Lewes Mayor and City Council have voted unanimously to implement new tax increases aimed at lodging and short-term rental accommodations.
The changes, passed on May 12th, will be phased in over the next three years to give businesses and visitors time to adapt.
Key Details Include:
- A new 2% lodging tax will be phased in gradually:
- 0.5% in 2026
- 1% in 2027
- 2% in 2028
- The current 9.5% gross rental receipts tax on short-term rentals (30 days or less) will remain unchanged through 2027, then increase to 10% in 2028
When factoring in existing state taxes, both the lodging and short-term rental taxes will reach 10% by 2028.
Balancing Revenue and Fairness
Deputy Mayor, Khalil Saliba, emphasized the need for additional revenue and fairness across different types of accommodations.
"There's a need for revenue, like in all towns, but there's also a need for parity," he said.
Council members were cautious about moving too quickly, concerned that this might discourage tourism overall in the area.
The gradual approach aims to give businesses and visitors time to adjust while bringing Lewes in line with neighboring coastal towns rental taxes, like Rehoboth Beach and Dewey Beach.
Mayor-elect Amy Marasco noted, "What businesses want, more than anything, is predictability."
Reactions from Local Business
Jim Owen, owner of the Savannah Inn, acknowledged the phased-in plan makes the change easier to handle, but acknowledged that he still views it as another financial hurdle.
"It's hard enough to get people to come to Lewes," Owen said. "When they take more of a cut, it makes it harder."
Owen is also preparing to expand his business presence. He plans to break ground soon on a new 15-room Beach House Hotel at 209 E. Savannah Road, the site of the former Two Dips ice cream shop.
The hotel is expected to open in summer 2026.
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Source: Cape Gazette