Nantucket voters approve measure legalizing short-term rentals across island

Voters in Nantucket, Massachusetts, have ended years of controversy and legal battles by passing a measure that allows short-term rentals (STRs) by right. More than 70% of residents at a Special Town Meeting on November 4 approved Article 1, which allows STRs in all zoning districts on the island except for a commercial-industrial area near the airport.

Nantucket’s zoning bylaw recognized “renting and leasing” of dwellings as a lawful principal use until 2015, when that language was inadvertently removed from the code. Starting in 2022, the town passed several regulations governing STRs. Proponents of Article 1 argued that those regulations couldn’t be properly enforced unless zoning laws recognized STRs as a legal use. Article 1 restores the previous language to explicitly legalize STRs.

The new law puts an end to legal challenges based on the assertion that STRs aren’t allowed in residential zoning districts. That was the basis of a lawsuit brought by Nantucket resident Cathy Ward. A Land Court judge ruled in favor of Ward’s case twice, bringing uncertainty about whether the town could enforce its rules for STR operations. After the latest ruling, in July 2025, the town and plaintiffs agreed to pause enforcement while the case was being appealed.

While the legality of STRs on the island has now been settled, more changes could be coming to the town’s STR rules. 

Currently, Nantucket requires STR operators to:

• Register with the town every year for each STR unit and pay an annual fee of $250
• Carry liability insurance coverage of $1 million
• Provide contact information for the operator or other responsible parties who must address any issues at the STR within two hours
• Include the operator’s certificate of registration number in any advertisement
• Observe occupancy limits of two people per bedroom plus two additional people in the unit

Nantucket defines STRs as rentals of 31 days or less, excluding properties rented for 14 days or less in any calendar year. The town prohibits commercial ownership of STRs. Operators who violate the rules can be penalized by fines of up to $300 per day.

In Nantucket STR operators must also follow lodging tax rules. Operators who collect payment from short-term guests renting out a room, apartment, house, or other dwelling for more than 14 days a year are responsible for registering with the Massachusetts Department of Revenue and collecting, filing, and remitting lodging taxes to the state. In Nantucket, lodging taxes include state room occupancy excise tax, local room occupancy tax, and a community impact fee, all of which are administered by the state.

The community impact fee must be paid by Nantucket operators meeting the following criteria:

• The rental is one of two or more units located in the same city or town.
• The units have the same operator.
• The units are not located in an owner-occupied single-family, 2-family, or 3-family dwelling.

STR operators may choose to allow an intermediary or other agent, including marketplaces such as Airbnb or Vrbo, to handle the rental of their property as well as register with tax authorities, collect lodging tax, and file returns on their behalf. 

Airbnb collects all lodging taxes and fees on behalf of Nantucket STR operators, while Vrbo collects state room occupancy excise tax and local room occupancy tax for Nantucket listings. Operators are still required to register with the state Department of Revenue even if lodging taxes and fees are collected for them by a marketplace.

Avalara MyLodgeTax can help vacation rental hosts automate and simplify lodging tax compliance on the local and state level, including tax registration and filing. For more on lodging taxes in Massachusetts, see our state vacation rental tax guide. If you have tax questions related to properties in Nantucket, drop us a line and we’ll get back to you with answers.