Key Aspects:
- The Cruise Lines International Association is challenging Hawaii’s new tax on cruise ships with a federal lawsuit.
- The lawsuit claims the new tax violates the US Constitution as well as the First Amendment.
- CLIA is not against any and all taxes on cruise ships, but only on how this one is levied and how unfairly it targets cruise ships compared to hotels.
Hawaii’s plans to raise nearly $100 million annually through a new 11% tax on cruise ships may not be as lucrative as the Aloha State had hoped.
The Cruise Lines International Association (CLIA), along with several local plaintiffs, including two tour companies that serve cruise ships, has filed suit against the state’s new tax, claiming it is federally unconstitutional.
The lawsuit was filed on Wednesday, August 27, 2025, in the US District Court for the District of Hawai’i. The new tax was passed in early May, but is not scheduled to take effect until January 1, 2026.
As a “green” tax, the new fees would not go to support cruise operations through port development, dredging, or similar projects, but instead would be earmarked for conservation projects.
“In attempting to leverage Hawai‘i’s ports to raise general revenue from out-of-state businesses and visitors, Act 96 violates federal law three times over,” the lawsuit alleges.
“Conflicting with the Tonnage Clause of the U.S. Constitution, the First Amendment’s restriction on government-compelled speech, and a provision of the federal Rivers and Harbors Appropriation Act of 1884 that exists to prohibit fees exactly like the ones imposed.”
The Tonnage Clause (Article 1, Section 10, Clause 3) prohibits states from taxing ships for simply entering the harbor. Taxes can be levied for services, such as pilots or loading and unloading, and cruise ships regularly pay those types of taxes.
Similarly, the violation of the Rivers and Harbors Appropriation Act of 1884 is related to the overall amount of the fees. The Rivers and Harbors Act sets statutory limits on fees states may impose for using navigable waters.
Finally, the First Amendment violation is because the new Hawaii cruise ship tax requires cruise lines to disclose the tax in commercials and other advertisements, as well as onboard every ship visiting Hawaii.
Because the tax itself is being challenged, this extra requirement is now in conflict with the First Amendment.
Another aspect of the new tax is that individual counties in Hawai’i have the authority to levy their own additional taxes on cruise ships. These fees can be up to 3%, in addition to the 11% fee from the state.
Those fees are on cruise fares paid by passengers.
“Between the 11% surcharge levied by the State and the 3% state-authorized surcharges levied by the counties, cruise-ship operators will be required to pay an effective 14% prorated portion of each passenger’s gross fare for the privilege of visiting ports in Hawai‘i,” the lawsuit explains.
That fee is likely to be passed along to cruise guests, raising fares substantially for sailings to Hawaii.
Despite the fact that the tax is intended to generate revenue for Hawaii, this could backfire with a loss of income if passengers choose more affordable cruise destinations.
Is the Tax Fair to Cruise Ships?
To be clear, cruise lines are not trying to disband all taxes and port fees, but this large increase and the way it is worded is particularly troublesome.
The lawsuit explains that because the 11-14% surcharge is on the entire cruise fare, “rather than just that portion of the fare attributable to on-board accommodations,” it is not comparable to tourist fees levied on hotels and resorts.
Read Also: Honolulu Cruise Port – Piers, Amenities, and Getting Around
After all, a cruise fare includes far more than a hotel room. It also includes multiple dining options, daily activities and entertainment, pools and other onboard amenities, as well as transportation between ports.
A similar tax on hotels specifically excludes charges for amenities such as meals, drinks. Likewise, flights between islands are not taxes, but a cruise fare includes port to port transportation.
“As a result, cruise-ship operators and (by extension) their passengers will be forced to make payments significantly higher than those required in connection with other types of tourism-related businesses,” the lawsuit clarifies.
It will likely be at least several months before the lawsuit is decided. In the meantime, it is unclear whether or not guests booked on Hawaii cruises in early 2026 should be prepared for additional taxes or fees. It is possible the fees may be suspended until the lawsuit is settled.
