Hawaii Set to Joins California, Washington, Oregon, Colorado, and Michigan in Raising Tourist Taxes for Sustainable Tourism in US Making it a New Travel Norm

Written By: Rana Pratap

Rana Pratap

My formal education culminated with a Master's in English from Dibrugarh University in 2015, but my real-world learning began simultaneously. Over ten years ago, while still a student, I joined Travel and Tour World as an intern, eager to nurture my love for travel in a professional setting. It has been a privilege to grow with this company, maturing from that initial role into a leadership position. As a Senior Writer and Team Leader today, I comfortably blend my passion for travelling with years of industry experience along with mentoring a creative team.

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September 23, 2025 4:31 AM

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Hawaii is set to join California, Washington, Oregon, Colorado, and Michigan in raising tourist taxes by up to 0.75% to help pay for protecting nature, fixing roads, and supporting local services, making this the new normal for travel in the US. These states’ tax stances emerge as a radical approach designed to ensure that the net gains from tourism revenue augment the funding for manifold social initiatives, infrastructural refinements, and ecosystem protection, reverberating sustainability principles. These states’ tax stances emerge as a radical approach designed to ensure that the net gains from tourism revenue augment the funding for manifold social initiatives, infrastructural refinements, and ecosystem protection, reverberating sustainability principles. There is a notable shift wherein an increasing number of destinations prioritize social and environmental stewardship alongside economic returns.

The Growing Trend of Tourist Tax Increases

Tourist taxes are not new, but in recent years, many regions are expanding or raising them to tackle the negative effects of tourism. These taxes, which often target hotel stays, short-term rentals, and other visitor-related services, are being designed to fund a wide range of projects. These include environmental conservation, infrastructure development, homelessness prevention, and emergency services.

Hawaii is the latest state to join this trend with the introduction of its “Green Fee” and an increase in its Transient Accommodations Tax (TAT). The state follows in the footsteps of other regions like California, Washington, Oregon, Colorado, and Michigan, who have already implemented or proposed similar measures.

Hawaii’s Green Fee: A Step Towards Climate Resilience

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Hawaii is known for its stunning beaches, lush forests, and unique wildlife. However, its natural beauty is increasingly under threat from climate change. The state has experienced devastating wildfires, like those in Maui in 2023, which resulted in millions of dollars in damages. In response to these environmental challenges, Hawaii has decided to raise its tourist tax, introducing the “Green Fee” alongside an increase in the TAT.

This move is not just about generating more revenue; it is a targeted effort to fund climate resilience and environmental protection projects. Starting in 2026, Hawaii will increase the TAT from 10.25% to 11%, and for the first time, this tax will also apply to cruise ships. The funds generated will be directed towards projects such as replenishing sand on eroding beaches, clearing invasive grasses to reduce wildfire risks, and building firebreaks to protect communities.

By investing in these critical environmental projects, Hawaii hopes to make tourism more sustainable in the long term. The idea is to ensure that the revenue generated by tourists is used to protect the very environment that attracts them in the first place. This aligns with the growing trend of using tourism revenue to address the environmental and social challenges created by high levels of tourism.

California: Pioneering the Change with Tourism Taxes

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California has been at the forefront of tourism tax reforms, with San Diego leading the way in implementing a new structure for the Transient Occupancy Tax (TOT). Starting May 1, 2025, San Diego’s TOT rates will increase and be applied based on the location of the hotel, with rates varying from 11.75% to 13.75%. This tiered approach ensures that areas with higher tourist traffic contribute more towards city projects.

The revenue generated from these increased rates is earmarked for three primary areas:

1. Convention Center Improvements (59%)
   A large portion of the funds—59%—will be dedicated to the improvement and operation of the San Diego Convention Center. This iconic venue plays a crucial role in attracting conventions and large-scale events to the city, generating significant economic activity. The upgrades will ensure that San Diego stays competitive as a prime destination for conventions and trade shows.
2. Homelessness Programs (41%)
   The next 41% of the funds will go towards addressing homelessness. This includes funding for shelters, supportive housing, and other vital services for the homeless population. California, particularly in cities like San Diego, has been grappling with rising homelessness, and this tax is part of a broader strategy to tackle this urgent issue, offering sustainable support for the city’s most vulnerable residents.
3. Street Repairs (10%)
   The remaining 10% of the revenue will be directed toward street repairs. This is particularly important in areas with heavy foot and vehicle traffic from tourists. Ensuring the infrastructure is well-maintained helps improve the overall visitor experience and supports local residents who depend on these roads every day.

This new tax structure, expected to generate $82 million annually, represents a shift in how tourism taxes are used. Instead of solely funding promotional efforts to attract more visitors, San Diego is now prioritizing projects that directly benefit both the local population and the tourists who contribute to the economy. The tax increases will ensure the city’s infrastructure can keep up with the demand from growing tourism while tackling critical social issues, such as homelessness.

As other cities and states look to address the challenges that come with high tourism demand, California’s approach provides a model for using tourism revenue to create a balanced and sustainable future for both locals and visitors alike.

Washington: A Temporary Lodging Tax for Global Events

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Washington is also jumping on the bandwagon by proposing a temporary 2% statewide lodging tax to coincide with the 2026 FIFA World Cup. This special tax, set to be collected from April to September 2026, is designed to help Washington cope with the enormous influx of visitors expected for the global event. The revenue generated will be divided among various causes, including funding human trafficking victim programs and promoting tourism during the World Cup.

The temporary tax is an innovative solution to handle the additional strain on local resources caused by major international events. It ensures that the increased number of visitors contributes directly to programs that will help support the state during this time of heightened demand. A portion of the funds will also be allocated to tourism promotion, ensuring that Washington is well-positioned to make the most of the global attention the World Cup brings.

