Occupancy taxes on short-term rentals, explained

Updated September 2026. Of all the rules that touch an American short-term rental, lodging taxes are the ones with no exceptions. A state can stop a city from banning your rental; no state stops the city from taxing it. Yet taxes are also where new owners most often get caught out, because the names, rates, thresholds and collection rules change at each level of government. This article explains how the system works and where the gaps usually are.

One idea, many names

An occupancy tax is a tax on the price of a short stay, paid by the guest and collected by whoever takes the money. Depending on where you are, it may be called:

• a hotel occupancy tax (Texas);
• a tourist development tax (Florida counties);
• a transaction privilege tax on transient lodging (Arizona, which has no classic sales tax);
• a room tax (Wisconsin municipalities);
• a lodging tax or hotel and motel tax (Nebraska, Iowa);
• a travel and convention tax (Idaho).

On top of these, most states apply their ordinary sales tax to short stays. A single booking can therefore carry four or five separate taxes, each with its own return.

The three layers

State. Usually sales tax, sometimes a dedicated lodging tax as well. Examples from our state guides, as reviewed in September 2026: Florida charges 6% state sales tax on transient rentals plus any county surtax; Texas charges a 6% state hotel occupancy tax; Tennessee applies its 7% state sales tax plus a local rate; Wisconsin's base sales tax is 5%; Nebraska adds a 1% state lodging tax to sales tax; Iowa levies a 5% state hotel and motel tax.

County. Florida's counties set tourist development taxes, Nebraska's set county lodging taxes, and many counties elsewhere levy sales surtaxes.

City or district. City hotel taxes in Texas, municipal room taxes in Wisconsin, local occupancy taxes in Tennessee, auditorium district taxes in parts of Idaho, city occupation taxes in Nebraska. Iowa caps local hotel and motel tax at 7% on that same September 2026 review.

When a stay stops being taxable

Every tax has a duration threshold, and they do not match. Texas, Idaho and Arizona look at stays under 30 days. Wisconsin taxes lodging of less than one month. Tennessee sales tax runs until 90 continuous days. Florida taxes transient rentals of six months or less. A 45-day corporate stay can be tax-free in one state and fully taxable in another, so check before you promise a guest a price.

What is in the taxable price

Assume that everything the guest must pay to stay is taxable: the nightly rate, cleaning fees, pet fees, extra-guest charges. Tennessee's Department of Revenue says so explicitly. Security deposits that are genuinely refundable are usually treated differently, but state rules vary.

What the platforms collect, and what they don't

Most states now have marketplace facilitator laws requiring booking platforms to collect and remit certain taxes. That has made compliance easier, but three gaps remain:

• Locally administered taxes. In Florida, most counties collect the tourist development tax themselves. Whether a platform remits it depends on agreements with each county.
• Registration still required. Arizona expects the owner to hold a TPT license and put the number on every listing, then deduct platform-collected income on the return. Several states require you to file even when the platform has paid.
• Direct bookings. Stays booked through your own website, by phone or with repeat guests carry no platform. Every tax on those is yours to collect and file.

Tennessee shows how intricate this can be: marketplace facilitators collect state and local sales tax, and for stays under 30 days they remit local occupancy tax to the state Department of Revenue rather than to the city, while direct bookings are still paid locally.

Registration: the step that protects you

Before your first guest, register with each tax authority that applies: the state revenue department, and the county or city if it administers its own tax. Local permits increasingly ask for proof. Houston's registration requires evidence of hotel tax registration; Arizona cities can require your tax license number on listings.

A simple compliance routine

• List every tax that applies to the exact address, with its authority and filing frequency.
• For each booking channel, note which of those taxes the platform remits.
• Collect and file the rest yourself, including zero returns where required (Iowa, for example, expects returns even in months without income).
• Keep booking-level records: dates, price components, platform and taxes charged.
• Review the rates each January; local rates change often.

Why it matters beyond the fine

Back taxes, penalties and interest are costly. The quieter risk is to your permit: where cities tie their short-term rental registration to proof of tax registration, as Houston does, a gap on the tax side becomes a gap in your right to operate. Clean tax records are part of what keeps a property rentable.

Our state guides list the taxes for each state we cover. If you want a second pair of eyes on the setup for a specific property, we study every request and tell you honestly whether and how we can help. For tax filings themselves, work with a local accountant.