Lewes passes phased-in tax increases

Lewes Mayor and City Council unanimously voted to raise two taxes, with the increases being phased-in over three years.

The city will implement a 2% lodging tax. It will be begin at rate of 0.5% in calendar year 2026, increased to 1% in 2027 and increased again to 2% in 2028.

The 9.5% gross rental receipts tax on rentals of 30 days or less will stay as is in 2026 and 2027, but will jump 0.5% to 10% in 2028.

Factoring the state taxes that are already being collected, both taxes will even out at 10% in 2028.

“There’s a need for revenue, like in all towns, but there’s also a need for parity,” said Deputy Mayor Khalil Saliba.

Saliba said council was concerned that if they moved too quickly they could alienate visitors.

He said that even with the lodging tax, Lewes is still below the average of Rehoboth Beach, Dewey Beach, Bethany Beach and Fenwick Island.

“This allows both types of accommodations to plan. This is in place for multiple years. What businesses want, more than anything, is predictability,” said Mayor-elect Amy Marasco.

Jim Owen, owner of the Savannah Inn, said the phased-in approach does not make a big difference.

“It just eases us into another tax. It’s hard enough to get people to come to Lewes, when they take more of a cut, it makes it harder,” Owen said.

Owen said he expects to soon break ground on his new 15-room Beach House Hotel at 209 E. Savannah Road at the site of the former Two Dips ice cream shop. He said he expects it to open in the summer of 2026.