The Airbnb Host’s Guide to Occupancy Tax Compliance

Renting your property or extra bedroom on Airbnb is a great way to make the most of your space and increase your income. While signing up with Airbnb is easy, starting to operate an Airbnb business usually presents a learning curve.

One area you’ll need to understand is managing taxes. While you’re probably already familiar with income taxes, operating an Airbnb requires dealing with an entirely different category of tax — occupancy taxes. This guide covers the basics of what you need to know to get started.

What are occupancy taxes?

Occupancy taxes, also commonly known as lodging tax, room tax, hotel tax, or tourist tax, are taxes that hosts and property managers are required to collect from guests then pay to state and/or local tax authorities when operating a short-term rental. Occupancy taxes are typically a percentage of the cost of the stay, added to the final bill, and they may be paid to the state, county, city, or other local government tax authority.

Depending on location, occupancy taxes may be referred to as occupancy taxes, hotel taxes, stay taxes, room taxes, bed taxes, tourist taxes, accommodations taxes, and more. 

Collecting occupancy taxes is an important part of the hosting process. Occupancy tax compliance is required by law and is the responsibility of the host, as stated in Airbnb’s terms:

13.1 As a Host you are solely responsible for determining your obligations to report, collect, remit or include in your Listing Fees any applicable VAT or other indirect sales taxes, occupancy tax, tourist or other visitor taxes or income taxes ("Taxes").

Understanding the difference between occupancy taxes and income taxes

As a taxpayer in the United States, you’re most likely familiar with filing income taxes every year by April 15. You generally pay these taxes to the federal government, and perhaps your state, once a year as a percentage of your annual income.

Occupancy taxes, on the other hand, are paid by your short-term rental guests rather than out of your pocket. While the guest pays the tax, you as the host are responsible for collecting it and remitting it to tax authorities.

Unlike income taxes, occupancy taxes are not paid to the IRS, but to state and local governments, usually each month or quarter. There is no federal occupancy tax. This means that there are no national rules for occupancy taxes and that the requirements that apply to you depend entirely on the exact address where your short-term rental is located.

The basics of Airbnb occupancy tax compliance

Occupancy tax compliance involves four main steps: 

1. Registering your Airbnb with tax agencies

Before you can begin collecting occupancy taxes, you need to register with tax agencies. You may receive a license or permit when you register, depending on the jurisdiction. Keep in mind that you may have to register with more than one tax agency if your short-term rental property is governed by more than one jurisdiction, such as both the city and state.

Tip: When researching taxes or registering, the state agency you need to contact is often called the Department of Revenue. At the city and county level, look for the Finance Department, Tax Collector, or Treasurer’s Office — but those departments may have other names.

Sometimes, states will collect all local taxes on behalf of each city and county, so that you only have to register with one agency, but that’s not universal. It’s crucial to make sure you understand what’s required for your specific short-term rental property and the different city, county, and state agencies involved.

Once you register, you’re allowed to start renting and collecting taxes from guests. You should receive instructions from each tax agency on filing and remitting your returns, such as what forms you should file, when they’re due, and your filing frequency.

2. Determining the amount of taxes to collect

The first step in determining the correct tax rate is knowing which tax jurisdictions govern your rental. This may be a state, county, city, or other jurisdiction, and your rental may be located in more than one jurisdiction. Each jurisdiction may levy its own taxes, so you may be required to collect several different taxes from your guests.

Once you know the tax rates for each of the jurisdictions that govern your vacation rental, you add them all together to get the final rate you’ll charge your guests. For example, a total tax rate of 10 percent may include 6 percent state tax, 2 percent city tax, and 2 percent county tax.

3. Collecting occupancy taxes

Lodging taxes are added to the rent amount you charge your guests and collected at the same time a guest pays the bill. For instance, if your nightly rate is $150 and the total tax is 10 percent, you would bill your guest $165 ($150 for rent plus $15 for occupancy taxes). 

