If you are pricing an Ala Moana condo as a second home or an investment, which Honolulu tax change should be in your spreadsheet right now? Most of this year's headlines would point you to the empty homes tax. That proposal is gone. A different change was already law a year earlier, and it takes effect for tax years beginning July 1, 2027. It redraws the line between an ordinary condo tax bill and a much steeper one, and that line runs straight through the price range of Ala Moana's better units.
The first official document to reflect it is the assessment notice the City mails on December 15, 2026.
The Proposal Everyone Watched Expired on August 1
Bill 46, the empty homes tax, reached a final vote in December 2024. Council leaders then postponed that vote, and the bill was filed on August 1, 2026 under the Council's two-year rule for pending bills. Honolulu Civil Beat reported that Council Chair Tommy Waters had promised a July vote, then left it off the agenda. A separate effort to put the idea on the November ballot also fell one vote short at the Honolulu Charter Commission, which voted 8 to 5 when nine votes were needed.
The issue had real local support. Civil Beat counted eight neighborhood boards that passed resolutions in favor, including the Ala Moana-Kakaʻako Neighborhood Board. No empty homes tax applies to the July 2026 through June 2027 tax year, and no city vacancy tax has replaced it.
Meanwhile, the change that did pass received far less coverage.
The Line That Actually Moved
Ordinance 25-44, which started as Bill 34 of 2024, was introduced by Councilmember Esther Kiaʻāina. It passed third reading on October 1, 2025 and was approved by the Mayor that October. It amends the definition of Residential A, the tax class that has applied since 2014 to condos and small residential parcels assessed at $1 million or more that do not carry a home exemption.
Here is the structure today and the structure the ordinance sets for tax years beginning July 1, 2027:
| Tax year July 2026 to June 2027 | Tax years from July 1, 2027 | |
|---|---|---|
| Residential A entry point, no home exemption | Assessed value of $1,000,000 or more | Assessed value of $1,300,000 or more |
| Residential A tiers | First $1M at $4.00 per $1,000; value above $1M at $11.40 | Up to $1.3M; $1.3M to $3.5M; above $3.5M |
| Transient Vacation tiers | First $800K at $9.00; above $800K at $11.50 | Up to $900K; $900K to $2M; above $2M |
| Plain Residential rate | $3.50 per $1,000 | Set annually by the Council |
The ordinance sets the tier boundaries. It does not set the rates for any tier, including the new third tier above $3.5 million. Those rates come from the Council's annual rate resolution.
The Honolulu Board of REALTORS supported the bill. Its testimony said Residential A was originally meant for high-value homes that owners do not live in, and that years of appreciation had pulled modest and multigenerational homes into the class.
What the Class Label Costs, in Dollars
The label matters because Residential A taxes value above the first tier at more than three times the plain Residential rate. The City's Real Property Assessment Division used a $1.6 million property to show the gap at current rates. With a home exemption, that property sits in Residential and owes $5,180. Without one, it sits in Residential A and owes $10,840, a difference of $5,660.
The same math applied to a non-owner-occupied unit assessed at $1.2 million gives $4,000 on the first $1 million plus $2,280 on the remaining $200,000, or $6,280. That unit would owe $4,200 at the $3.50 Residential rate. Under the July 2026 to June 2027 rates, the class label alone adds $2,080 a year. That arithmetic uses today's rates only. Next cycle's Residential rate has not been set, so nobody can yet state the exact FY2028 bill for that unit.
Half the Class Walks Out, and Someone Covers the Gap
This is the part of the ordinance that changes the market. In a September 15, 2026 presentation for Honolulu and Ala Moana, the assessment division put a number on how many parcels the new threshold releases:
"More than 51% of the current Res A population has an assessed value below $1.3 million. It will be interesting to see what the tax rates will be for Res A if the administration and/or city council desires next year's Res A revenue to be revenue-neutral, or to raise the same amount without the threshold increase. Less than half of the remaining Res A population will need to offset the loss of Res A parcels due to the threshold increase."
That passage comes from the Real Property Assessment Division's presentation.
