As of the census of 2000, there were 2,959 people, 1,097 households, and 840 families residing in the town. The population density was . There were 1,178 housing units at an average density of . The racial makeup of the town was 95.34% White, 1.49% African American, 0.41% Native American, 0.68% Asian, 0.03% Pacific Islander, 0.84% from other races, and 1.22% from two or more races. Hispanic or Latino of any race were 1.82% of the population.
There were 1,097 households, out of which 36.9% had children under the age of 18 living with them, 58.1% were married couples living together, 12.7% had a female householder with no husband present, and 23.4% were non-families. 17.8% of all households were made up of individuals, and 5.1% had someone living alone who was 65 years of age or older. The average household size was 2.70 and the average family size was 3.02.
In the town, the population was spread out, with 27.2% under the age of 18, 7.8% from 18 to 24, 32.6% from 25 to 44, 22.5% from 45 to 64, and 9.8% who were 65 years of age or older. The median age was 36 years. For every 100 females, there were 102.8 males. For every 100 females age 18 and over, there were 99.1 males.
The median income for a household in the town was $36,417, and the median income for a family was $38,906. Males had a median income of $30,040 versus $21,450 for females. The per capita income for the town was $14,919. About 10.3% of families and 12.1% of the population were below the poverty line, including 17.7% of those under age 18 and 4.1% of those age 65 or over.
Communities and locations in Rutland
- Black River – A village along the northern town line and the Black River, half in Rutland and half in Le Ray. It was once called "Lockport".
- Felts Mills – A hamlet (and census-designated place) by the northern town line and the Black River. A mill was built in 1800, establishing the community.
- Harpers Ferry – A hamlet on NY-126 at County Road 163, east of Rutland Center.
- Rutland Center – A hamlet on NY-126.
- Rutland Hollow – A shallow valley in the northwestern part of the town.
- Rutland Lake – A small lake near Rutland Center.
- Sandy Creek – A stream flowing through the southern part of Rutland.
- Tylerville – A hamlet in the southern part of town at the junction of County Roads 69 and 161. The community dates from circa 1805 and was originally called "South Rutland".
- Underwood Hill – An elevation in the southwestern part of Rutland.