This temporary measure highlights Washington’s strategy to balance the short-term economic boom created by global events with the long-term well-being of its residents. It serves as a clear example of how temporary tourist taxes can be used to mitigate the pressure of large-scale events while supporting key social programs and infrastructure needs.

Oregon: Localised Tax Increases for Community Benefits

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Oregon is also following the trend of raising tourist taxes, but with a more localized approach. In Tillamook County, Oregon, voters will be asked to approve a phased increase in the lodging tax, with the rate rising from 10% to 14% by 2026. This tax increase is aimed at helping fund local emergency services, including the sheriff’s office, which has seen increased demand due to the growing number of visitors to the area.

The goal of this increase is to ensure that the influx of tourists contributes to the maintenance of public safety services that are under pressure from the growing number of visitors. As the tourism industry continues to grow in Oregon, the local government wants to ensure that residents are not left shouldering the cost of additional services needed to support tourists. The new tax will help alleviate some of the pressure on local services, making it a step towards sustainable tourism that benefits both visitors and the local community.

This localized tax increase represents a growing trend in many regions where local governments are taking action to ensure that the benefits of tourism are distributed more fairly within the community. By directly linking the tax to public safety and emergency services, Oregon is providing a clear example of how tourism revenue can be used to support essential services that benefit everyone, not just tourists.

Colorado: Empowering Local Governments to Raise Lodging Taxes

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In Colorado, a new state law has given local governments more control over lodging taxes, allowing counties to raise the maximum lodging tax rate from 2% to 6%. This new law, which was signed in May 2025, empowers local counties to propose lodging tax increases to voters, allowing them to address specific local needs. The increase in lodging taxes is intended to support a wide range of community projects, including infrastructure improvements, public safety, and conservation efforts.

Several counties in Colorado, including Chaffee, Custer, Gilpin, Routt, Park, Eagle, and Ouray, have already placed measures on their November 2025 ballots to raise lodging taxes. These counties argue that the growing number of tourists puts a strain on local infrastructure, including roads, police services, and emergency response teams. By increasing lodging taxes, they aim to offset the financial burden of these services, ensuring that the local community is not left to bear the full cost of maintaining these essential services.

The new law reflects a growing recognition that tourism impacts not just the local economy but also public services and infrastructure. As more visitors flock to Colorado’s scenic areas, local governments are turning to tourism taxes to fund the services that keep the community running smoothly. This approach allows the state’s counties to be more responsive to the specific needs of their communities while ensuring that visitors help support the local infrastructure they rely on during their stay.

Michigan: A Two-Pronged Approach to Tourism Taxation

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Michigan is another state that has taken steps to increase its tourist taxes. In Detroit, the city has increased the hotel tax from 2% to 3.5%, with plans for a further increase in 2031. The additional revenue will be used to support tourism promotion through Visit Detroit, helping the city remain competitive as a destination for conventions and leisure travel.

In Kent County, the lodging excise tax has been increased from 5% to 8%, with the revenue earmarked for public infrastructure projects like the construction of a new amphitheater and a proposed soccer stadium. The idea behind this increase is that the large number of non-resident visitors will help fund public assets without burdening local taxpayers.

Michigan’s approach is a good example of how tourism taxes can be used for both marketing and infrastructure development. While some might argue that these taxes could deter visitors, the broader community benefits from improved amenities and services, making the area more attractive in the long run.

The Shift Towards Sustainable Tourism Taxation

The rising trend of tourist tax increases across these states signals a shift in how tourism is viewed and managed. In the past, tourist taxes were primarily seen as a means of generating revenue for local governments. However, as tourism numbers have grown and the impacts on communities and the environment have become more apparent, many states are using these taxes to fund projects that mitigate the negative effects of tourism.

Sustainable tourism taxation is now being seen as a way to ensure that tourism benefits both visitors and the local community. By using tourism revenue to fund environmental projects, infrastructure development, and public services, these states are taking a proactive approach to managing the challenges of mass tourism. This shift in focus is particularly important as more and more destinations around the world are grappling with the pressures of overcrowding, environmental degradation, and social inequalities.

What Does This Mean for the Future of Travel?

The rise in tourist taxes for sustainability is likely to become the new norm in travel. As more destinations adopt similar measures, travelers may begin to expect that a portion of their spending will go towards funding the upkeep and protection of the places they visit. This could lead to a shift in attitudes towards tourism, with travelers becoming more conscious of their impact on local communities and the environment.

In the long run, these taxes could help create a more sustainable tourism industry. By investing in the preservation of natural resources, improving infrastructure, and supporting local communities, states can ensure that tourism continues to be a viable and beneficial industry for years to come. Visitors may come to appreciate the idea of contributing to the sustainability of the destinations they love, knowing that their money is helping to protect the places they visit.

Hawaii is set to join California, Washington, Oregon, Colorado, and Michigan in raising tourist taxes by up to 0.75% to help fund environmental protection, improve local infrastructure, and support community services, making this the new norm in travel across the US.

Conclusion

Hawaii, alongside California, Washington, Oregon, Colorado, and Michigan, is setting an important precedent by raising tourist taxes to fund sustainable tourism initiatives. These states are recognising the need to balance the economic benefits of tourism with the responsibility to protect their natural environments and support local communities. As more destinations follow suit, tourism taxation may become an essential tool in promoting sustainability, making it a crucial part of the travel landscape for years to come.

By using tourist taxes to fund climate resilience, infrastructure improvements, and social programs, these states are paving the way for a future where tourism is not just about attracting visitors, but also about preserving the beauty and vitality of the places people love to visit. The new norm in travel is one where tourists contribute to the long-term sustainability of the destinations they enjoy.