So the ordinance does two things at once. Most of the class moves out, into the Residential rate. Whatever revenue the City still expects from Residential A then falls on a smaller group of higher-value parcels, and those parcels now have a separate tier above $3.5 million that can carry its own rate. Revenue is a live question. The same presentation notes that real property taxes make up around 61 percent of the City's General Fund. Hawaiʻi Public Radio reported in March 2026 that city officials were brainstorming revenue sources, and that Waters raised the possibility of raising the threshold for higher-end homes while taxing them more. That was discussion, not a rate proposal.
The empty homes tax would have treated nearly every home without a home exemption the same way, at least at first. Ordinance 25-44 does the opposite. It sorts non-owner-occupied property by value, so the same law can lower one owner's bill and raise another's.
Why This Lands Hard in Ala Moana
Ala Moana's condo prices sit right around the old and new thresholds. Honolulu Board of REALTORS regional figures put the Ala Moana-Kakaʻako condo median at $895,000 in July 2026 and $820,000 in August 2026. Island-wide, HBR reported an Oʻahu condo median of $510,000 for August 2026, and the Honolulu Star-Advertiser reported a September 2026 condo median of $523,000.
The district's middle runs well above the island's middle, close enough to $1 million that a large share of Ala Moana's view units and larger floor plans fall in the band the ordinance releases. HBR's monthly price-band counts show how thin that band is across Oʻahu. From July through September 2026, 58 condo sales closed between $1.0 million and $1.499 million, about 5 percent of the quarter's 1,156 closings, and roughly 10.4 percent of sales were $1 million or more. The urban core, Ala Moana included, is where those units concentrate.
The district also has the other end of the range. Ala Moana's newer luxury towers include units that would reach past $3.5 million, which is where the new third tier begins. Those owners stay in Residential A, and their bills will depend on the rate the Council attaches to value above $3.5 million once the class has shrunk.
Assessed value and sale price are different numbers. The assessment division values property at fair market value through mass appraisal, with one appraiser sometimes responsible for 5,000 to 20,000 residential parcels. A unit that recently sold for $1.35 million can carry an assessment on either side of $1.3 million, and the class follows the assessment.
The Calendar From Here
The assessment division's timeline for the tax year beginning July 1, 2027 sets the order of events:
- September 30, 2026. The deadline for home exemption claims for that tax year has passed.
- October 1, 2026. The valuation date that sets each parcel's assessed value has passed.
- December 15, 2026. Assessment notices are mailed. These are the first notices issued under the $1.3 million threshold, and the appeal period opens.
- January 15, 2027. The appeal period closes.
- February 1, 2027. The certified assessment roll goes to the City Council.
- June 15, 2027. The Council is scheduled to set tax rates, including the first rates for all three Residential A tiers.
- July 20, 2027. The first-half bill is mailed.
Appeals to the Board of Review can be based on several grounds, including an assessment that exceeds market value by more than 10 percent. For an owner whose assessment lands just above $1.3 million, the appeal window is the only point in the cycle where the assessed value can be questioned.
Home exemptions are changing in the same tax year. Separate ordinances raise the exemption from $120,000 to $140,000 for owners under 65, and from $160,000 to $180,000 for owners 65 and older, starting with tax years beginning July 1, 2027. The exemption applies only to a principal residence the owner occupies.
Frequently Asked Questions
Does Ordinance 25-44 change my current tax bill? No. It applies to tax years beginning July 1, 2027. Bills for July 2026 through June 2027 use the existing $1 million threshold and the existing two tiers.
What will the rate above $3.5 million be? That rate has not been set. The ordinance creates the tier, and the Council sets the rate through its annual resolution, scheduled for around June 15, 2027.
Could a state vacancy tax come back instead? State bills for a vacant-homes surcharge, HB 489 and SB 1214, were carried over to 2026 with no hearings scheduled and no Act listed.
Does a vacation rental unit fall under these tiers? Units classified as Transient Vacation have their own tiers. Those move to $900,000 and $2 million, with a third tier above $2 million.
If you own or are considering a non-owner-occupied condo in Ala Moana, the December 15 notice will show which side of the new $1.3 million line your unit falls on. Real Select Vacations can go through the notice with you in English or Japanese, compare the assessment with recent building sales, and help you plan around the Council's rate decision next June. Let's Connect.
This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.
