California Joins Hawaii, Colorado, Utah, Michigan, New York, and Others in Changing US Tourism Dynamics with a Significant Hike in Tourism Taxes Starting in 2026: Everything You Need to Know

Published on December 2, 2025

Starting in 2026, California joins states like Hawaii, Colorado, Utah, Michigan, and New York in reshaping US tourism dynamics with a significant hike in tourism taxes. These changes aim to boost local economies and infrastructure, as municipalities across the nation seek to capitalize on the booming tourism industry. California, with its bustling tourist hotspots, including San Diego and Menlo Park, is stepping up its transient occupancy tax (TOT) to fund public services and tourism-related projects. This trend mirrors similar moves in other states, where increased lodging taxes—from Hawaii’s rise in transient accommodation taxes to Michigan’s new local tax options—are helping to address the growing demand for enhanced local amenities. As tourism continues to drive economic growth, these tax hikes reflect a nationwide shift towards ensuring that the benefits of tourism are felt not just by businesses, but by the communities that support them.

Hawaii: A Wave of Change in Hotel & Cruise Taxes

Hawaii is making waves with its new tax policies. Starting January 1, 2026, the transient accommodation tax (TAT) on lodging will rise by 0.75 percentage points, increasing from 10.25% to 11.00%. This adjustment is part of a broader effort to boost state revenue from tourism. Additionally, a new TAT of 11.00% will be imposed on cruise fares, prorated by the number of days the ship spends in port. These changes aim to capture a fairer share of Hawaii’s booming tourism industry, especially from its growing cruise sector.

California: New Hotel Tax Zones Are on the Horizon

California is stepping up its transient occupancy tax (TOT) game, with new rates in San Diego and Menlo Park. Starting May 1, 2025, San Diego will implement new TOT rates across different zones, ranging from 11.75% to 13.75%, in addition to the existing Tourism Marketing District (TMD) tax. These changes are expected to support local tourism infrastructure. Menlo Park will also see an increase in its TOT rate, rising from 14.5% to 15.5% beginning in 2026, reflecting the area’s growing need for public service funding amidst increased tourism activity.

New York: Saratoga County Hotels Get a Tax Boost

Saratoga County in New York is raising the stakes with its hotel occupancy tax. Starting in 2026, the tax on hotel and short-term rentals will increase from 1% to 3%. This increase is part of the county’s strategy to improve local infrastructure and enhance its appeal as a premier tourist destination. Known for its historic horse racing track and vibrant festivals, Saratoga County’s growing popularity as a travel destination makes this tax hike essential for maintaining its local amenities and public services.

Colorado: Eagle County Doubles Down on Lodging Tax

Eagle County in Colorado is raising its local lodging tax to help fund vital services. Beginning January 1, 2026, the tax will increase from 2% to 4%, a move approved by local voters. The increase is aimed at bolstering the county’s infrastructure to support its booming ski and tourism industries. With more visitors flocking to the area for outdoor adventures, the increased tax will provide much-needed revenue for local projects and services.

Utah: Counties Set to Raise Local Lodging Taxes

Utah is adjusting its local lodging tax rates, with several counties implementing increases. The new rates could go as high as 4.5%, depending on the county, with the goal of supporting local tourism infrastructure and services. This adjustment is part of Utah’s ongoing efforts to tap into the booming tourism market, particularly in regions known for outdoor recreation. As more visitors flock to Utah’s national parks, ski resorts, and other attractions, these tax hikes will provide vital funding for maintenance and local community projects, ensuring that both residents and tourists benefit from the state’s flourishing tourism industry.

Michigan: Local Governments Gain Flexibility with New Tax Option

Michigan is empowering local governments with new flexibility in lodging taxes. The recent enabling legislation gives cities and counties the option to add up to 3% to their local lodging taxes. This change provides municipalities with an additional tool to generate revenue for local infrastructure, tourism promotion, and public services. With the state’s vibrant tourism economy, especially in areas like the Great Lakes and major cities, this new tax option will allow communities to capture a larger share of the growing visitor spending, boosting local economies and enhancing public services.

Starting in 2026, California joins states like Hawaii, Colorado, Utah, Michigan, and New York in reshaping US tourism dynamics with a significant hike in tourism taxes. These changes aim to boost local economies and infrastructure.

Conclusion

California’s significant hike in tourism taxes starting in 2026 places it alongside states like Hawaii, Colorado, Utah, Michigan, and New York in a nationwide effort to reshape U.S. tourism dynamics. These tax increases are not just a financial adjustment but a strategic move to ensure that local economies and infrastructure benefit from the booming tourism industry. By following the lead of other states, California aims to capture a fairer share of tourism revenue, addressing the growing demands of both residents and visitors. As these states implement their tax changes, the impact will be felt across the country, signaling a new era in tourism management where local communities play a central role in supporting the industries that fuel their growth.