SUSSEX COUNTY, DE — A new tax may soon impact short-term rentals across Sussex County. At tomorrow’s County Council meeting, officials are expected to discuss an ordinance that could impose a 3% tax on short-term rentals in unincorporated areas, made possible by recent state legislation.
Under state definitions, short-term rentals are stays of 31 nights or less. Sussex County currently applies a 3% lodging tax on hotels and motels, which has generated approximately $3.4 million since its introduction in 2020. According to the county finance director, half of that revenue has already funded several dredging projects, and if approved, the proposed rental tax would be limited to supporting initiatives like beach nourishment, economic development, tourism programs, and more.
However, Adriane Gallagher, president of the Sussex County Association of Realtors, warns the tax could harm the local economy.
“Any type of short-term rental is not only bringing in people to stay in a vacation home but they’re also going out to restaurants, they’re using our local services,” she said. “There’s a cumulative impact when you take people away from our area, and having extra taxes could potentially do that.”
Gallagher points out that the state already implemented a 4.5% short-term rental tax.
“If the county chooses to add to this, a total of seven and a half percent could be quite a bit of money for people when they’re budgeting their vacation, and we are such a tourist-driven area.”
The ordinance is only up for initial discussion in tomorrow’s meeting, where council members could decide whether to advance or set aside the proposal.