Climate-Driven Compliance: What Hawaii’s New STR Tax Means for Local Governments

In May 2025, Hawaii became the first U.S. state to directly link short-term rental (STR) tax revenue to climate change resilience.

A new law will raise the state's Transient Accommodations Tax (TAT) from 10.25% to 11% beginning January 2026. The additional 0.75%—referred to as a “Green Fee”—is projected to generate $100 million annually to fund environmental initiatives, including wildfire prevention, beach restoration, and storm preparedness (Associated Press, May 2025). 

This move marks a shift in how governments are beginning to view STR policy—not just as a regulatory or revenue issue, but as a critical lever for long-term public good. 

A New Role for STRs in Public Policy 

Historically, STR oversight has centered on issues like neighborhood disruption, fair taxation, and economic equity between traditional lodging and peer-to-peer platforms. While those challenges remain relevant, Hawaii’s decision reframes STR taxes as an engine for climate resilience. 

The funds will be allocated to specific, high-impact interventions such as: 

• Removing invasive grasses that fueled 2023’s deadly Lahaina fire 

• Strengthening coastal infrastructure against rising sea levels 

• Subsidizing storm-readiness upgrades to homes and hotels (The Guardian) 

It’s a bold, future-facing policy—and one that many cities and counties across the U.S. may soon look to replicate. 

Why Implementation Will Be the True Test 

As more jurisdictions explore similar measures, one key question will be whether they have the visibility and systems in place to make these policies succeed. 

STR markets are notoriously dynamic. Listings can be activated or deactivated on a whim. Hosts may use multiple platforms or fly under the radar altogether. Without consistent, up-to-date insights, local governments risk basing major policy decisions—and budget projections—on incomplete information. 

“If you’re building a climate resilience fund on STR revenue, you need to be certain about what’s coming in,” says Dustin Reilich, VP of Sales & Government Relations at Deckard Technologies. “That starts with knowing how many properties are operating, how often they’re rented, and whether they’re contributing their fair share.” 

What Other Cities Can Learn from Hawaii 

Hawaii’s approach offers a powerful example of policy innovation, but it also raises critical considerations for other states and municipalities: 

• STR regulation is evolving: It’s no longer just about registration and enforcement—it’s becoming part of broader economic, environmental, and infrastructure strategies. 

• Revenue must be reliable: For new taxes to fund meaningful initiatives, jurisdictions need confidence in their data, not just their legislation. 

• Expect growing scrutiny: As STR taxes fund higher-profile programs, public accountability will rise. Officials must be prepared to show the math. 
  
  

Final Thoughts 

The link between STRs and climate funding may seem unconventional, but it’s a logical extension of a core principle: local governments must make the most of every available tool to serve their communities. Hawaii is using STR policy to think bigger—about sustainability, safety, and the long-term health of its environment. 

It’s a model worth watching—and a reminder that STR oversight isn’t just a back-office task anymore. It’s fast becoming a central part of how cities plan for the future.