Maryland vacation rental tax guide

With a bounty of popular destinations including Baltimore, Annapolis, and Ocean City, the Old Line State offers ample opportunity for short-term rental (STR) businesses.

But these opportunities come with tax obligations. Like hotel stays, STR stays in Maryland are subject to lodging taxes. Failure to comply with state and local tax laws can result in fines and interest penalties. Tax jurisdictions are increasingly making STR tax compliance a priority, so it’s important to address compliance before tax authorities address it for you.

Avalara MyLodgeTax put together this guide to help you comply with Maryland lodging tax laws at the state level. Local jurisdictions such as cities or counties may have their own lodging tax rules. For more information on the tax rates and jurisdictions that apply to your rental’s specific location, use our lodging tax lookup tool.

No lodging tax guide is a substitute for professional tax advice. Consider this an asset to help you understand and prioritize your vacation rental questions and concerns. Questions pertaining to specific situations or out-of-the-ordinary conditions are best solved with a certified tax professional familiar with Maryland tax laws.

Lodging tax basics

Lodging taxes are a percentage of the cost of your guest’s stay that’s added to the price on the bill. The guest pays the tax, but the STR operator is responsible for collecting and paying it to the proper tax authority.

What’s the definition of “short-term rental” in Maryland?

In Maryland, STR operators are considered “accommodation providers,” meaning they offer the rights for transient guests to occupy a room or lodgings. Accommodations providers are required to collect state sales tax from their guests unless they’re renting on a monthly basis or are permanent residents. In resort areas, sales tax applies to all rentals for terms of four months or less.

Who’s required to collect and file lodging taxes on short-term rentals in Maryland?

If you collect payment from short-term guests renting out a room, apartment, house, or other dwelling, you’re likely responsible for collecting, filing, and remitting lodging taxes to Maryland tax authorities. STR operators are liable for lodging taxes not collected by a third party.

Location is key to compliance

The location of your rental is a crucial piece of information for lodging tax compliance. Your address determines which tax jurisdictions you’re required to report to, which taxes you need to collect, and the appropriate tax rates.

Use our lodging tax lookup tool to get a rate report specific to your Maryland rental’s address. The report includes the estimated total tax rate to collect from guests, number of required registrations, number and frequency of returns per year, and minimum number of rented days to qualify as a taxable stay.

It should be noted that tax rates and the rules governing them change frequently. Please consider your tax rate report to be informative rather than authoritative.

Local short-term rental regulations

STR operators in Maryland should be aware of the local regulations that apply to them, including rules covering:

• Legality
• Permits, licenses, and registration
• Zoning
• Advertising
• Neighborhood notification
• Building and housing standards

Homeowner associations (HOAs), condominium communities, co-ops, and landlords may also have specific rules regarding vacation rentals. It’s your responsibility to be aware of STR policies that apply to your property.

Registering with tax authorities

Before you can begin collecting lodging taxes in Maryland, you’re legally required to register with the Comptroller of Maryland. You can register online to receive a sales tax license. Depending on your jurisdiction, you may be required to register with your local tax authority and file local lodging tax returns in addition to state registration and filing.

Collecting lodging tax

Once you’ve registered with tax authorities, you’re ready to start collecting lodging taxes, which you’ll add to your guest’s bill when they pay for their stay.

Which lodging taxes apply to Maryland short-term rentals?

In Maryland, STRs are subject to state sales tax and may be subject to local lodging tax, depending on location.

Tax rates

Before you can begin collecting short-term rental taxes, you need to know the correct rate to charge to avoid compliance issues. Our lodging tax lookup tool can give you a rate report specific to your Maryland address.

What charges are taxable?

In Maryland, the entire charge for accommodations is taxable. This includes charges such as cleaning fees, pet fees, rollaway bed fees, extra person fees, etc.

What happens when my short-term rental marketplace (such as Airbnb or Vrbo) collects lodging taxes for me?

In Maryland, STR marketplaces are required to collect state sales taxes from guests when a rental is paid for. Starting July 1, 2027, STR marketplaces will also be required to collect local lodging taxes and remit them to the state. If taxes aren’t being collected from guests for you, you’re responsible for collecting and remitting taxes.

Are guests ever exempt from taxes?

There are situations in which you aren’t required to collect lodging taxes in Maryland. For example, a guest who rents for a long term rather than a short term is exempt from lodging taxes. In Maryland, accommodations purchased by buyers including government agencies, nonprofit and charitable organizations, and foreign diplomats may be exempt. Guests are required to present exemption certificates.

Filing lodging tax returns

After you’ve collected taxes from your guests, it’s time to file your tax returns with the Comptroller of Maryland. In Maryland, you can file returns and pay the tax online.

When do I need to file my returns?

You’ll be assigned a filing frequency and due dates when you register with the tax authority. For filing with the Comptroller of Maryland, state sales tax due dates are as follows:

I didn’t rent my property during this filing period. Am I still required to file a lodging tax return with the Comptroller of Maryland?

Yes. STR operators registered with the Comptroller of Maryland are required to file returns each assigned filing period, regardless of whether you had any STR income or collected lodging taxes. Such returns are commonly known as “zero dollar returns.” Local tax authorities may have their own requirements.

Are there penalties for filing taxes late?

Whether you choose to offer STRs through a marketplace like Airbnb or Vrbo, or directly to guests, you open the door to tax liability at the state and local level. As tax revenue is a major source of local funding, tax authorities are becoming more aggressive in their efforts to identify individuals and businesses not in compliance with tax laws. Failure to register with tax authorities and file lodging tax returns in Maryland on time may result in late fees, interest payments, and in extreme cases, legal action.

I’ve been offering short-term rentals without collecting lodging tax. What options do I have?

If you’re already operating an STR but not collecting lodging tax, you may be in violation of Maryland tax laws. Take the time to review your legal responsibility (with a tax professional, if necessary) and understand the risk of continuing to not collect tax.

STR operators in Maryland may be able to take advantage of a voluntary disclosure agreement (VDA). A VDA offers an opportunity for operators to proactively disclose prior period tax liabilities in accordance with a binding agreement with the Comptroller of Maryland. VDAs are offered to encourage cooperation with state tax laws and may result in some or all penalty and interest payments being waived.

Are there options for outsourcing lodging tax filing?

Yes. Many STR operators in Maryland file several state and local lodging tax returns every year. Filing solutions such as Avalara MyLodgeTax can relieve this burden.