Hawaii County just passed a new property tax structure, and for once, I think the county got it mostly right.
I serve on the Hawaii County Real Property Tax Board of Appeal here on the Big Island. That means I see, up close, what happens when a tax bill lands on a family that bought their home years ago when values were much lower and now finds themselves staring at an assessment that doesn't match their financial reality. It's not abstract for me. These are real people in real situations, and the pressure a high valuation can put on a household is something I think about a lot.
So when the Hawaii County Council passed a new tiered property tax structure last week, I paid close attention.
One thing to keep straight before we go further. In Hawaii there is no statewide property tax. Each county sets its own rates and classes. Hawaii County is the Big Island, so what follows applies here and nowhere else. What Oahu, Maui, and Kauai charge is a separate question with separate numbers.
Key Takeaways
- Owner-occupied homeowners on the Big Island see a property tax rate reduction under the new structure.
- A new tier three class taxes non-owner-occupied homes valued above $4 million at a higher rate, affecting roughly 842 properties countywide, primarily in West Hawaii's luxury resort communities such as Hualalai, Kukio, and Kohanaiki.
- A new long-term rental class offers a lower rate to second-home owners who rent to residents for at least 180 days per year; over 800 applications have already been filed.
- Last year's agricultural tax overhaul provides additional relief for property owners with qualifying ag use.
- The new rates are projected to generate about $17 million annually, covering the county's projected $15 million budget shortfall for 2028.
What Actually Changed
The new rates, introduced by Council Chair Holeka Inaba, do several things at once. They lower the tax rate for owner-occupied residential properties. They create a new long-term rental class that gives second-home owners a tax incentive to rent to local residents rather than run a vacation rental. And they add a tier three residential class for non-owner-occupied properties valued above $4 million.
That top tier is where the "tax the rich" headlines come from. And yes, it targets properties in communities like Hualalai Resort, Kukio, and Kohanaiki. But here is a number worth keeping in mind: county tax officials estimate the tier three rate applies to roughly 842 properties countywide, with a combined assessed value of about $5.3 billion. This is not a sweeping change that reshapes the luxury market. It is a targeted rate on a narrow band of very high-value second homes.
The overall package is projected to generate about $17 million in new revenue annually. The county needed it. The debt load is growing, driven largely by EPA-mandated upgrades to aging wastewater infrastructure, and the county was facing a $15 million shortfall heading into 2028. This closes that gap.
The Kama'aina Benefit
The piece of this that deserves more attention than it has gotten is the homeowner rate reduction.
If you live here full time and your home is your primary residence, your property tax rate just went down. The structure now tilts in favor of the people who actually live here, pay here, and are part of this community year-round. That matters. The Big Island faces the same affordability pressures the rest of Hawaii does, and using the tax code to put full-time residents first is a reasonable response to a real problem.
The long-term rental class adds another layer. If you own a second home valued under $2 million and you're willing to rent it to a local resident for at least 180 days a year, you can qualify for a lower long-term rental rate. The county has already received over 800 applications for that class. That's not a rounding error. There are clearly owners who would rather have a reliable long-term tenant than manage the vacation rental market, and the tax code now rewards that choice.
The Agriculture Angle
One more piece I'm glad to see playing out. Last year's overhaul of the agricultural tax classification has opened the door to significant tax reductions for property owners with legitimate ag use. Combined with the new homeowner rate reduction, the county is sending a clear signal about who it wants to protect. Families. Farmers. Full-time residents.
That's a signal worth paying attention to if you own or are considering property here with any agricultural component.
For how the county calculates these bills, see our Hawaii County property tax guide.
A Word on the Bigger Picture
A more aggressive proposal from Council member Jennifer Kagiwada, which would have raised approximately $30 million annually, didn't make it to a vote. Council Chair Inaba kept it off the agenda, arguing two similar resolutions at once would be too confusing. Kagiwada's position was that the county needs to get ahead of its growing debt load rather than just patch this year's shortfall. She has a point. The $17 million this structure generates covers the immediate gap, but debt service is projected to keep climbing over the next decade.
Whether a future council revisits the rates is an open question. For now, the structure that passed is reasonable, and the direction it points is the right one.
I believe in progressive taxation when it's done thoughtfully. This one is. The full-time homeowner gets a break. The second-home owner willing to house a local resident gets an incentive. The absentee owner of a $5 million property pays a little more. That's not a radical idea. It's sound tax policy, and it's a long time coming.
If you have questions about how the new rates affect your specific situation, or if you're considering a purchase on the Big Island and want to understand what you're actually walking into on the tax side, reach out. That's what we're here for.
Frequently Asked Questions
How does the new Hawaii County property tax structure affect full-time residents?
Full-time homeowners with owner-occupied status see a rate reduction under the new structure. The tiered system was designed to put residents first, lowering the burden on primary residences while raising rates on high-value second homes and non-owner-occupied investment properties.
What is the tier three residential rate and who does it apply to?
Tier three applies to non-owner-occupied residential properties valued above $4 million. It carries a higher rate than the standard second-home classification. Countywide, it affects roughly 842 properties, concentrated in West Hawaii's luxury resort communities.
What is the long-term rental tax class and how do I qualify?
The long-term rental class allows owners of second homes valued under $2 million to qualify for a lower tax rate if they rent the property to a local resident for at least 180 days per year. Hawaii County has already received over 800 applications for the classification.
Does the new structure affect agricultural properties on the Big Island?
The 2026 rate changes build on last year's agricultural tax overhaul, which created meaningful reductions for property owners with qualifying agricultural use. If your property has an ag component, it's worth reviewing whether you qualify for that classification. The combined effect of both changes can be significant.
Will the new rates affect property values in communities like Hualalai and Kukio?
The tier three rate applies to roughly 842 properties across the entire county, so the direct impact on any single community is modest. Property values in West Hawaii's luxury corridor are driven by far more than tax rates, and a marginal increase on non-owner-occupied high-value homes is unlikely to move the market in any measurable direction.
What is the Real Property Tax Board of Appeal and what does it do?
The Hawaii County Real Property Tax Board of Appeal is a county body that hears appeals from property owners who believe their assessed value is incorrect. If you receive an assessment that doesn't reflect your property's actual market value, you have the right to appeal, and the Board reviews those cases. It's one of the more underused protections available to Big Island property owners.
Source: Civil Beat, "Hawai'i County Is Taxing Homes Of The Rich, But Others Get A Break," Taylor Nahulukeaokalani Cozloff, May 2026. Tier three parcel count and value from the Hawaii County Real Property Tax Office, reported by Big Island Now, March 2026.
Mark Davis, Esq. is a licensed real estate broker and member of the Hawaii County Real Property Tax Board of Appeal. He is a partner at Kona Homes for Sale with Brenda Kuessner at Coldwell Banker Island Properties, specializing in residential and luxury property on the Kona and Kohala coasts of the Big Island. This post is for general informational purposes and does not constitute legal or tax advice. Property tax rates and classifications change; confirm current rates and your property's classification with the Hawaii County Real Property Tax Office before making decisions.
