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Hawaii Transient Accommodations Tax increases by one percent

  • Sep 15, 2017 | MyLodgeTax

Last week, Hawaii Governor David Ige signed a 1 percent increase to the Transient Accommodations Tax (TAT) rate into law. Every hotel room, home rental, and vacation rental booking will be subject to the higher tax rate as of January 1, 2018.

In addition to the TAT increase, the bill extends a surcharge on the general excise tax from 2017 to 2030, in an effort to generate $1 billion for Honolulu’s financially troubled rail transit project.

There is concern within the tourist industry that an increased TAT rate will result in tourists considering other locations.

Executives from the Hawaii Tourism Authority and the Hawaii Lodging and Tourism Association believe the rate increase coupled with other challenges could lead to lower room demand and a reduction in tourism-related employment. This position was cited as anecdotal and challenged by Senator Glenn Wakai who referenced the TAT increase in 2009 and the continued rise in number of tourists since.

While the 1 percent TAT rate increase is scheduled to sunset on December 31, 2030, it’s important to note that similar rate increases in 2009 and 2010 were made permanent.

The Hawaii Transient Accommodation tax is now 10.25 percent. Add Hawaii General Excise tax with an effective tax rate of 4.16 percent and the total is 14.41 percent tax on all hotels and vacation rentals, plus an extra 0.5 percent for locations on Oahu. These taxes are on gross receipts (revenue). Therefore, there are no deductions — these taxes are paid off the top, not the bottom line.

What does all this mean for you? If you operate vacation rentals or hotels in Hawaii, you’ll need to collect the higher tax rate from your guests. If you need assistance or have questions about managing your Hawaii lodging taxes, visit our Hawaii Vacation Rental Guide.

Lodging tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
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