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Why Is Hawaii So Expensive? (ALL You Need To Know!)

Planning a trip to Hawaii? You would, of course, want to find out everything you can about the place; one thing we can tell you right away is that Hawaii doesn’t come cheap. Keep reading to find out why Hawaii is so expensive and if there’s a chance to holiday here on a budget!

Recommended reading: 6 Hawaiian Islands to visit during your next holiday!

Reasons For Hawaii’s High Living Cost

There are several reasons for Hawaii’s high living costs, but they all stem from Hawaii’s location and government policies.

Location and Shipping Costs

Hawaii is found in a remote corner of the world. The archipelago is quite cut off from the US mainland as well as the rest of the world. Everything that you need here has to be either shipped or flown into the state.

The Jones Act is one of the main culprits for Hawaii’s exorbitant prices; the act dictates that only US-manufactured ships that employ Americans are allowed to travel between the mainland and Hawaii; this removes healthy competition, thus increasing shipping costs.

Shipping costs are ultimately borne by the consumer. Almost every commodity is shipped into the state. Shipping costs, taxes, and profit margin are all factored into the last price of products, so prices are, inevitably, very high.

Limited Availability of Land

There are regulations on zoning and land use. It’s the government that decides the use of the property.

Hawaii isn’t a large archipelago, and the land is limited. To make things worse, there’s high demand for Hawaiian land, making the prices go high.

While Hawaii is truly a paradise with mountains and beautiful beaches, many native Hawaiians are priced out of the land due to high housing costs.

High Taxes

Everything in Hawaii is taxed. The locals pay a huge amount of their annual income to the government in the name of tax.

Hawaii has the second highest income tax rate.

The general excise tax, a tax like sales taxes, is the biggest burden on the residents – according to several studies, more than 10% of a local’s income is paid to the government as general excise taxes.

Lack of Resources vs Demand

For every resource that’s scarce and limited, there’s high demand. No matter how high the prices are, there’s someone willing to pay for them. This spikes up the prices, which is no trouble to those at the very top of the income ladder, but the low-income earners in Hawaii have to scrape up everything they can to afford the very basic necessities.  

Cost Of Food

Hawaii Food

Like everything else, food prices in Hawaii are also high. The reason is that almost every food item is shipped from the mainland, and the prices reflect the shipping costs.

For example, the price of a loaf of bread can go up to $6 and a dozen eggs may cost about $4 to $6.

Locally grown vegetables and fruits are cheaper than imported items, but you will pay more for them than you would back home.  

If you are a tourist, you would of course want to dine out. Unfortunately, dining out will cost you way more than making your own meals. A meal at an inexpensive restaurant will generally cost you $18 on average.

Tips for tourists: Take advantage of your resort meals. Go for all-inclusive resort packages. If you decide to make your own meals, which is the cheaper option, buy locally produced items; fruits and vegetables are relatively cheaper.

Alcohol Cost

Hawaii has some of the highest alcohol prices in the entire nation. For instance, you’ll spend about $7 on a pint of domestic beer and about $9 on imported beer. For a margarita, you’ll end up paying about $11.

Tips for tourists: You can bring your own drinks, but there are conditions: liquor exceeding the alcohol percentage of 24% isn’t allowed, and the quantity should be limited to 5 litres. Also, the bottles should be in their original packaging.

Cost Of Utilities

A Hawaiian household pays about $500 to $700 for utilities every month.

Let us give you an approximate breakdown:

Electricity$150 (500kWh)
Natural Gas$70
Cable TV + Internet$150
Approximate breakdown of Utility Costs in Hawaii

Tips for tourists: Until the water contamination that was reported in November 2021, tap water in Hawaii was completely safe to drink, but now there are doubts among locals and tourists. A small bottle of water can cost about $1 to $2. But bottled water at ABC Stores is reasonably priced. Alternatively, you can boil or filter tap water.

What Are The Primary Costs Of Visiting Hawaii?

Accommodation and flying will take the biggest chunk of your budget – visit during the off-season for cheaper accommodation and flights.

Getting around Hawaii is another costly affair – Use public transportation or the hotel shuttle services. You can also use Uber and Lyft, but these services are more expensive than car rentals.

Food is another big cost of touring Hawaii – Make your own meals or go for an all-inclusive hotel package.

For activities including sightseeing and guided tours, you may have to spend about a daily average of $50 – $100 per person.

Can You Use US Dollars In Hawaii?

Yes, you can use US dollars in Hawaii. Hawaii is a state of the United States, so the official currency is the US dollar.

Frequently Asked Questions About Expenses In Hawaii

How much is a gallon of Milk on the island of Hawaii?

The price depends on the size and the brand, but be prepared to pay anything between $4 to $6 for a gallon of milk – don’t be surprised if you end up paying more.

Is Hawaii the most expensive state to live in in the US?

Yes, Hawaii is the most expensive state in the US.

Do you need to Tip in Hawaii?

Tipping would be a generous gesture as the cost of living here is so high. 15% is acceptable; if the service is outstanding, make it 20% or 25%.

Disclaimer: Prices mentioned in this article are subject to change. Note that prices can change at the discretion of the manufacturer or the store and according to the quantity, the availability of the product and the season.