Some vacation rental platforms provide a tax rate field, usually in the area where you set up your nightly rate and any fees (such as cleaning fees). You can add the tax rate here and the platform will automatically charge the tax to your guest. Airbnb, however, does not have a tax rate field, so Airbnb recommends you collect taxes manually, either in person from guests during check-in, or via the Resolution Center after check-in. Either way, it’s important to let guests know the exact tax amount before booking.

It’s best practice to keep track of the total amount you receive from guests and the tax amount paid by them so you have those funds available when it comes time for you to file your tax reports and pay any taxes owed. 

Tip: Many rental operators will deposit the taxes they’ve received from guests into a separate bank account to ensure they have this money available. 

4. Filing short-term rental tax returns

Once you register and start collecting occupancy taxes on your Airbnb, you must file and pay the taxes. The tax agencies determine how often you’re required to file, when the taxes are due, and what forms you must use. Most taxes can be filed and paid online. 

While most tax agencies require occupancy tax returns to be filed on a monthly basis, your required frequency may be quarterly, semi-annually, or even annually. Keep in mind that if you’re paying taxes to more than one jurisdiction, you may have more than one filing frequency or deadline. For example, your state taxes may be due quarterly while your city taxes might be due monthly.

When you file your taxes, you’ll report the amount of revenue (rent plus mandatory fees) you’ve received for your short-term rental for a specific period on the tax return form. You’ll need to pay the correct percentage of occupancy tax owed on that revenue. 

Lodging tax collection by Airbnb

In many jurisdictions, Airbnb has agreements with tax agencies to collect taxes on behalf of hosts. In these instances, tax is collected when payment is accepted from guests. Airbnb then remits the taxes to the appropriate tax agency. In locations where Airbnb collects taxes, the host does NOT have to collect or remit the same taxes. Airbnb handles it for you.

However, Airbnb does not have agreements with all jurisdictions in the U.S., so it may not collect all the occupancy taxes in your area. And it may have agreements with some of the jurisdictions that govern your rental, but not others.

For example, Airbnb may have an agreement with your state but not your city, so Airbnb would collect state taxes for you from guests, but not city tax. Airbnb states on its site that any taxes not collected by Airbnb are your responsibility.

Furthermore, keep in mind that Airbnb does not register your property with tax authorities or file tax returns for you — even if it collects and pays taxes for you. And some tax agencies require hosts to continue to file tax returns, even if Airbnb collects taxes on their behalf.

In Washington state, for example, hosts are required to file excise tax forms on which they report their short-term rental revenue and take the amount of tax that Airbnb has collected for them as a deduction.

While Airbnb collection can make occupancy taxes easier for you, it’s crucial to understand that as a short-term rental host, you’re ultimately responsible for occupancy tax compliance. It’s up to you to know what Airbnb takes care of and to fill in the gaps.

The table below provides information about the tax jurisdictions for which Airbnb currently collects and remits tax on behalf of hosts. We recommend visiting Airbnb’s occupancy tax collection and remittance page for details specific to the location of your property.

State

Is state occupancy tax collected by Airbnb?

Is county occupancy tax collected by Airbnb?

Is city occupancy tax collected by Airbnb?

Alabama Yes                                                                                                                                                                                                                                                                        

Airbnb collects most county taxes.

Airbnb collects most city taxes.

Alaska

There is no state occupancy tax in Alaska.

No

Airbnb only collects city occupancy tax in Anchorage.

Arizona Yes

Yes

Yes

Arkansas Yes

Airbnb collects most county taxes.

Airbnb collects most city taxes.

California There is no state occupancy tax in California.

Airbnb collects some county occupancy taxes, but not most.

Airbnb collects some city occupancy taxes, including in San Francisco, Los Angeles, and San Diego, but not most.

Colorado Yes Yes Airbnb collects all city sales taxes and many city occupancy taxes. However, Airbnb does not collect most large city and ski town lodging taxes.
Connecticut Yes

There are no county taxes in Connecticut.

There are no city taxes in Connecticut.

Delaware No

No

No

Florida Yes

Airbnb collects all county sales taxes and some county tourist taxes. There are many counties where Airbnb does not collect tourist taxes.

