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Accounting and Tax Tips Blog

occupancy tax

A few years ago, cities began to realize that Airbnb rentals were eating into their tax revenues. At the time, Airbnb hosts weren’t paying taxes like hotels, so many US cities set out to change that. Now, many cities make Airbnb hosts pay taxes just like hotels. In fact, occupancy taxes commonly go by the nickname “hotel taxes”. The cities that charge occupancy taxes want their money, so they’ll come down hard if you try to avoid them.

What is Occupancy Tax?

Occupancy taxes go by many names, including hotel tax, lodging tax, room tax, or tourist tax. However, they all serve the same purpose. Some cities charge an occupancy tax on short-term rentals. Usually, the renter is responsible for these costs. As a result, your guests must pay extra taxes if they stay for less than 30 days. Many cities also have licensing requirements which you need to satisfy within 30 days of launching your hosting venture. Noncompliance can result in penalties, fines and retroactive taxes on your Airbnb business.

Occupancy Tax Rates By City

If you’re shopping for a rental in a new city, you should know the local occupancy tax rates before you buy. This city-by-city list breaks down occupancy taxes in several metropolitan areas so bookmark it for reference.

As of the date of this writing Airbnb is collecting and remitting taxes in the following cities in the United States. Remember, local regulations change constantly, so this is by no means an end-all resources. Check with local tax authorities to determine occupancy tax rates.

Chicago, IL

Hotel Accommodation Tax – 4.5% fee for reservations 29 nights and shorter.

District of Columbia

Sales Tax on Hotels (Transient Accommodations) – 14.5% of the listing price fee for reservations 90 nights and shorter.

Malibu, CA

Transient Occupancy Tax – 12% of the listing price for reservations 30 nights and shorter.

Multnomah County and Portland, OR

Transient Lodging Tax: 1% of the listing price for reservations 30 nights or shorter.  1% is the State imposed tax rate only.  Additionally, there is the Multnohah County Transient Lodging tax at 11.5%.  Portland assesses 6% of the listing price for any reservation 30 nights or shorter.

North Carolina

Sales Tax: 6.75-7.75% of the listing price.  The state also imposes a 4.75% tax and a local 2-2.75% tax which varies by county.

Oakland, CA

Oakland Transient Occupancy Tax: 14% of the listing price for reservations 30 nights or shorter.

Palo Alto, CA

Transient Occupancy Tax: 14% of the listing price for reservations 30 nights or shorter.

Philadelphia, PA

Hotel Room Rental Tax: 8.5% of the listing price for reservations 30 nights or shorter.

Phoenix, AZ

Hotel/Motel Tax: 3% of the listing price for reservations 29 nights or shorter.  In addition, there is a Phoenix Transaction Privilege (Sales) Tax: 2% of the listing price for all reservations.

Rhode Island

Sales Tax: 7% of the listing price for reservations 30 nights or shorter.  Also, there is the Rhode Island Local Hotel Tax at 1% and the Rhode Island Statewide Hotel Tax at 5%.  Rentals of an entire home or apartment are excluded from this tax.

San Diego, CA

Transient Occupancy Tax: 10.5% of the listing price for reservations 30 nights or shorter.  In addition, there is the San Diego Tourism Marketing District Assessment at .55% of the listing price.

San Francisco, CA

Transient Occupancy Tax: 14% of the listing price for reservations 29 nights or shorter.

San Jose, CA

Transient Occupancy Tax: 10% of the listing price for reservations 30 nights or shorter.

Collecting Occupancy Taxes

Airbnb says it falls on hosts to collect occupancy taxes. As a host, you’re also responsible for following licensure procedures in your city. It falls on you, the host, to follow these regulations, so don’t expect Airbnb to help you if you slip up. Do your research and make sure your rental complies with local laws, or risk the consequences.

More Airbnb Tax Planning Tips

At Shared Economy Tax, we believe that this is the beginning of a long-term trend. More and more cities are beginning imposing occupancy taxes, and it could ultimately effect your rentals. Don’t let an unpaid occupancy tax derail your growing business. Talk to a Shared Economy Tax specialist today.  You can also sign up for our complimentary newsletter