The law

Hawaii Gov. Josh Green signed Act 96 in May 2025. The law imposes an 11% tax on the gross fares paid by cruise ship passengers, prorated for the number of days their vessels are in Hawaii ports. Counties are authorized to collect an additional 3% surcharge, which would bring the potential total to 14% of prorated fares.

The law also raises rates on hotel room and vacation rental stays, provisions that were not challenged in the lawsuit.

Cruise Lines International Association filed suit against the cruise ship tax, arguing it violates the U.S. Constitution by taxing vessels for entering Hawaii ports and would make cruises more expensive for passengers.

U.S. District Judge Jill A. Otake upheld the law before the new year. The cruise industry appealed to the 9th Circuit. The U.S. government intervened in the case and also appealed Otake’s ruling. The appeals court granted both requests for an injunction pending a full hearing on the merits.

State’s response

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

The order temporarily halts enforcement only on cruise ships while the appeals process moves forward, Schwartz said.