Short-term lodging on Hilton Head Island carries the Hilton Head accommodations tax in several layers: a 2% state accommodations tax, a 1% local accommodations tax, and a 2% beach preservation fee, all on top of the 7% state sales tax that applies to accommodations. The taxes apply to any rental of fewer than 90 consecutive days — hotel rooms, vacation condos, bed and breakfasts, and other short-term lodging. Guests pay the taxes at the time of booking; owners and operators are responsible for collecting them and sending them to the right agency.
What Guests Pay and Where It Goes
The 2% state accommodations tax is authorized by SC Code 12-36-2630(3). The South Carolina Department of Revenue collects it and remits it quarterly to the municipality where the rental occurred.1South Carolina Legislature. South Carolina Code Title 12 Chapter 36 – Section 12-36-2630
On top of that, the Town imposes its own 3% under SC Code 6-1-520, which lets municipalities levy up to 3% on transient accommodations.2South Carolina Legislature. South Carolina Code Title 6 Chapter 1 – Section 6-1-520 Hilton Head uses the full amount and splits it into a 1% local accommodations tax and a 2% beach preservation fee.3Town of Hilton Head Island. Accommodations Tax and Beach Preservation Fees
Guests also pay a 7% state sales tax on accommodations under SC Code 12-36-920, but that revenue stays with the state and does not come back to the Town.4South Carolina Legislature. South Carolina Code Title 12 Chapter 36 – Section 12-36-920
Quarterly Filing Deadlines for Operators
Every hotel, property management company, and individual owner collecting the local accommodation taxes must remit them to the Town on a quarterly schedule. Payment must be received or postmarked by the 20th of the month after the quarter closes:
- First quarter (January through March): due April 20.
- Second quarter (April through June): due July 20.
- Third quarter (July through September): due October 20.
- Fourth quarter (October through December): due January 20 of the following year.
The Town’s finance department handles these local payments.5Town of Hilton Head Island. Town Tax Payments
The 2% state accommodations tax is filed separately through MyDORWAY, the South Carolina Department of Revenue’s free online portal. Returns are filed under the “Sales – Accommodations Tax” return type, and new users have to create an account before they can file.6South Carolina Department of Revenue. MyDORWAY
Penalties for Late Payment
Miss a quarterly deadline on the local tax and the penalty hits right away. The Town charges 5% of the unpaid balance for each month it stays outstanding, compounding until the balance is paid in full. Businesses that remain delinquent can also receive a $1,092.50 municipal summons.5Town of Hilton Head Island. Town Tax Payments
Short-Term Rental Permits Are a Separate Requirement
Paying the tax is not the whole picture. If you rent out property on the island for fewer than 90 days at a time, you need both a standard Town business license and a separate short-term rental permit. The permit costs $150 per bedroom per year and runs from May 1 through April 30. Renewals submitted after May 15 trigger a $250 late fee.7Town of Hilton Head Island. Short-Term Rental Permits
Owners of single-family homes must submit a site plan showing parking and trash storage. Every permit holder has to post Town-provided informational material inside the unit for guests. The Town operates a 24/7 Rapid Response Hotline for neighbors or guests to report noise, parking, or trash problems. An owner can use a property management company as the rental agent, but a written agreement between them has to be in place.7Town of Hilton Head Island. Short-Term Rental Permits
For the 2026 permit cycle, the payment portal opened April 6, 2026, with the late-fee deadline on May 15, 2026.7Town of Hilton Head Island. Short-Term Rental Permits
How the Town Is Required to Spend the Money
The accommodations tax dollars that come back to Hilton Head are not general revenue the Town can spend as it chooses. South Carolina law locks most of the 2% state tax into tourism-specific uses: after the first $25,000 and a small unrestricted share, 30% of the remainder must fund tourism advertising and promotion, and 65% must fund tourism-related expenditures defined by statute.8South Carolina Legislature. South Carolina Code 6-4-10 – Allocation to General Fund; Special Fund for Tourism; Management and Use of Special Fund
Those qualifying uses include arts and cultural events, civic and cultural facilities, the share of police, fire, sanitation, and health services attributable to serving tourists, public restrooms and parks, tourist shuttles, erosion control and beach renourishment, and visitor information centers. A capped share can also go to workforce housing programs for workers earning between 30% and 120% of local median income, a category that expires December 31, 2030.9South Carolina Legislature. South Carolina Code Title 6 Chapter 4 – Section 6-4-10
The Town’s locally imposed 3% follows its own split. The 1% local accommodations tax pays for tourism-related buildings, beach access, roads, water and sewer, maintenance, police, fire, and emergency medical services. The 2% beach preservation fee funds beach renourishment — the periodic dredging of offshore sand and pumping it onto eroding shoreline — which is the single largest expenditure the island’s accommodation taxes support.3Town of Hilton Head Island. Accommodations Tax and Beach Preservation Fees