There's a tax on your rental that has nothing to do with income tax, and it's the one small hosts most often get wrong: lodging tax — also called occupancy tax, transient tax, or hotel tax depending on where you are. Get it wrong and the penalty usually isn't about the money you owe; it's about failing to register in the first place.
What it is
Lodging tax is a percentage charged on short stays, collected from the guest and remitted to a state, county, or city. It's separate from the income tax you pay on your profit. Many places have several layers stacked — a state rate plus a county rate plus a city rate — each potentially administered by a different office.
The trap: "Airbnb collects it, so I'm covered"
This is the single most common — and most dangerous — assumption hosts make. Under marketplace facilitator laws, platforms like Airbnb and Vrbo do collect and remit lodging tax in many jurisdictions. But that does not always mean you're off the hook:
- You may still have to register with the locality even when the platform remits the tax on your behalf. Collection ≠ registration.
- Platforms don't cover every jurisdiction. They may handle the state layer but not your city or county.
- Direct bookings are yours. Any booking that doesn't go through a platform, the collecting and remitting is entirely on you.
Assuming full coverage when it's partial is exactly how owners end up with a fine and back taxes.
How to get it right in 15 minutes
- Find your layers. Search your state Department of Revenue, then your county, then your city, for "short-term rental" or "transient occupancy tax."
- Register with each jurisdiction that requires it — often required even if a platform collects.
- Confirm what your platforms actually cover for your specific address (it's usually listed in your payout/tax settings).
- Handle the gaps yourself — any layer or any booking the platform doesn't cover, you collect and remit on the required schedule.
It's paperwork, not rocket science — but it's the paperwork that quietly turns into penalties when skipped. Do it once, set a reminder for the filing cadence, and it's handled.
This is general education, not tax advice. Lodging-tax rules are intensely local and change often — verify the specifics for your exact address and confirm with a qualified professional.