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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Stacy says
Sure glad I’ve been there numerous times, because I won’t be back. Plenty of other places to visit that don’t charge as much and actually welcome tourists.
Greg M says
These taxes are getting ridiculous but the way I look at it is if we “budget” $XXX for a trip and now more of our budget dollars are getting eaten up by taxes well then that’s less $$ for me to spend in restaurants/bars etc but I basically still spend the same amount!! We go to Maui about 3x a year for about 3 weeks, still love it as much as ever but they better be careful because they are going to price themselves out of the market, kind of like Vegas is slowly doing.
Catherine says
Arriving end of next week and just received a bill from the condo owner for the extra 3%. Two less dinners out 🙁
Michelle Z says
Just received an email from our condo rental in Maui and we’re being charged the newly enacted tax rate because our rental starts on 10/1/21 even though we were fully paid in August.
Haven’t been to Hawaii since 2012 and they’re making it really hard to want to go back.
David B says
Update – we Kauai TVR owners just received a broadcast email from the county. Bottom line is that the county is not requiring any additional tax tax returns, they will piggy-back off monthly TAT return sent to the state. However, we will need to submit $$ (on-line only) directly to the county on a portal that is still in progress. So, the 3% “KTAT” applies to all rent declared on the state TAT form (monthly/annual).
Kim B. says
Has anyone in state government explained why they’re no longer apportioning the base accommodations rate tax among the islands based on occupancy? It sounds to me as though the state government needs an audit.
David B says
It’s because they want the money, and let the counties raise new tax. Do a little on line research. Taxes never high enough. They’re building a 12 billion dollar rail project on an island that has a little over 1 million people. That 12 billion will grease a lot of palms that make political campaign donations.
Besides, it’s a tourist tax. Those are the bast kind everywhere
Walter K says
You would think the mayors of the Islands would try and stop the funneling of the TAT to subsidize a $12 million project that none of the other islands Sharon soon people will be going to Costa Rica and Mexico by passing Hawaii altogether because of nearly a 20% tax on top of their vacation rental cost doesn’t any buddy in this government think about thatu😡😡
Heyward B. says
What might $62 airfare to Hawaii teach us about the state of Hawaiian tourism?
ted b says
With the higher taxes you might see visitors staying a shorter time and spending less money
Fred F. says
BOH. Thanks as always. We’ve been lucky to travel to direct to Maui from Salt Lake City for the past 18 months. We missed out on the direct flight in late October and have to connect through Honolulu. We’re not familiar with Hawaii Safe Travels protocol checking for connecting passengers. Can’t locate it on the website. Could you please provide any guidance? Thanks.
Beat of Hawaii says
Hi Fred.
There is nothing required for interisland travel. So your flight to Honolulu will be the one that you need to follow Safe Travels for. Assuming you have a pre-clear bracelet, your travels should be largely the same as pre-Covid.
Aloha.
Fred F says
T.Y. Delta doesn’t do bracelets, so our assumption is getting in line like we would at Kahalui?
Starla G says
Search Delta’s website for Hawaii safe travel. I’m not sure about all of the airports but they are doing it at Atlanta. Even customer service at Delta vacations don’t know about it.
Fred F says
Thanks Starla. Good tip.
Gary S. says
Flew Delta out of SLC last week. They were doing bracelets.
Clay B says
I love Hawaii, but the current state of affairs makes me delay. The current state of affairs has caused us to cancel three trips to the islands.
All I can say to the tourists is, “Cabo San Lucas”! It has been great! No hassle and the cost of excursions is much more economical.
We’ve moved our time share to Cabo. Perhaps in a number of years Hawaii will get their act together, but it really does not matter to us any longer. Cabo has been so much more welcoming. I encourange amyone to give it a try.
Jeff says
I agree Cabo is much less expensive more fun and they want tourist.
John A. says
Does anybody in Hawaii state or county government realize that the higher they raise the accommodations tax (which increases revenue), the more dependent they become on tourism and the need to attract tourists only gets stronger? And if over-tourism is a supposed evil, well, congrats because they just cemented the islands’ fate to it.
Richard C says
Aloha BOH Bro’s
I don’t understand the stink about the new tax when Hawaii’s Governor Ige successfully wiped out all fall travel to the islands.
Small family owned business’s who rely on tourist dollars are in panic mode. Maui Restaurants are posting all over social media “Welcome we are open for dining“
No reservation needed, this posted on several travel sites and Hawaiian Facebook pages by tourist on the islands.
Check out the Hawaiian beach cams they’re empty.
Good government at work let’s raise a tax on tourist than tell them to stay home. Lol 😂
GLORIA G says
I am currently on Kauai. We went to Breneke’s today for lunch – CLOSED … due to lack of workers. A Heritage Restaurant in Poipou. SAD.
Beat of Hawaii says
Hi Gloria.
Check Starbucks. The one in Poipu is now closing at 12 noon. Same reason.
Aloha.
