What Is the Airbnb Tax Rate and How Is It Calculated?

Earning income through platforms like Airbnb involves navigating various tax obligations. Hosts are generally considered self-employed or operating a business, which means their earnings are subject to specific tax responsibilities. This includes federal income and self-employment taxes, along with state and local lodging taxes.

Federal Income and Self-Employment Taxes

Gross rental income from an Airbnb property is considered taxable income. This income is subject to federal income tax rates, which depend on an individual host’s total taxable income and their filing status. These tax rates are structured into various brackets, meaning different portions of income are taxed at increasing percentages.

Beyond federal income tax, most active Airbnb hosts also incur self-employment tax. This tax contributes to Social Security and Medicare programs, similar to the payroll taxes withheld from traditional employees’ wages. While traditional employees and their employers each pay half of these taxes, self-employed individuals are responsible for both portions.

The self-employment tax rate is 15.3%, comprising a 12.4% Social Security tax and a 2.9% Medicare tax. This rate is applied to 92.35% of your net earnings from self-employment.

For the Social Security portion, there is an annual earnings limit. In 2025, only the first $176,100 of net earnings is subject to the 12.4% Social Security tax. Earnings exceeding this threshold are still subject to the 2.9% Medicare tax.

Federal income tax and self-employment tax are separate financial obligations. Income tax is calculated based on overall taxable income after deductions, while self-employment tax is specifically levied on net earnings from self-employment activities. Self-employed individuals are generally required to pay estimated taxes throughout the year to cover both these federal obligations, typically in quarterly installments.

State and Local Lodging Taxes

In addition to federal taxes, Airbnb hosts may be subject to various state and local lodging taxes. These are often referred to by different names, such as occupancy taxes, transient occupancy taxes (TOT), hotel taxes, or tourist taxes. These taxes are typically imposed by state, county, or city governments on short-term rentals.

The rates and rules for these lodging taxes vary significantly across different jurisdictions. A single short-term rental might be subject to multiple layers of these taxes, such as a state lodging tax, a county occupancy tax, and a city hotel tax. For example, a total tax rate of 10% could include 6% state tax, 2% city tax, and 2% county tax.

Airbnb facilitates the collection and remittance of these taxes in many jurisdictions where required. In these areas, Airbnb calculates the applicable taxes, collects them from guests at the time of booking, and then remits them directly to the appropriate tax authorities on behalf of the host. This can simplify the process for hosts by handling a portion of their tax responsibilities.

However, Airbnb does not automatically collect and remit all state and local taxes in every location. In some areas, Airbnb might collect state-level taxes but not local city or county taxes. In jurisdictions where Airbnb does not automatically handle tax collection, the host remains responsible for these obligations. This requires hosts to register with the relevant local tax authorities, accurately calculate the taxes, collect them from guests, and then remit them to the government entities on a regular basis, often monthly or quarterly.

Some jurisdictions may also impose other local fees or sales taxes on short-term rentals. Therefore, hosts must research and understand the specific tax requirements for their rental property’s exact location. Even when Airbnb collects some taxes, hosts should verify their remaining obligations to ensure full compliance with all applicable state and local tax laws.

Deductible Expenses and Tax Reporting

Airbnb hosts can significantly reduce their taxable income by claiming business expenses. These deductions lower the amount of income subject to federal income tax and, for active hosts, self-employment tax. Common deductible expenses include a portion of mortgage interest and property taxes, utilities such as electricity, gas, and water, along with cleaning fees and supplies.

Other allowable deductions include insurance premiums, maintenance and repair costs, and depreciation of the property and its furnishings. Airbnb service fees, professional fees paid to accountants or lawyers, and the cost of supplies like toiletries or welcome amenities for guests are also deductible. Travel expenses incurred for business purposes can be written off. Maintaining detailed records for all expenses is important to substantiate deductions.

For tax reporting, Airbnb may issue Form 1099-K, Payment Card and Third Party Network Transactions, to hosts. This form reports the gross amount of payment transactions processed through the platform. For 2025, Airbnb is required to issue Form 1099-K if gross payments exceed $2,500. Regardless of whether a host receives a 1099-K, all rental income must be reported to the Internal Revenue Service (IRS).

Most active Airbnb hosts report their income and expenses on Schedule C, Profit or Loss from Business (Sole Proprietorship), of Form 1040. This form is used by self-employed individuals to calculate their net earnings from a business, which then determines their self-employment tax liability and contributes to their overall taxable income. The IRS generally considers an Airbnb activity to be a business if substantial services are provided to guests, similar to a hotel, or if the average period of customer use is seven days or less.

In contrast, Schedule E, Supplemental Income and Loss, is typically used for reporting passive rental income, such as from long-term rentals where minimal services are provided. While some Airbnb activities might theoretically fall under Schedule E if they are truly passive, most short-term rental operations involve enough active management and services to warrant reporting on Schedule C. This distinction impacts self-employment tax obligations, as income reported on Schedule E is not subject to self-employment tax. Consulting with a qualified tax professional is recommended for accurate reporting and to maximize eligible deductions.