There are very few city taxes in Florida. Airbnb collects Surfside taxes.

Georgia No

No

No

Hawaii No

No

No

Idaho Yes

There are no county taxes in Idaho.

Yes. City taxes are uncommon. Airbnb collects several of them.
Illinois Yes

Airbnb only collects county hotel tax in Cook County.

Airbnb only collects tax in Chicago and a few other cities.

Indiana No

No

No

Iowa Yes

Yes

Airbnb collects city lodging taxes in most cities.

Kansas Yes Yes

Yes

Kentucky Yes Airbnb only collects taxes in a few counties.

Airbnb only collects taxes in a few cities.

Louisiana Yes

Airbnb collects county room taxes in only a few parishes.

Airbnb collects tax in New Orleans, but no other cities.

Maine Yes

There are no county taxes in Maine.

There are no city taxes in Maine.
Maryland Yes

Airbnb only collects Montgomery County room tax.

Airbnb only collects Baltimore room tax.

Massachusetts No

No

No

Michigan Yes

Airbnb collects county room taxes in Genesee and Kent counties.

No

Minnesota Yes

Airbnb collects county taxes administered by the state, but does not collect in several counties that levy their own room tax.

Airbnb collects city tax in Duluth.

Mississippi Yes

Yes

Yes
Missouri Yes

Airbnb collects all state-administered county sales taxes, but only one county lodging tax.

Airbnb remits all state-administered city sales taxes, but only a few city lodging taxes.
Montana Yes

There are no county taxes in Montana.

No

 

Nebraska No

No

No

Nevada

There is no state occupancy tax in Nevada.

Airbnb only collects tax in Washoe County.

Airbnb only collects tax in Reno and Sparks.

New Hampshire Yes

There are no county taxes in New Hampshire.

There are no city taxes in New Hampshire.

New Jersey Yes

No

Airbnb collects tax in only a few cities.

New Mexico No

Airbnb collects tax in only a few counties.

Airbnb collects tax in only a few cities.

New York No

Airbnb collects tax in about half of New York counties.

No. Few cities in New York levy a room tax. New York City has a local hotel tax that Airbnb does not collect.

North Carolina Yes

Yes

Yes

North Dakota Yes

Airbnb collects most county taxes.

Airbnb collects taxes in most cities.

Ohio No

Airbnb collects tax in only a few counties.

Airbnb collects tax in only a few cities.

Oklahoma Yes

Yes

Yes, but several cities levy taxes that Airbnb does not collect.

Oregon Yes

Airbnb collects taxes in a few counties.

Airbnb does not collect most city room taxes.

Pennsylvania Yes

Airbnb collects tax in many counties.

Yes, but there are very few city taxes.

Rhode Island Yes

There are no county taxes in Rhode Island.

Yes

South Carolina Yes

Airbnb only collects state-administered tax in a few counties. Many counties have their own lodging tax that Airbnb does not collect.

Airbnb only remits state-administered tax for a few cities. Many cities have their own lodging tax that Airbnb does not collected.

South Dakota Yes

Yes

Yes
Tennessee Yes

Airbnb collects county sales taxes, but not county hotel taxes.

Airbnb remits tax in only a few cities.

Texas Yes

Airbnb remits tax in only a few counties.

Airbnb remits tax in only a few cities.

Utah Yes Yes Yes
Vermont Yes

There are no county taxes in Vermont.

Yes

Virginia No

No

Airbnb only collects in a few cities.

Washington Yes

Yes

Yes
West Virginia Yes

No

No
Wisconsin Yes Yes Airbnb collects all state-administered local taxes, but only a few city taxes.
Wyoming Yes

Yes

Yes

as of July 2019

How Avalara MyLodgeTax can help

Lodging taxes can be complicated, and it can take a lot of time to be certain you’re getting them right. Avalara MyLodgeTax can help by automating occupancy tax compliance. MyLodgeTax takes care of registering your short-term rental for the correct jurisdictions, determines the exact tax rate to charge, prepares your occupancy tax returns, and makes sure they’re filed and paid on time.