be begging people to come. Everything has a certain price/value and once people decide it’s not worth it they will find other alternatives.
Spot-on, add-in the newly announced Supply Chain issues Bedding to Food & Beverage, the diminished Value received against older Pricing and Memories will be an issue with those with discretionary Spends. The Budget Traveler will still buy their Beer or Wine for the room, as we all do, but not spend where Prices are higher and Hotel Profit Margins greater in Revenue Production. Governor Ige, tied the Retailers hands for 18 months, now with the added Taxes, that comes from somewhere!
Exactly!!! The average traveler will have a set budget so Hawaii can raise prices, tax more etc etc but once the “budget” amount has been met he/she will no longer spend. Vegas is slowly finding that out and Hawaii will be next.
Are there any restrictions on travel to Maui at this time? We travel there Jan.1
Accommodations are becoming more and more unaffordable in Hawaii. Feels like price gouging. Soon the only tourists and business travelers there will be the wealthy. Is that what Hawaiians want?
Apparently Hawaiian government Officials never met Winston Churchill.
“We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”
― Winston S. Churchill
Sadly comical, with One-Party Rule and a lame-duck Governor that coralled all the Counties collected Taxes for the States General Fund, this at the same time that Oahu’s International Airport and Maui’s come in 2nd worst in their respective categories! Rather then re-invest this Money by County into the Airports, they just let them get worse and worse, as if the Citizenry of the Aloha State doesn’t deserve better!
Thanks for the article, BOH. I really can’t understand the logic in taking the money away from the counties. Of course, they will raise their taxes. People should note that while the accommodation taxes are high, the sales tax is very low. In the Seattle area it is around 10%, in Hawaii it is around 4%. I have no idea about the rest of the country or the world, just thought I’d throw out a positive point.
Heading to Maui October 29, can’t wait!
Mahalo,
Lani
Hi Lani.
Thanks. Yes, good point. Enjoy your time on Maui.
Aloha.
Yes definitely will impact going back to Maui. Already have the highest tourism tax rates. Will need toook for another vacation destination. So sad
Does this tax apply to Timeshare if you own at the Hawaii property