Federal Court Blocks Hawaii’s New Cruise Tax

Hawaii cruise passengers just caught a break. A federal court stopped the state from collecting a new climate change tax on cruise ships. The tax was supposed to start on January 1, 2026.

The Cruise Lines International Association sued Hawaii over the new law. They argued it breaks the U.S. Constitution by taxing cruise ships just for entering Hawaii ports. The cruise industry also said the tax would make cruises more expensive for travelers.

What the Tax Would Have Cost Cruise Passengers

The new law creates an 11% tax on cruise fares. The tax only applies to the days your ship spends in Hawaii ports. Counties could add another 3% on top of that. This means cruise passengers might have paid up to 14% extra on their Hawaii cruise costs.

Hawaii already raised taxes on hotel rooms and vacation rentals. But the cruise ship tax was brand new. It would have been the first tax in America specifically designed to fight climate change.

Why Hawaii Created This Tax

Governor Josh Green signed the law in May 2024. Hawaii wants the money to deal with climate problems. The state faces eroding beaches, dangerous wildfires, and other environmental challenges.

Officials think the tax could bring in almost $100 million every year. That money would help protect Hawaii’s coastlines and fight climate change effects.

The Legal Battle Continues

A lower court judge first said the tax was legal. But the cruise industry appealed to a higher court. The U.S. government also joined the case and appealed the ruling.

Two judges from the 9th Circuit Court of Appeals granted an injunction. This means Hawaii cannot collect the cruise tax while the legal fight continues.

“We remain confident that Act 96 is lawful and will be vindicated when the appeal is heard on the merits,” said Toni Schwartz. She speaks for the Hawaii attorney general’s office.

The court order only stops the cruise ship part of the tax law. Hotels and vacation rentals still face the higher taxes.

What This Means for Your Hawaii Cruise

For now, you won’t pay the extra climate tax on Hawaii cruises. The legal process will take time to resolve. Courts must decide if states can tax cruise ships this way.

The cruise industry argues the tax unfairly targets their passengers. Hawaii says it needs the money to protect the islands from climate damage.

This case could set important rules for how states can tax cruise travelers. Other coastal states dealing with climate problems are likely watching closely.

Cruise Lines International Association spokesperson Jim McCarthy said he couldn’t comment immediately. The ruling came right before New Year’s Eve, making it hard to reach officials for response.

The appeals process will determine whether Hawaii can eventually collect this tax from cruise passengers. Until then, cruise travelers can book Hawaii trips without worrying about the extra 11% to 14% climate fee.