FENWICK ISLAND, Del. - Fenwick Island will equalize lodging taxes at 12% for hotels and short-term rentals beginning Jan. 1, 2026, town officials announced.
Short-term rentals such as vacation homes and condos have grown in popularity along the Delaware coast, offering vacationers an alternative to traditional hotels. Local Thomas Carroll said his lodging choice often depends on the type of trip.
“If it's just me and my wife and the kids, probably a hotel,” Carroll said. “But if we're staying with a group of friends, probably a short term rental.”
That growth prompted the state of Delaware to implement a new 4.5% tax on short-term rentals in 2025. In Fenwick Island, the added state tax created a gap between how hotels and short-term rentals are taxed overall.
Currently, hotels in Fenwick Island are taxed at a combined state and local rate of 11.5%. Short-term rentals are taxed at a higher combined rate of 12.5%, giving hotels a slight financial advantage.
To close the gap, town officials approved changes to Fenwick Island’s local tax rates so that both hotels and short-term rentals will pay the same combined rate of 12%.
To close the gap, town officials approved changes to Fenwick Island’s local tax rates so that both hotels and short-term rentals will pay the same combined rate of 12%.
Carroll said the adjustment makes sense. “It seems reasonable that they pay the same tax whether they're staying at a hotel or a short term rental,” he said.
According to the mayor of Fenwick Island, the decision was driven by the state’s new short-term rental tax and the town’s desire to keep lodging taxes fair and consistent across all types of accommodations.