Austin short-term rental hosts, marketplaces face new regulations

Short-term rental (STR) operators in Austin, Texas, face new regulations under a city law that went into effect October 1, 2025. The changes were set in motion by the City Council in February and were finally approved in September after years of debate. 

Austin defines STRs as the rental of a housing unit for periods of less than 30 consecutive days. The city requires STR operators to obtain a license for each STR. Licenses are valid for two years and may not be transferred, and operators are required to include a valid license number in ads or listings. STR operators are required to designate a local agent who can be contacted in case of emergencies and respond within two hours. Operators must also follow safety and nuisance rules.

The law requires STRs to be spaced at least 1,000 feet apart, with two STRs allowed per lot. The ordinance also restricts the density of short-term rentals in multifamily buildings within neighborhoods and establishes limits on the number of guests and noise levels. In 2023, a federal judge struck down part of Austin’s STR law banning unhosted STRs in residential areas. STRs are now allowed in all residential areas with a valid license.

The changes to the law also allow tenants to operate STRs with written permission from the property owner. 

Violations are punishable by fines of up to $500, with each day of the violations considered a separate offense. The city may also revoke STR licenses for serious or multiple offenses.

The STR ordinance also spells out new requirements for STR marketplaces such as Airbnb and Vrbo, effective July 1, 2026. Marketplaces must require all Austin listings to have a valid license number. They cannot facilitate a booking for a listing without a license and are required to remove listings within 10 days of notice from the city. 

Austin STRs are subject to city and state lodging tax. The city’s hotel occupancy tax applies to stays in “any building or buildings in which the public may obtain sleeping accommodations for a cost of 2 dollars or more each day for a consecutive duration of 30 days or less.” The tax rate is 11%, consisting of a 9% occupancy tax and an additional 2% venue project tax, and the revenues must be spent by the city on tourism promotion. Those who collect the taxes must file returns and pay them to the city quarterly. 

All Texas STRs are also subject to state hotel occupancy tax. Operators must register with the Texas Comptroller’s Office, collect taxes, and file state occupancy tax returns. Registration and filing aren’t required if an STR marketplace collects all state hotel occupancy taxes for the property. 

STR marketplaces such as Airbnb and Vrbo are required to collect the state portion of the tax for bookings on their sites. Austin began requiring marketplaces to collect the city’s lodging tax in April of this year. Starting July 1, 2026, marketplaces must also provide quarterly documentation to operators of the amount of hotel occupancy taxes collected on their behalf.

Avalara MyLodgeTax can help short-term rental hosts automate and simplify city and state lodging tax compliance, from registration to tax return filing. If you have tax questions related to Texas vacation rental properties, drop us a line and we’ll get back to you with answers. See our Texas vacation rental tax guide for more on STR lodging taxes in the state.