In October, federal appeals court judges issued a temporary ruling blocking Hawaii from enforcing this tax as it pertains to cruise guests. The tax was supposed to begin January 1, 2026, and guests were to pay 11 percent of their cruise fare as a tax to the state for every day the cruise ship was at a Hawaii port, as it was part of Hawaii’s climate change tax initiatives. The tax was designed for the Environmental Impact Surcharge and would have been the first-ever cruise passenger tax in Hawaii, but the tax was designed to help mitigate the climate change impact of cruise ships, which is why it was a part of the climate change tax initiatives from the state.
Even though the Hawaii state legislature likely designed the tax well-intentionally, it created a bad precedent that exposed cruise taxes to litigation, as the cruise line industry is most likely to lobby against taxes of any sort, as evidenced by the Cruise Line International Association and its cruise line members in these tax initiatives. Thus far, this case has been used to demonstrate how legacy cruise taxes impact air and port taxes.
Understanding the New Tax and Its Implications
The new tax is included in Act 96 and is part of Hawaii’s efforts to fight climate change. Governor Josh Green is on record saying that the money will help Hawaii mitigate the effects of the warming climate. The tax will affect many thousands of cruise ship travelers to Hawaii who will have to pay more money than the already high and various cruise fees and taxes.
The tax law states that travelers to Hawaii on cruise ships will pay an 11 percent tax on a prorated part of the cruise fare, which is based on the number of days the travelers will be in Hawaii. Furthermore, counties will now be able to charge an additional 3 percent of a prorated cruise fare. Thus, a cruise ship passenger will pay a total of 14 percent on a prorated basis in addition to the cruise fees and taxes.
Legal Issue: CLIA’s Case Against the Tax
The Cruise Lines International Association (CLIA), along with other cruise lines, including Disney Cruise Line, filed a lawsuit claiming the law is unconstitutional, as the tax creates an unconstitutional burden for cruise line patrons. Plaintiffs argued that cruise line patrons already pay a myriad of fees and taxes, and thus, imposing an additional fee is an unconstitutional burden as it goes beyond flight taxes.
Tax advocates, including state representatives, claimed the money would be used to counter the negative effects of climate change. The state of Hawaii asserted the law was intended to fund climate change initiatives and mitigate damage to the state’s ecosystems, especially its coastal ecosystems, which are most susceptible to the effects of climate change.
There is also an argument for cruise lines, and along with CLIA, that the tax creates a negative effect on the economy by increasing the price of cruise tourism, which is a necessary component of revenue for the local economy. The lawsuit also contests the state and county’s ability to impose these taxes on the cruise line industry.
Court Rulings and Appeal Process
Judge Jill A. Otake from the U.S. District Court authorized the tax law to go into effect. This happened in December of 2025. This ruling was not in favor of CLIA and the rest of the industry, who appealed to the 9th U.S. Circuit Court of Appeals. The appeals court granted an injunction, which means the tax law has not yet been enforced and will be further appealed.
The 9th Circuit’s intervention means that the tax will not go into effect just yet. Along with the plaintiffs, the U.S. Government has also appealed the district court’s ruling, which leads the tax to remain in limbo according to the 9th Circuit. The case will now continue to go forward to merit briefs, with a ruling to follow in the future.
The spokesperson for the Hawaii attorney general’s office has publicly stated that the ruling will come in favor of the tax law, regardless of the temporary standstill. The attorney general’s office is confident that the court will come in favor of the state once the case is fully briefed.
Effects on Cruise Lines and Customers
Disney Cruise Line was one of the first companies to notify customers of the additional fee due to the new Tax on Cruises and Climate Change Cost in October 2025. Another cruise line tailors its business to the new cruise line taxes because they may alter their business model in Hawaii as well.
In Hawaii, customers will now pay an additional $35 in the climate change cruise tax. Cruises are one of the most expensive forms of travel due to the multiple fees, including taxes, cruise line tips, add-on excursions, and other charges. Those who are likely to pay the most for cruise line services are the most likely to be concerned about the cruise climate change tax.
Hawaii believes the Tax on Cruises and Climate Change Cost will help mitigate the climate change problems of cruise ships. However, customers in Hawaii will likely view the climate change fee as just another tax.
Hawaii’s Future Plans and Scope of Concerns
There is a legal battle regarding the cruise tax, and Hawaii is trying to come up with ways to improve the current situation. The Hawaiian economy is heavily reliant on tourism, and with that comes the worries about the tourism that is taking place there. Hawaii has been attempting to come up with ways to minimize the overall impacts of tourism on the environment and how they can put a stop to the destruction of ecosystems.
This is the first time Hawaii is trying to implement such a tourism tax and thus trying to tackle the problem of money flow to the economy and the problem of climate change, this time from the center. The Hawaiian Islands have been a focal point of tourism since they became a port of call for cruise ships. Their culture is very diverse, and combined with the attractions of the islands, the cruise ships will always be loaded to the brim with visitors.
Hawaii’s officials hope that the court will rule in favor of the cruise tax, as Hawaii’s change in climate has a direct impact on it. With the tax, it will be possible to improve the direct impact of the tax on the cruise industry.
Conclusion: The Continuing Fight Against The Law
Uncertainty for both the customers and the cruise industry is what lies ahead during the legal fights for the cruise taxes in the state of Hawaii. The legal battle is still ongoing and could last for some time, but for now, there is a state of relief over the taxes for the cruise lines. The tax is aimed at climate change and is an attempt to minimize the impact of the cruise revenue on tourism. The tax does, however, raise more questions than it answers.
Tourism is one of the most heavily relied upon money makers, and therefore situated at the center of most disputes of the legal fights over the tax laws regarding cruise revenue. The taxes in the state of Hawaii, over the cruise boats, have global legal disputes regarding tourism and taxation coming to a close over the disputes of the tax laws over the cruise revenue.
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