News Summary
Hilton Head Island is projected to collect over $12 million in accommodation tax revenue for the upcoming fiscal year, reflecting its dependency on tourism. Local leaders are currently debating how to allocate these funds, with a focus on supporting workforce housing needs. The revenue forecast arises amidst discussions on tax collection from short-term rentals and significant beach renourishment projects scheduled for completion. As tourism remains a pillar of the local economy, the management of these funds continues to spur public debate.
Hilton Head Island Anticipates Over $12 Million in Accommodation Tax Revenue for 2026
Hilton Head Island is projected to generate over $12 million in accommodation tax revenue for the fiscal year 2026, reflecting the island’s heavy reliance on tourism as a cornerstone of its economy. This revenue forecast comes as local leaders engage in an ongoing debate about how to allocate funds to support workforce housing needs.
The accommodation tax, often referred to as A-tax, is a 2% tax on lodging in addition to a total state sales tax of 7%, with 2% of the funds returned to local governments. Last year, Hilton Head Island collected approximately $13 million from this tax, indicating a stable source of income derived from the island’s approximately 3,000 hotel rooms and 6,000 vacation homes and villas. The average occupancy rate for these properties stands at 63% year-to-date, bolstered by a growing share of room nights contributed by short-term rentals.
As the fiscal year 2026 begins in July 2025 and concludes in June 2026, discussions amongst the Hilton Head Town Council regarding the projected allocations took place on July 15, 2025. According to established laws, 65% of A-tax revenue allocations are determined by an A-tax committee, pending town council approval. However, the distribution of funds for workforce housing is capped at a maximum of 15% of the total A-tax revenue.
Debate Over Tax Allocation for Housing
The allocation of A-tax funds for housing has sparked public debate, particularly following the introduction of legislation by State Senator Tom Davis, which permits A-tax funds to be used for workforce housing projects. This new provision has prompted differing opinions among council members concerning the best use of tax funds and the necessity for affordable housing on the island.
In recent years, issues surrounding the collection of accommodation taxes from short-term rental platforms like Airbnb have come under scrutiny. In 2021, Airbnb faced a class-action lawsuit related to the payment of local accommodation taxes. The tax payment mechanism for short-term rentals has also faced criticism for being overly complicated. To address these challenges, Representative Lee Hewitt proposed Bill H. 3876, which requires licensed real estate firms to collect and remit local taxes directly, rather than relying on rental platforms to do so.
Beach Renourishment Project Underway
Alongside revenue discussions, Hilton Head Island is preparing for a significant beach renourishment project. This project aims to deposit 2 million cubic yards of sand across five shoreline areas at a projected cost of over $40 million, making it the most expensive beach renourishment initiative to date. The project is essential for protecting the island’s beaches, local wildlife, and properties from erosion.
Historically, Hilton Head undergoes beach renourishment approximately every eight to ten years, with the last project costing over $20 million in 2016. Scheduled to commence in June and last until spring 2026, this current project will focus on five areas: South Beach, Central Island, The Heel, Fish Haul Creek, and Pine Island. A large pipe will facilitate the process by pumping a slurry of seawater and sand to the various beach locations.
To minimize disruption during construction, operations will target only a 1,000-foot section of the beach at any given time. Temporary beach access ramps will be provided to ensure visitor movement is not hindered. Updates on the project will be distributed through an e-subscription service to keep residents and visitors informed of developments.
With a significant share of the local economy tied to tourism and ongoing debates regarding housing solutions, Hilton Head Island continues to navigate the challenges and opportunities presented by its reliance on accommodation tax revenue.
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Additional Resources
- Island Packet: Real Estate News
- Wikipedia: Tourism
- Island Packet: Local News
- Google Search: Hilton Head Island
- WSAV: Beach Renourishment Project
- Encyclopedia Britannica: Hilton Head Island
- Post and Courier: Beach Renourishment Project
- Google News: Hilton Head Island news
- Beat of Hawaii: Hawaii Trips
Author: STAFF HERE HILTON HEAD
The HILTON HEAD STAFF WRITER represents the experienced team at HEREHiltonHead.com, your go-to source for actionable local news and information in Hilton Head Island, Beaufort County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the RBC Heritage golf tournament, Hilton Head Island Wine & Food Festival, and the Gullah Celebration. Our coverage extends to key organizations like the Hilton Head Island-Bluffton Chamber of Commerce and Community Foundation of the Lowcountry, plus leading businesses in tourism and hospitality that power the local economy such as Sea Pines Resort and Sonesta Resort Hilton Head Island. As part of the broader HERE network, including HEREAiken.com, HEREBeaufort.com, HEREChapin.com, HERECharleston.com, HEREClinton.com, HEREColumbia.com, HEREGeorgetown.com, HEREGreenwood.com, HEREGreenville.com, HEREHiltonHead.com, HEREIrmo.com, HEREMyrtleBeach.com, HERENewberry.com, HERERockHill.com, and HERESpartanburg.com, we provide comprehensive, credible insights into South Carolina's dynamic landscape.