Randy R says
Very sad, first went to Brenneke’s in 1987, stayed at the Stouffer Waiohai (Iniki took it out) nice beach, since have been at the Grand Hyatt Poipu, the issue is Governor Ige was taking Federal $ through last week, making it impossible for the people to go back to work, they make more on Unemployment. Democrat’s destroying the Small Business’ that give character to neighborhoods!
Sherylyn P says
So our original trip was Maui April 2020 and we have cancelled for April 2021 and Thanksgiving 2021 due to covid. Due to the govenor asking us not to travel. Now we have to pay higher tax on a rental we paid for in 2020. I do not think so. I would understand it effective in future on rentals. We are traveling there next year. I am so upset right now I may be ready to throw in the towel. You should not have to be filthy rich to travel there!!!
David B says
Haven’t been down to Poipu in years (my wife calls it the Orange Co. of Kauai), but the last time we ate at Brennecke’s, the food was mediorce compared with past visits. Maybe was just an outlier.
There is a big time service industry labor shortage all over the island. Most restaurants and even food trucks have curtailed their hours of operation. Lunch tends to get cut first, since not as profitable for owners or servers. The enhanced UE benefits may have played a role, but also the lack of affordable housing for people in those jobs, and (I am told) many people decided to not go back to a service industry job after the initial COVID shut downs and layoffs took place.
Phillip says
Yet another “Hawaii shoots itself in the foot” story. Are you surprised? I’m not…
Tom B says
California has taxed its residents to the point that it has lost population and a seat in the House of Representatives for the first time in its history. My macro (or was it micro?) economics classes taught me there are calculations (math problems) to maximize revenue based on a number of variables. I ended up with a degree in Physics, so I’m probably not qualified to speak about economics, but it feels like the more you take advantage of those you rely upon for your daily livelihood, namely tourism, the more likely you risk losing them.
When every destination in Mexico, the Caribbean and places like the Maldives or Seychelles are more affordable, folks that enjoy the entire experience of those destinations might not return.
Jane M says
Sounds like the Hawaiian government needs to audit the HTA to see exactly where the money is being spent. It should be shared proportionately with all the islands. As a person who spends 3 months each year in Kauai since 2009 some of the taxes and fees are really high.
Nancy M says
It sounds as if there needs to be a checkup on HTA. When the CEO makes $300,000 a year, there are 20 employees, with a budget of $1,000,000, yet there are continuing problems with turnover, and other questionable issues going back years, it seems that a thorough investigation and audit is in order.
Those of us with long memories know that when there is a lack of oversight, sometimes mismanagement can occur.
Thank you, BOH, for keeping us informed of developments in Hawai’i.
Brad K says
The new tax problem in and of itself makes sense for the strain travelers put on the system. But it compounds the FEE free for all that makes a $150 my property cost $300+ per night after all of the FEES and now a higher tax on the many dubious fees imposed on top of the rental rate and the new even higher tax. It comes across as dishonest and tells me only the rich need apply.
Jerry L says
I say abolish the entire HTA. Who hasn’t heard about the islands of Hawaii and that one can vacation there, yet they’re spending 100M a year on marketing. This is like the current radio and tv ads telling everyone to wash their hands, wear a mask, and social distance wherever possible…really is there anyone on the planet who doesn’t know all this already. Stop wasting all this money!!
Tom B says
This is like the movie “Dave” when he’s trying to save the homeless shelter bill and he ends up cutting the money that is spent making people “feel good about a car they already bought”.
Claudia S says
OMG Tom. I was just going to post that!
Dot S. says
I think the tax is a mistake. What should be done is have the HTA thoroughly audited and see if the money is being spent responsibly. With such high employee turnover, surely it’s a cry for oversight.
Diana E says
As a long time visitor to Hawaii we do not mind paying more to assist the local governments to address the additional strain on various service and infrastructure we create, and we do (even when we spend money in the local economy) rather than the folks that live on the islands—these taxes have not prevented us from coming almost every year since 2006. An extra $60 for a condo rental that costs $2,000 is not that onerous. And we are retired on a limited budget, but a vacation is a luxury we choose to enjoy.
However, you did not mention whether the new taxes are retroactive, if the accommodations have been paid for in full prior to the stay, or applied to all stays from October 2021 forward. Can you clarify whether we can expect that extra 3% to be applied?
Mahalo
Beat of Hawaii says
Hi Diana.
We have not heard anything specific about that.
Aloha.
David B says
It likely depends on when your “pre-paid” rent is booked as “paid” to the owner/operator of your lodging. If “pre-paid” means booked as rent paid prior to Oct 1, you may end up not being charged the additional 3% county tax, since there will be no rent “paid” on/after Oct 1 on which the tax is levied.
But, if “pre-paid” just means “deposit,” and the rent is not officially booked as paid to the owner/operator until on/after Oct 1, then you should expect to get charged the 3% tax.
FWIW, our TVR operator does not book rent payments until the first day of the rental period, even if she already their rent money in advance (which she nearly always does).
Beat of Hawaii says
Hi David
Thanks. Not simple and there is no way to tell people what to expect on their reservations without actually inquiring.
Aloha.