Cruise Lines Just Sued Hawaii Over a New 11% Tax—Here’s Why

Hawaii’s new tourism tax on cruises is headed to court. The Cruise Lines International Association (CLIA) and partners filed suit in Honolulu, arguing the state’s 11% levy on gross cruise fares—prorated by days spent in port—is unconstitutional and could chill demand. The first hearing lands on October 31, 2025, according to the Associated Press.

What Hawaii passed—and why cruise lines are pushing back

According to the Associated Press, Hawaii enacted a law designed to fund environmental resilience and climate adaptation with a new tourism tax that explicitly captures cruises. The statute applies an 11% tax to gross cruise fares and prorates that amount based on how many days a ship spends at Hawaii ports. Counties may layer on their own surcharges.

CLIA and allied plaintiffs say the tax illegally targets maritime commerce that moves between states and international waters. As AP reports, their filing argues Hawaii is overstepping by burdening traffic on navigable waters and risking broader economic fallout—from itinerary cuts to higher prices for travelers. The state has not yet publicly detailed its litigation strategy; it’s expected to defend the measure as a fair, environmental-impact-driven user fee.

What this means in the real world: lines can either absorb the hit, pass it through to guests, shorten Hawaii calls, or skip the islands altogether. None of those choices is great for Hawaii’s visitor economy—or for cruisers banking on bucket-list sailings.

The math behind the levy (and what it could add to your fare)

The statute’s mechanics matter. Because the 11% is prorated by days in port, the actual impact depends on how long a ship stays in Hawaii. Here’s a simple, illustrative example:

Suppose a $1,200 base cruise fare for a 7-night sailing that spends 3 days in Hawaii ports. The effective tax would be 11% × (3/7) × $1,200 ≈ $56 per guest, before any county surcharges.
A longer Hawaii stay raises the effective rate; a shorter stay lowers it.

Cruise fares are price-sensitive, and add-on costs can sway behavior. Industry attorneys told AP the new tax risks deterring visits, particularly when ports and islands already manage capacity and environmental pressures. Hawaii, for its part, has argued the revenue is aimed at climate resiliency—things like shoreline protection, invasive species management, and infrastructure stress tied to tourism.

Quick stats at a glance

11%: State tax rate on gross cruise fares (per AP)
Prorated: Calculated by share of days spent in Hawaii ports
Local option: Counties may add surcharges (per AP)
Court date: First hearing set for October 31, 2025 (per AP)

The constitutional fault lines the court will probe

Per AP, the plaintiffs contend the tax violates constitutional protections for interstate and maritime commerce by singling out cruise activity on navigable waters. In past tourism-fee fights, courts have examined whether a charge is a permissible cost-based fee tied to services—or a revenue-raising tax that unduly burdens commerce.

The big questions likely to guide the Honolulu bench:

Nexus: Is the charge closely tied to actual, quantifiable costs Hawaii bears from cruise calls?
Fair apportionment: Does prorating by port days adequately allocate tax to in-state activity?
Non-discrimination: Are cruises treated differently from comparable tourism sectors without solid justification?
Federal conflict: Does the levy intrude on areas the federal government largely governs, such as interstate navigation and maritime law?

Legal nuance aside, the outcome will signal how far destination states can go in using cruise-specific levies to fund climate and visitor-impact initiatives.

Ripple effects: itineraries, pricing, and port calls

If the law stands, lines could tweak Hawaii programs to minimize tax exposure—fewer port days, shorter calls, or more sea days. Ships repositioning between the West Coast and the South Pacific may rethink Hawaii stopovers. For guests, any pass-through could appear as a line item in fees and taxes or get baked into base fares.

There’s precedent for negotiation. Other U.S. ports and cruise hubs have pursued compromises—like capacity limits, infrastructure agreements, or per-passenger fees tied to specific services. If Hawaii and the industry can align on a transparent, cost-based framework, the standoff could end short of a sweeping court ruling.

Pros and cons for key stakeholders

Pros (State/Counties): Dedicated funding for climate resilience; pricing signals that better reflect visitor impacts; potential leverage to manage port congestion.
Cons (Cruise Lines/Guests): Higher costs for consumers; itinerary risk; legal uncertainty; potential for patchwork county surcharges that add complexity.

What to watch on October 31—and after

The first hearing won’t decide everything, but it should clarify the court’s appetite for injunctions that could pause enforcement. A temporary block would give both sides time to hash out details. No injunction would push lines to decide quickly whether to adjust winter and spring schedules.

Two realistic paths forward:

Narrow tailoring: The state refines rules to explicitly tie charges to services or environmental mitigation costs, bolstering legal footing.
Settlement dynamics: Parties negotiate a memorandum of understanding on port calls, reporting, and fee structures, mirroring solutions seen in other cruise destinations.

Either way, the decision will echo beyond Hawaii. Destinations grappling with crowded ports and climate stress are watching whether a broad fare-based tax survives judicial scrutiny.

Short timeline

2025: Hawaii enacts a new tourism tax framework that includes cruises (per AP).
October 2025: CLIA and partners file suit in Honolulu (per AP).
October 31, 2025: First court hearing scheduled (per AP).

The bottom line for cruisers

For now, book as usual—but keep an eye on the hearing and your invoice. If the tax takes effect as written, expect a modest per-guest addition on Hawaii-heavy itineraries. If counties add surcharges, line-item complexity could climb. If an injunction hits, the status quo holds while the case plays out.

Summary

Hawaii’s new 11% gross-fare tax for cruises is being challenged in court.
The levy is prorated by days in Hawaii ports; counties can add surcharges.
CLIA argues it burdens maritime commerce and could deter visits.
A key hearing is set for October 31, 2025 in Honolulu.
Expect itinerary and pricing tweaks if the law proceeds unmodified.