Short term rental revenues smash records

Despite uncertainty of pandemic, revenues bolster town budgets. In some cases keeping them afloat.

Tax revenue from the rooms excise tax is up significantly since short term lodgings such as Airbnb and VRBO had to begin paying. — Nicolas Ruderman

When Gov. Charlie Baker signed the expanded rooms excise tax into law two years ago, cities and towns in Massachusetts knew revenues would increase, but weren’t sure by how much. Two years and a global pandemic later, revenues are up. A lot.

Signed into law two years ago, the expanded rooms tax introduced a suite of taxes to expand the state’s local room-occupancy taxes, which hotels pay, to lodging units rented for 31 or fewer consecutive days such as Airbnbs and VRBOs.

How much individuals pay in the rooms tax varies by municipality. There is a 5.7 percent state tax and an up to 6 percent local option tax. According to the state’s Division of Local Services, Oak Bluffs, Tisbury, and West Tisbury all charge the maximum 6 percent. Chilmark, Edgartown, Aquinnah charge 4 percent. Those making a short-term stay on Martha’s Vineyard will pay between 9.7 and 11.7 percent in tax on their rental.

Revenue from the tax has grown significantly since the expanded rooms excise bill was signed into law. 

According to the Massachusetts Department of Revenue, between fiscal years 2013 and 2019 local option room occupancy revenue from Martha’s Vineyard towns, excluding West Tisbury, grew by 6.67 percent per year — with $1.5 million collected in 2013 and $2.1 million collected in 2019. West Tisbury did not start collecting taxes on hotels and short term rentals until FY2020.

With West Tisbury now collecting the tax and rentals from Airbnb and VRBO now required to collect a short-term rental tax revenue grew significantly. From 2019 to 2020 all six Martha’s Vineyard towns collected $1.3 million in additional revenue which is a 63 percent increase.

FY2021 numbers run even higher. All six Island towns collected $5.5 million through the rooms tax — a $2 million increase from the previous year.

Unless permitted by another Massachusetts General Law, all revenues to the towns’ must go to the general fund to be used to offset the tax levy and tax rate for that fiscal year.

When setting its FY2021 tax rate, West Tisbury estimated it would receive $300,000 through the rooms excise tax, according to town accountant Bruce Stone. In turn, the town lowered the tax levy to be raised by property taxes by that amount. The rooms excise revenue ended up being $16,000 higher than estimated.

“We will use a similar revenue estimate when setting the FY2022 tax rate which will again lower the amount taxpayers will have to contribute to pay for the town budget and warrant articles passed at town meeting,” Stone wrote in an email to The Times.

Stone added that it will be hard to determine what revenue to expect over the past year and half due to the pandemic. 

“The first four quarter of receipts in FY2020 actually reflected only 10 months of room excise collections as there is a two-month lag from when the excise is collected by the owner to when they pay it to the state and then the state turns it over to the Towns,” Stone said. “Then when COVID hit, the Department of Revenue provided long term extensions for when it needed to be paid by the owner to the state.  Room excise returns due from March 20, 2020 through June 1, 2021 still don’t need to be filed until October 31, 2021, so it’s hard to know what revenue would have been.”

Towns can allow a percentage of revenue sources such as room excise receipts to go to a stabilization fund. In 2019, West Tisbury put two articles on its annual town meeting warrant that would have dedicated 30 percent of room excise taxes to go to one or both of two purposes: one 30 percent to go a stabilization fund for future municipal vehicle purchases and another for 30 percent to a fund for future road reconstruction projects, but both articles failed to get a required two-thirds vote.

Tisbury finance director Jon Snyder said Massachusetts does not break out short-term rental tax from other rooms taxes, but there’s been a definite uptick in revenue.

​​”We have seen a significant increase in total room taxes collected over the past year, and we infer that the increase is in short-term rental taxes,” Snyder wrote in an email to The Times.

During the time period, two former inns were converted to apartments, so there are fewer rooms in the town’s inns and hotels — an indication the spike is from people renting their homes to vacationers.

Tisbury’s short-term rental revenue increased by $209,000 in FY2020 the next highest yearly increase was in 2014 when the town collected $100,000 over the previous year.

Out of all Island towns, Edgartown collects the most revenue through room occupancy and saw a $500,000 increase in revenue from the tax in 2020 for a total of $1.5 million

Edgartown town administrator James Hagerty said the town knew revenues would go up, but didn’t know by how much. The revenue ended up being a vital part of the town’s budget during last year as revenue was down across the board on permits, license,and mooring fees.

“This was keeping the budget afloat,” Hagerty said. “For FY21 we were in deficients in several categories so it was short term rentals balancing things out.”

Hagerty added that while the town has seen an increase in revenue from the tax, there isn’t enough historical data on how much they can expect going forward. 

“We have historical data on moorings and permits. We don’t have that with the short term rentals,” Hagerty said. “Is this because of the pandemic? We don’t know.”

The rental market has been red hot, outpacing past years for those who rent short-term rentals.

Grace Hagerty, who owns a real estate company that features rentals on Airbnb, also told The Times bookings have outpaced past years.

“Everything has booked quicker and at much higher rates this season vs the 2020 season. And it’s not slowing down. The interest in rentals and sales has been rapidly increasing.”

Pete, who did not provide his last name, rents out a yacht on Airbnb and said he’s had plenty of bookings.

“Busiest year since I started in 2011,” he said.

Joan Talmadge, co-owner of, told The Times the summer of 2020 was extremely busy with people who had a pent up desire to get away. This summer has seen even more rental traffic.

“This summer is just incredible,” Talmadge said. “Our site has been busier than it ever has been in our 23 years in businesses.”

She said of the roughly 400 homes the site has on the Vineyard, only a handful of weeks are available for rent until the last week of August. 

“The inventory is extremely low. Vacationers started booking early this year because last summer they may have missed out,” she said.



  1. Tisbury also enacted a fee-based license requirement for short-term rentals, but I have not seen any feedback on that effort. How many owners registered, how much money did Tisbury get from licenses, and how is Tisbury enforcing the requirements?

  2. I honestly do not think that increased revenues to the town is more important than the destruction of the affordable housing market on our island. Okay, more tax revenues but at what cost? Supporting a functioning community (as opposed to economic gain by individuals buying up investment properties) was once a subconscious value of people who rented out spare rooms and guest houses to island residents and summer workers. Alas, it seems the majority of those opportunities are being usurped in service to the almighty dollar. How unfortunate that some day, in the not-too-distant future, those paying taxes will have nobody to service their pools or retail ants or landscaping companies or police and fire departments. At least the towns are now collecting those fees, but as the previous comment said, how is that enforced?

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