FAIRFAX, Vt.—Last week a group of older people who attend Rev. Elizabeth Griffin’s strength training class in a former church did something that felt radical. They had class without their masks.

Since the entire group was vaccinated, they could leave the masks home under new town rules.

“It’s hard to believe some people are still resistant to the vaccine,” said Colleen Steen, dressed in a pink workout top and celebrating her 75th birthday with hand-held weights and some deep knee bends.

As the most-vaccinated state in America, Vermont said that 80% of the state’s eligible population has received at least one shot of the vaccine. The state had recently eased most Covid-19 restrictions, and the few that remained applied to unvaccinated individuals. Monday, officials lifted all remaining rules. Cases, as measured by a seven-day average daily case count, have dropped 94% since April 1. Hospitalizations have dropped in half in two weeks, and just one patient has died of Covid-19 in the past three weeks. Hospitals are closing their Covid-19 wards, schools are hosting in-person graduation ceremonies and the tourism industry is experiencing a resurgence.

Rev. Elizabeth Griffin after her exercise class in Fairfax, where she can now hold classes without masks.

Rev. Elizabeth Griffin after her exercise class in Fairfax, where she can now hold classes without masks.

Inside Charlie-O's World Famous bar in Montpelier. Vermont had previously eased most Covid-19 restrictions.

Inside Charlie-O's World Famous bar in Montpelier. Vermont had previously eased most Covid-19 restrictions.

“When we reach the 80% level, that essentially tells Vermonters their life is really going to be much closer to what they considered normal in pre-pandemic,” said Mark Levine, the state’s health commissioner.

State health authorities say the threshold isn’t a declaration of herd immunity and instead was set as a target to ensure that enough people are vaccinated that the disease is unlikely to spread.

“Government is going to be out of the picture and give guidance but not going to create a situation where there is a mandate for masks or a capacity limit or curfews or anything,” Dr. Levine said.

The ward at Northwestern Medical Center used to treat Covid-19 patients is now darkened and emptied of personnel.

The ward at Northwestern Medical Center used to treat Covid-19 patients is now darkened and emptied of personnel.

Photo: John Tully for The Wall Street Journal

Dr. John Minadeo said there is less fear now about the virus.

Dr. John Minadeo said there is less fear now about the virus.

Photo: John Tully for The Wall Street Journal

Vermont has fully vaccinated 61.2% of its total population, compared with 43.4% for the U.S. overall, according to data from the U.S. Centers for Disease Control and Prevention. In the least vaccinated state, Mississippi, 28.1% of the state is fully vaccinated. A few factors helped drive up Vermont’s vaccination rate. The state’s aging, overwhelmingly white, liberal residents are part of a demographic that is the least hesitant to get vaccinated, according to data from polling and data analytics firm Civiqs. Its population is consistently ranked among the healthiest in the nation.

But the biggest factor was that—by and large—Vermonters trusted and listened to the state’s health authorities. In a yearlong study published in March 2021 by researchers from Harvard Medical School, Northeastern, Rutgers and Northwestern universities, Vermont Republican Gov. Phil Scott maintained the highest level of approval for a governor among voters. At the same time, Vermonters polled in April 2020 listed public-health officials as their most trusted source for information about Covid-19.

“The public does trust government here,” said Dr. Levine.

Owner Sonia Rivera worked with a client at Incognito Salon in Montpelier. Vermont officials lifted all remaining Covid-19 rules on Monday.

Owner Sonia Rivera worked with a client at Incognito Salon in Montpelier. Vermont officials lifted all remaining Covid-19 rules on Monday.

Eighth-grade students at Stowe Middle School recently held a graduation rehearsal.

Eighth-grade students at Stowe Middle School recently held a graduation rehearsal.

Vermont enacted strict travel restrictions in March 2020. When the state loosened those restrictions—allowing residents to end a 14-day quarantine a week early with a negative Covid-19 test—enough residents followed the rules that the spread of the disease was limited, according to data, persuading the CDC to enact similar guidance nationwide.

“Vermont was this green island, surrounded by red New York, red Maine, red New Hampshire, red Canada,” said Michael Rousse, chief medical officer at Northeastern Vermont Regional Hospital, of the first Covid-19 surge.

The hospital hasn’t had a Covid-19 inpatient in weeks. For hospital employees, that means they can soon cut through the formerly restricted Covid-19 wing to get to the cafeteria. Last week, they were allowed to dispense their own coffee for the first time.

At Northwestern Medical Center in St. Albans, Chief Medical Officer John Minadeo walked through the hospital’s now-empty Covid-19 ward this week.

The ward was darkened and emptied of personnel. Signs about how to wear protective clothing, disassembled air-handling equipment and tape on the floor to separate doctors from patients served as reminders of the ward’s former use.

When the first surge hit the West Coast in early 2020, the hospital pulled together an incident command team.

The hospital rushed to turn a decommissioned wing of the hospital into a ward for isolating Covid-19 patients. And then, the staff waited.

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“There was a sense of stress for me and nervousness. Is it tonight? Is it tomorrow?” Dr. Minadeo said. His team watched cases and deaths mount in surrounding states, overwhelming local hospitals. The staff talked about how to reuse masks and how to choose between patients when there weren’t enough ventilators.

After the hospital’s first admission, people started getting sick quickly. It was mostly elderly patients, he said. At one time, half their allotted beds were filled with Covid-19 patients. With two staff members working with each patient, they expected to be overwhelmed. They never were. Now they are talking about what to do with the space.

“There’s less fear now,” he said.

Government officials are hoping that the state’s high vaccination rates will, in time, draw people looking for high-skilled jobs and become an economic boon. “This positions Vermont to be a state that probably could be considered to be the safest state in the country right now and arguably one of the safest places in the world,” said Dr. Levine, the health commissioner.

Colleen Steen on her way home from Rev. Griffin’s exercise class.

Colleen Steen on her way home from Rev. Griffin’s exercise class.

Smugglers’ Notch Resort has been preparing to fully open for the summer season.

Smugglers’ Notch Resort has been preparing to fully open for the summer season.

At Smugglers’ Notch Resort, a skiing and summer-vacation destination for families in northwestern Vermont, employees were busy preparing for the start of their summer season this week. Guest bookings are on par with pre-pandemic levels, according to Steve Clokey, vice president of marketing for the resort. Last year the resort was running at 40% of normal occupancy, he said.

“At first it was, ‘Don’t touch anything.’ Then it was like, ‘How do you share a basketball? Can you have basketball outside?’ ” said Stacey Comishock, the activities and aquatics director.

Now, with at least 83% of their staff vaccinated, the resort is telling vaccinated guests they can leave the masks at home. Since young children and some guests are still unvaccinated, the resort is asking staff to remain masked around guests. But vaccinated staff can socialize with one another without masks.

Hayden Duquette, 18 years old, a lifeguard in the resort’s pool and waterslide area, said he is excited that he can push guests down the slide again.

An emergency medical technician waits to distribute Covid-19 vaccines at Smugglers’ Notch Resort.

An emergency medical technician waits to distribute Covid-19 vaccines at Smugglers’ Notch Resort.

Write to Julie Wernau at Julie.Wernau@wsj.com