Last Updated: April 2026
The short-term rental market (Airbnb, VRBO, Hipcamp, etc.) has created millions of incidental and professional landlords who face a complex tax situation: STR income sits at the intersection of vacation home rules, rental income rules, and potentially self-employment/business income rules — and state and local tax compliance varies enormously by jurisdiction. This guide covers the federal income tax framework for STRs and the state-by-state picture for STR operators.
The federal tax treatment of STR income depends on the pattern of use:
If you rent your property for 14 or fewer days in the year and use it personally for more days than you rent it: rental income is entirely tax-free (not required to be reported). You cannot deduct any rental expenses. This rule is often called the 'Masters exception' (Augusta, Georgia homeowners famously rent for the Masters golf tournament — 7 days, tax-free income). If you earn significant income from a short annual rental window, this rule can be very valuable.
If you use the property personally for more than 14 days OR more than 10% of rental days (whichever is greater): it is treated as a vacation home. Rental income is taxable. Deductions are limited — you can deduct expenses up to gross rental income (no deductible loss). Expenses must be allocated between personal use days and rental days.
If you use the property for fewer than 14 days personally AND fewer than 10% of rental days: it is treated as a rental property. You report income and deductible expenses (mortgage interest, taxes, insurance, repairs, depreciation, management fees, Airbnb fees) on Schedule E. Passive activity rules apply — rental losses can only offset passive income unless you qualify as a Real Estate Professional (750+ hours annually in real estate activities with it exceeding 50% of your total work time).
If the average rental period is 7 days or less AND you provide substantial services (daily housekeeping, meal service, guided activities), the IRS may reclassify the STR as a business on Schedule C — not rental income. Implications: you may deduct operating losses against ordinary income (not subject to passive loss rules), but you may owe self-employment tax (15.3%) on net profit. This classification can be beneficial or harmful depending on your situation.
Short-term rental operators face two types of state/local tax:
STR income is taxed by the state where the property is located — regardless of where the owner lives. If you own an Airbnb in California but live in Texas: you owe California income tax on the net STR income (file CA non-resident return). State income tax treatment generally follows federal treatment of the income (Schedule E or Schedule C characterization).
Most states and many cities impose occupancy taxes on short-term rentals — similar to hotel taxes. Rates vary significantly:
| State | State STR Occupancy Tax | Notes |
|---|---|---|
| California | Varies by county/city; typically 10–15% total | Los Angeles: 14%; San Francisco: 14%; Airbnb collects and remits in many CA jurisdictions |
| Florida | 6% state sales tax + county tourist development tax (4–6%) | Total: 10–12%; Airbnb collects in most FL counties |
| Texas | 6% state hotel occupancy tax + local | Total typically 13–15%; Airbnb collects state portion; local may require separate registration |
| New York | 4% state hotel tax + NYC hotel tax (5.875%) + NYC hotel unit fee ($1.50/night) | Total NYC: ~15–20%; NYC STR restrictions (Local Law 18) severely limit Airbnb in NYC |
| Colorado | 2.9% state sales tax + local; mountain resort towns have very high local STR taxes | Vail/Aspen: up to 8–10% additional local tax |
Airbnb and VRBO automatically collect and remit state and local occupancy taxes in many (but not all) jurisdictions. Hosts must verify whether their specific location is covered. In jurisdictions where Airbnb collects: host may still need to register with the state/locality independently. In jurisdictions where Airbnb does NOT collect: host must collect from guests and remit independently. Check your Airbnb host dashboard under 'Taxes' to see which taxes Airbnb handles for your properties.
For rental-classified STRs (not vacation home or 14-day rule), deductible expenses include: Airbnb/VRBO service fees (host fee), cleaning costs, linens and supplies, utilities (proportional to rental vs personal use), repairs and maintenance, property management fees, depreciation on the structure (27.5 years) and furnishings (5 years, potentially eligible for bonus depreciation), mortgage interest (proportional allocation), property taxes (proportional allocation), and professional services (accountant, attorney).
CountryTaxCalc.com is reader-supported. When you use our partner links, we may earn a commission at no cost to you. Learn more about our affiliate partnerships
★ 4.8 verified reviews · 3,758 reviews
Short-term rental classification, vacation home rules, occupancy tax compliance, and depreciation optimization require experienced CPA guidance. TaxHub connects you with rental property specialists.
⚠ Not for simple single-state returns. Free filing is fine for straightforward W-2 situations.
Get STR Tax Help From a CPA →★ 4.8 Trustpilot · 1,625 reviews
Non-US residents owning US Airbnb properties face FIRPTA, branch profits tax, and US rental income reporting. Greenback specialises in US real estate tax for international owners.
⚠ Not the cheapest option — best for complex situations and expats who want a dedicated CPA.
US STR Tax Help for Non-Residents →Generally no — passive rental income (Schedule E) is not subject to self-employment (SE) tax. SE tax (15.3% on net earnings) applies only if the STR is classified as a business on Schedule C. The STR-as-business classification applies when the average rental period is 7 days or less AND substantial services are provided (daily cleaning, meals, tour guiding). Most typical Airbnb hosts — who rent for a week or more and provide only typical cleaning between guests — report on Schedule E and owe no SE tax on STR profits.
If you use your rental property personally for more than 14 days or 10% of rental days (whichever is greater), it is a vacation home. The vacation home rule limits deductions to gross rental income — you cannot deduct a loss. Expenses must be allocated between personal and rental days. The 'Cohan rule' or proportional allocation method applies: if you rent 100 days and use personally 15 days, rental expenses = 100/115 × total expenses. Deductible expenses in excess of rental income are carried forward but remain limited to future rental income.
Yes — short-term rental furnishings, appliances, and equipment (5-year MACRS property) qualify for bonus depreciation. Bonus depreciation percentage is 60% for 2024 (phasing down: 40% in 2025, 20% in 2026, 0% thereafter under current TCJA phase-out schedule). On $20,000 in Airbnb furniture: 60% bonus depreciation = $12,000 immediate deduction in year 1. Cost segregation studies can also identify shorter-life components in the physical structure, accelerating depreciation further — particularly valuable for high-value properties.