No, we don't have low property taxes

by Keli'i Akina, Ph.D., President / CEO, Grassroot Institute of Hawaii

We’re in one of the scariest times of the year: property tax season. That’s when the county councils set property tax rates for the coming year and homeowners cross their fingers and hope their tax bills don’t go up much.

But first, I want to address the persistent myth that Hawaii doesn’t have high property taxes. This claim resurfaces every time a county wants to increase its budget or the state tries to grab some property tax revenues.

It is true that Hawaii’s property tax rates are nominally low compared to other states. But that’s not the whole picture. Property tax bills are based on assessed values, and Hawaii has extremely high property values. So when you calculate the actual money owed, we’re closer to the middle of the pack.

In addition, Hawaii is the only state that does not use property taxes to fund public education, so of course you would expect its county property tax rates to be relatively low.

Meanwhile, property assessments in Hawaii rarely go down — and sometimes increase precipitously — so homeowners here often have to pay more in taxes even when the rates stay the same.

I recognize that the counties depend on property tax revenues to fund the government and sustain county services. But Hawaii homeowners are not a piggybank that can withstand infinite tax hikes.

In Maui County, for example, Mayor Richard Bissen is seeking a $116 million increase in his proposed 2026 budget. His proposal includes rate hikes for multiple property categories.

The Maui County Council has piled on with proposed hikes that would generate about
$23 million in additional property tax revenues — although some Council members have suggested rolling back some of those proposed higher rates.

To the Council’s credit, it is even advocating lower rates in some categories. Thus, some property owners might see lower tax rates in the coming year, namely homeowners in lower-valued homes and lower-value bed-and-breakfasts or long-term rentals.

But even with lower rates, higher assessments could result in higher tax bills. That’s because the average taxable value of an owner-occupied property on Maui increased from $686,000 for fiscal 2025 to $843,000 for fiscal 2026.

This situation isn’t true of just Maui. All of Hawaii’s counties face this conundrum.

A few years ago when property values were spiking, county lawmakers statewide went above and beyond to prevent soaring assessments from turning into massive tax hikes.

Looking forward, I hope they will remember that sticking to disciplined budgets and keeping property taxes low is a key way to make Hawaii more affordable for everyone.

E hana kākou! (Let's work together!)