Hotel stays in Hawaii could be slightly more expensive after the new year when a new tax goes into effect.

In October the state legislature and governor approved a new 1% increase in the transient accommodations tax, bringing the rate up to 10.25%. The tax applies to all rental properties in Hawaii, including hotels, condos and B&Bs.

The funds collected from the tax increase will be directed toward Honolulu's rapid transit project. The light rail system will extend 20 miles from Kapolei on the western side of Oahu to Ala Moana Center with 21 stations along the way, including stops at Daniel K. Inouye International Airport.

The cost of the entire project is estimated to be more than $6.7 billion, with approximately $4.8 billion in funds coming from an increase in the general excise and use tax implemented in 2007, and $1.55 billion from the Federal Transit Administration. The increase to the general excise and use tax expires in 2027 while the upcoming hike in the transient accommodations tax will run through 2030.

The controversial light rail project has been plagued by cost overruns, and some estimates now put the final cost at $10 billion.

A study published in September by HVS ranked Hawaii third in the nation for highest lodging taxes with a total rate of 13.25%, trailing only Maine (14.5%) and Connecticut (15%).

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