State of the state: Hawaii short-term rental laws

In this series of blog posts, we offer an overview of the short-term rental lodging tax obligations for certain states, along with the latest rules on short-term rental operations.

Hawaii offers a dream vacation spot with its famed beaches, warm weather, and laid-back lifestyle. Short-term rentals have become a popular option for travelers — so popular that local governments have been active in recent years creating more regulations for the industry. While most short-term rental taxes are administered by the state government, local governments may each have their own lodging taxes and operational rules for vacation rental hosts to follow.

Vacation rental lodging taxes

In Hawaii, lodging taxes operate a bit differently than in most other states. Short-term rental income in Hawaii is subject to state transient accommodation tax (TAT) and general excise tax (GET), which are levied on gross rental proceeds from transient accommodations. In some counties, vacation rental proceeds are also subject to a state GET surcharge.

Hawaii counties may also levy their own transient accommodation tax (TAT) surcharge in addition to the state’s TAT. Hawaii, Honolulu, Kauai, and Maui counties have all passed their own TAT surcharges since the law allowing them to do so was passed in 2021.

When it comes to TAT and GET, short-term rental business owners may pass these taxes on to their guests. For tax purposes, short-term rentals in Hawaii are defined as stays of less than 180 consecutive days.

Tax registration and filing

Before hosts can begin collecting taxes on short-term rentals in Hawaii, they’re legally required to register with the Hawaii Department of Taxation for GET and TAT licenses/Tax ID numbers.

For state-administered TAT and GET, as well as county GET surcharge taxes, operators must file lodging tax returns with the state and pay at the time of filing. For county TAT surcharge taxes, hosts file returns with the state, but pay the taxes to county tax authorities.

Tax collection by short-term rental marketplaces

While short-term rental marketplaces such as Airbnb and Vrbo collect taxes on behalf of their hosts in many states, they’re not allowed to do so in Hawaii. If taxes aren’t being collected for operators, they’re responsible for collecting and remitting them to state and local tax authorities.

Local vacation rental laws

Amid concerns about overtourism and a lack of affordable housing for locals, local Hawaii governments have put short-term rentals in the regulatory spotlight in recent years.

In April 2022, the Honolulu City Council, which governs the island of Oahu, passed a strict new vacation rental law. And in January 2022, Maui banned new construction of transient accommodations, including short-term rental properties, timeshares, and hotels, for up to two years, unless the county approves new legislation to address tourism management before then.

Under the Oahu ordinance, vacation rentals in residential areas will have a minimum rental period of 90 days. The law also restricts permits for vacation rentals to resort-zoned areas including Waikiki and Ko Olina; prohibits vacation rental guest parking in rural, apartment, or residential zones; and reduces permit renewal fees from $2,000 to $500. The measure goes into effect in October 2022.

Critics of the new Oahu ordinance say that Honolulu doesn’t effectively enforce its existing 2019 short-term rental law. The COVID-19 pandemic and potential issues with the law delayed the ordinance’s implementation, and new enforcement positions that were created with the legislation were never funded.

However, Honolulu and other county governments have increasingly worked together with vacation rental marketplaces to enforce local short-term rental laws.

In 2019, Airbnb agreed to share some information on its short-term rental hosts with the state, making it easier for authorities to enforce tax regulations. Since then, Airbnb and Expedia Group (parent company of HomeAway and Vrbo) have entered into agreements with Honolulu, Kauai, and Maui authorities to enforce short-term rental laws. Under those agreements, the marketplaces require hosts to provide government-issued property identification and/or tax registration numbers in order to be listed. However, because Honolulu never issued the new short-term rental permits allowed by the 2019 law, the agreements with Airbnb and Expedia didn’t go into effect.

Get help with Hawaii vacation rental taxes

Avalara MyLodgeTax can help vacation rental hosts automate and simplify lodging tax compliance on the local and state level, including tax registration and filing. For more on vacation rental lodging taxes in Hawaii, see our state Vacation Rental Tax Guide. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.