How much is Airbnb tax: Guide for the US hosts

Running an Airbnb can bring in great extra income, but there are important tax implications you need to know about. So, how much is Airbnb tax? Do you need to pay taxes on all of your hosting earnings, and if so, how much?

Generally speaking, all US hosts have to pay taxes on their Airbnb earnings. But how much you pay depends on your residency status and where your property is located (in the US or abroad). Here's everything you need to know about Airbnb taxes.

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Do you have to pay tax on Airbnb income?

Yes, you're generally required to pay US income tax on your Airbnb earnings. However, the specifics depend on your circumstances.

Here are the 3 main scenarios where you'll owe US taxes on your hosting income:

• You're a US citizen or resident hosting US properties: This is the most straightforward situation. Your rental income gets treated like any other domestic income and must be reported on your tax return
• You're a US citizen or resident hosting properties abroad: US citizens and residents must report worldwide income, including foreign rental earnings. You'll likely owe US taxes regardless of where your properties are located
• You're NOT a US citizen or resident, but you host US properties: Even if you live abroad, income from US rental properties is still subject to US taxation. The property location determines the tax obligation, not your citizenship

There's one exception to these rules.

If you rent out your home for fewer than 15 days per year, the IRS doesn't consider it a rental business.¹You won't need to report this income or claim rental expenses on your tax return.

You can still deduct mortgage interest and property taxes as you normally would on Schedule A, however.

How to report rental income on Airbnb?

You'll need to report your Airbnb earnings using either cash-basis or accrual-basis accounting. Most people use cash-basis accounting, which means you report income in the year you receive it and deduct expenses when you pay them.¹

You must report the gross income from your rental activities, which means the total amount guests paid before any refunds or Airbnb service fees are subtracted.¹ This gross amount will likely be higher than what actually landed in your bank account.

Taxes when renting out a property on Airbnb as an American

The tax rate you'll pay on your Airbnb income depends on how you've structured your hosting business.

It matters whether you operate as an LLC, an S-Corp, a sole proprietor, or in any other way. Your filing status (single, married filing jointly, etc.) also determines which tax brackets apply to your income.

Here are the 2024 federal tax rates for single taxpayers. These are progressive rates, meaning you only pay the higher rate on income that falls into each bracket, not on your entire income.²

If you're a US citizen or tax resident hosting properties outside of the US, you still need to file US tax returns and report that foreign rental income.

Depending on tax treaties and foreign tax credits, you may be able to reduce or eliminate double taxation, but the rules vary by country.

Taxes when renting out a US property on Airbnb as a non-American

Even if you're not a US citizen or resident, renting out a property in the US makes you subject to US tax laws. It doesn't matter where you live. You must report your income from your US real estate to the IRS.

In this scenario, Airbnb requires you to submit either Form W-8BEN (for individuals) or Form W-8BEN-E (for business entities). However, this triggers a 30% withholding tax on all your US rental payouts.³

In other words, Airbnb will automatically deduct 30% of your earnings and send it to the IRS.³

There's an alternative, though.

If you submit Form W-8ECI, Airbnb won't withhold the 30% tax from your payouts. However, filing this form means that you're certifying that your rental income is "effectively connected with a US trade or business," and you're committing to file a complete US tax return.³

If you're paying taxes on your US rental income in your home country as well, you might be able to use foreign tax credits to avoid double taxation.

The specifics depend on tax treaties between the US and your country, so it's a good idea to consult with a knowledgeable tax professional.

What tax deductions are available for hosts on Airbnb?

You can deduct many legitimate business expenses from your rental income to reduce how much you pay in US taxes. It's typically possible to deduct any expense that's ordinary, necessary, and actually paid.¹

Here are the main deductible expenses for Airbnb hosts:¹

• Advertising and marketing expenses
• Cleaning services and supplies
• Utilities (electricity, gas, internet, cable, trash collection)
• Property insurance, including mortgage insurance premiums
• Property taxes specifically related to the rental
• Interest on loans or mortgages used to buy or improve the rental property
• Airbnb service fees and other platforms' collection fees
• Legal and accounting fees related to your rental business
• Homeowners' association fees
• Repairs like fixing broken windows, doors, or appliances
• Regular maintenance to keep the property in good condition>
• Depreciation on the property and major improvements over time
• Travel costs for property management and maintenance
• Refunds paid to guests through cancellations or Airbnb's Resolution Center
• Educational expenses like property management conferences
• If you're renting the property yourself, rent payments to your landlord

For more complex situations, like US citizens with foreign properties or international owners with US properties, the deduction rules can get more complicated.

If you're wondering "how much is tax on Airbnb," there's no single answer because it depends on your circumstances. In short:

• US citizens and residents hosting domestically will pay regular income tax rates on their rental earnings
• US citizens with foreign properties must report that income on their US tax returns, regardless of where the properties are located
• Non-US residents with American properties face either a 30% withholding tax or need to file US tax returns if they qualify³

Your tax rate also depends on factors like your total income, filing status, business structure, and what deductions you can claim.

If you're receiving payouts in different currencies or transferring money between countries, banks often charge hefty fees and use poor exchange rates. These costs can quickly add up and reduce your rental profits.

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Sources

1. Airbnb - General guidance on the taxation of rental income (by Ernst & Young)
2. IRS - Federal income tax rates and brackets
3. Airbnb - Frequently asked questions about US taxes