Does Airbnb Collect Sales Tax or Is It Host Responsibility?

Taxes on short-term rentals can be confusing, especially when using platforms like Airbnb. One of the biggest questions for hosts is whether Airbnb collects sales tax automatically or if they need to handle it themselves. The answer depends on local regulations and how Airbnb operates in different regions.

Understanding tax responsibilities helps hosts avoid penalties and unexpected costs.

Situations Where Airbnb Collects Tax

Airbnb collects and remits taxes in many locations based on agreements with local governments. When these agreements exist, Airbnb calculates taxes at checkout and submits them directly to tax authorities. These typically include sales tax, transient occupancy tax, hotel tax, or similar levies on short-term rentals.

For example, in California, Airbnb collects Transient Occupancy Taxes (TOT) in cities like Los Angeles and San Francisco. In Texas, it handles the state’s 6% Hotel Occupancy Tax. The percentage Airbnb collects varies by location. In New York City, the platform applies a 5.875% state sales tax, a 4% city hotel room occupancy tax, and a $1.50 per night unit fee. In Florida, Airbnb collects the 6% state sales tax along with county tourist development taxes, which range from 2% to 6%. These taxes are automatically added to the guest’s total.

Even when Airbnb collects taxes, some states and municipalities require hosts to file additional reports. In Washington State, Airbnb remits sales and lodging taxes, but hosts must still file a tax return with the Department of Revenue. In Colorado, Airbnb collects state and local sales taxes, but hosts may need to register with local tax authorities if additional district taxes apply.

Cases Requiring Host-Handled Tax

In areas where Airbnb lacks agreements with tax authorities, hosts must collect and remit taxes themselves. This is common in smaller municipalities or regions with evolving rental regulations. Without Airbnb’s automatic tax collection, hosts must determine applicable tax rates, add them to the guest’s total, and ensure timely payment to the correct government agency.

Some locations require hosts to register for a tax permit before collecting taxes. In Missouri, rental operators must obtain a sales tax license from the Department of Revenue and file returns periodically. Failure to do so can lead to penalties or legal action. In Tennessee, hosts outside of Airbnb’s tax collection jurisdictions must collect the state’s 7% sales tax, along with county lodging taxes ranging from 2% to 5%.

Certain jurisdictions impose additional fees Airbnb does not handle. In Pennsylvania, Airbnb collects the state’s 6% hotel occupancy tax, but some counties require hosts to remit an additional local hotel tax separately. This requires hosts to research location-specific requirements.

Tax filing frequency varies by state. In Georgia, hosts exceeding $500 in monthly taxable sales must file returns each month, while those below this threshold can file quarterly. Missing deadlines can result in fines, with some states imposing percentage-based late fees. Arizona, for example, charges a 10% penalty on unpaid lodging taxes.

Differences Between Sales Tax and Occupancy Tax

Sales tax and occupancy tax both apply to short-term rentals but serve different purposes. Sales tax is a broad consumption tax on goods and services, including accommodations, and is typically a percentage of the total booking cost. Occupancy tax, also called lodging or transient tax, applies specifically to short-term stays and may include fixed per-night fees or tiered rates based on duration.

Sales tax follows state-level guidelines, meaning rates and exemptions are set by state governments. In Illinois, the state sales tax on lodging is 6.5%, but local municipalities can impose additional sales taxes, leading to a combined rate exceeding 10% in some areas. Occupancy tax is usually controlled at the county or city level, allowing local governments to adjust rates based on tourism demands. In San Diego, the Transient Occupancy Tax (TOT) is 10.5%, while in Austin, Texas, the city charges a 9% occupancy tax in addition to the state’s hotel tax.

Exemptions vary. Some states exempt longer-term stays from occupancy taxes, classifying rentals exceeding a certain number of days as residential leases rather than short-term lodging. In North Carolina, guests staying longer than 90 consecutive days are exempt from the state’s occupancy tax but must still pay sales tax for the first portion of their stay. Sales tax exemptions are more commonly tied to the type of guest, with some states waiving sales taxes for government employees or nonprofit organizations booking accommodations for official purposes.

Documentation for Tax Compliance

Maintaining accurate records is essential for tax compliance. Proper documentation ensures hosts meet tax obligations and protects them in case of audits. The IRS and state tax agencies require hosts to keep thorough records of rental income, deductible expenses, and tax payments. Under IRS guidelines, hosts should retain these records for at least three years, though longer retention may be necessary if substantial underreporting is suspected.

Income documentation should include booking confirmations, payment receipts, and Airbnb’s annual tax forms, such as Form 1099-K, which is issued to hosts with over 200 transactions and $20,000 in gross earnings. Some states, like Massachusetts and Vermont, have lower reporting thresholds, requiring Airbnb to issue 1099-K forms to hosts earning as little as $600. Hosts should reconcile these forms with their financial records before filing tax returns.

Expense tracking is equally important, as deductible costs can reduce taxable income. Hosts should maintain receipts for property maintenance, cleaning services, utilities, and depreciation of furnishings or appliances. The IRS allows depreciation deductions for rental properties under the Modified Accelerated Cost Recovery System (MACRS), typically over 27.5 years for residential properties. Properly categorizing these expenses ensures deductions are correctly applied, minimizing tax liability.