Avalara Taxrates > Blog > Sales Tax News > Massachusetts won’t tax Airbnb, for now - Avalara

Massachusetts won’t tax Airbnb, for now

 Airbnb rentals remain tax free in Massachusetts, at least for now.

The taxability of short-term rentals like those offered by Airbnb is hotly contested in a number of locations. It’s an issue that’s arisen in Brazil, where Airbnb is offering 20,000 lodging options during the 2016 Rio Olympics. It’s made headlines in New York City, San Francisco, Toronto, and, most recently, Massachusetts.

Short-term rentals à la Airbnb and VRBO are not subject to tax in Massachusetts. Charges for hotel lodging, however, are. Not surprisingly, the hotel industry is pushing to level the playing field and apply Massachusetts lodging taxes to all forms short-term lodging, particularly those offered by the sharing-economy giant. And earlier this summer, it seemed that would happen soon.

Governor Charlie Baker (R) initially expressed his support for legislation including a tax on short-term accommodations such as Airbnb which was part of a proposal to increase the state’s Earned Income Tax Credit (see SB 2423). He wasn’t alone in thinking it was a good idea: the Senate received a letter from Airbnb in which the sharing economy giant wrote, “Airbnb sees the value in ensuring that our community pays its fair share of these room occupancy taxes” (Mass Live). It’s good to know the backbone of the sharing economy doesn’t mind sharing in the tax burden.

Yet after looking more closely, the governor changed his mind and withdrew his support for that legislation. Through his spokesman, he expressed concern that “the Senate amendment would impose burdensome taxes and government bureaucracy on folks who utilize short term vacation rentals popular in the Commonwealth.” He expressed particular concern over extending the tax to small bed and breakfasts, which are currently exempt, saying the tax was “very broad and covers a whole variety of rentals that I would never dream of having Massachusetts tax.”

Nonetheless, Governor Baker emphasizes that he isn’t opposed to taxing Airbnb. While he doesn’t support raising taxes, he does see the need for a level playing field. Eventually. Perhaps.

Less conflicted than Gov. Baker

Other states and cities have decided to tax Airbnb accommodations. These include Alabama, Connecticut, Florida, Washington, and the District of Columbia. Where there are no state-wide taxes on Airbnb accommodations (or in addition to state taxes), many cities and counties have enacted them. These include many locations in California and:

  • Anchorage, Alaska
  • Phoenix, Arizona
  • Cleveland, Ohio
  • Philadelphia, Pennsylvania
  • Santa Fe and Taos, New Mexico
  • Sullivan County, New York

For a complete list of areas where occupancy tax is collected and remitted by Airbnb, click here.

Businesses can simplify lodging tax compliance with an automated solution. Learn more.

photo credit: OuiShare Summit 2012 via photopin (license)

Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.