Federal Court Upholds Hawaii Tax on Cruise Passengers

A U.S. District Court judge has ruled in favor of Hawaii’s new tourist tax on cruise passengers that will see the state’s “green fee” applied to cruise ships for the first time ever. The Cruise Lines International Association (CLIA) had filed suit against the state citing a “blatant violation of the Constitute of the United States.”

While the court did dismiss the suit, it did leave the door open for future challenges. According to the Maritime Executive, the court noted that “the issues of Federal rights in this area have been rarely litigated and that the court might revise its opinion in the future.”

In the meantime, however, the tax, which the state says is being used to help combat climate change, now takes effect on Jan. 1, 2026.

The tax adds 0.75% to the tax paid by hotel and short-term rental guests, bringing the total to 11%. For the first time, it will also be applied to cruise passengers for each day their cruise ship is in Hawaiian waters. As part of the new tax policy, local governments are free to add an additional 3% surcharge if they choose.

The tax is expected to raise about $100 million annually.

CLIA has filed a notice of appeal. According to Bloomberg Tax, the Association also moved for an injunction but was denied by the court the same day.