Hawaii’s environmental tax has three parts: a $1.05 per-barrel tax on petroleum products, a 19-cent tax on each million British thermal units of fossil fuels like coal and natural gas, and a visitor-paid green fee that adds 0.75 percentage points to the transient accommodations tax starting January 1, 2026. The two fuel taxes are paid by distributors under Hawaii Revised Statutes §243-3.5 and show up indirectly in pump prices. The green fee is paid by anyone booking a hotel, vacation rental, timeshare, or cruise ship stay.
The Barrel Tax on Petroleum
Every distributor who sells petroleum products to a retail dealer or end user in Hawaii owes $1.05 on each barrel or partial barrel sold. Aviation fuel is carved out and not subject to this rate.1Justia. Hawaii Code 243-3.5 – Environmental Response, Energy, and Food Security Tax; Uses
A petroleum product, under the statute, is any liquid hydrocarbon at standard temperature and pressure that comes from refining or processing crude oil. Gasoline, diesel, and heating oil all qualify.2Department of Taxation, State of Hawaii. Hawaii Code 243 – Fuel Tax Law Consumers never file for the barrel tax, but the cost is built into what they pay at the pump.
The Fossil Fuel Tax
Coal, natural gas, and liquefied natural gas aren’t taxed by the barrel. The same statute imposes a separate tax of 19 cents on each one million BTUs of fossil fuel sold to a retailer or end user.1Justia. Hawaii Code 243-3.5 – Environmental Response, Energy, and Food Security Tax; Uses The statute defines fossil fuels as hydrocarbon deposits derived from ancient organic material and explicitly excludes petroleum products, so a given shipment falls under one tax or the other, never both. Volume works for liquid fuels arriving in tankers; heat content captures gaseous and solid fuels that don’t fit a barrel measurement.
The Green Fee Visitors Pay in 2026
Governor Josh Green signed Senate Bill 1396 in 2025, making Hawaii the first state to dedicate a tourist-paid fee to environmental protection. The law raises the transient accommodations tax by 0.75 percentage points, bringing the total TAT to 11 percent as of January 1, 2026.3Office of the Governor, State of Hawaii. Gov. Green Signs Historic Senate Bill 1396 Codifying a Green Fee to Mitigate Climate Impacts in Hawaii The TAT covers hotels, vacation rentals, timeshares, and other accommodations rented for fewer than 180 consecutive days.
The law also extends the 11 percent TAT to cruise ships docked at Hawaii ports, prorated for days spent docked. For a traveler, the green fee adds about $3 to a $400-per-night hotel stay. It doesn’t appear as a separate line item; it’s folded into the TAT the accommodation collects. Revenue is earmarked for environmental stewardship, climate and hazard resilience, and sustainable tourism management.3Office of the Governor, State of Hawaii. Gov. Green Signs Historic Senate Bill 1396 Codifying a Green Fee to Mitigate Climate Impacts in Hawaii
Where the Money Goes
The $1.05 per barrel is split into dedicated slices, with the remainder flowing into the state general fund:
- 5 cents to the Environmental Response Revolving Fund, which pays for oil spill response, hazardous waste cleanup, and remediation of contaminated sites.4Justia. Hawaii Code 128D-2 – Environmental Response Revolving Fund; Uses
- 4 cents to the Energy Security Special Fund, which supports the state Energy Division and greenhouse gas reduction work.
- 5 cents to the Energy Systems Development Special Fund for energy research.
- 3 cents to a subaccount for electric vehicle charging infrastructure.
- 3 cents to a subaccount for hydrogen fueling station development.
That accounts for 20 cents of each $1.05 barrel. The other 85 cents goes to the general fund.2Department of Taxation, State of Hawaii. Hawaii Code 243 – Fuel Tax Law The 19-cent fossil fuel tax follows the same idea but uses percentages: 4.8 percent to the Environmental Response Revolving Fund, 14.3 percent to the Energy Security Special Fund, and 9.5 percent to the Energy Systems Development Special Fund.1Justia. Hawaii Code 243-3.5 – Environmental Response, Energy, and Food Security Tax; Uses Green fee revenue, collected through the TAT increase, is directed to climate and conservation programs rather than through these fuel-tax funds.
The Federal Tax Layered On Top
Hawaii distributors also owe a federal per-barrel excise tax under 26 U.S.C. §4611. For calendar year 2026, that rate is $0.18 per barrel, consisting entirely of the Hazardous Substance Superfund financing rate. The Oil Spill Liability Trust Fund component expired on December 31, 2025.5Internal Revenue Service. Section 4611 Oil Spill Liability Trust Fund Financing Rate Expiration Combined with the state tax, a Hawaii distributor pays $1.23 per barrel in environmental taxes alone before other fuel excise taxes apply. Federal reporting goes on Form 6627.6Internal Revenue Service. Instructions for Form 6627
Who Has to File
Anyone acting as a distributor must register and obtain a license from the Hawaii Department of Taxation before doing business.2Department of Taxation, State of Hawaii. Hawaii Code 243 – Fuel Tax Law Returns are due on or before the last day of each calendar month, reporting the prior month’s barrels of petroleum products and BTUs of fossil fuels sold, with the corresponding tax.1Justia. Hawaii Code 243-3.5 – Environmental Response, Energy, and Food Security Tax; Uses
“Distributor” is broader than the word suggests. It includes anyone who imports fuel into the state and sells it, and anyone who imports fuel for their own use.2Department of Taxation, State of Hawaii. Hawaii Code 243 – Fuel Tax Law A company that brings in diesel for its own fleet qualifies, and owes the barrel tax the same as a commercial supplier. Delinquencies and penalties attach as of the last day of the reporting month, so a late return triggers consequences immediately.