STR Vacation Tax Guide: What Every Short-Term Rental Owner and Manager Needs to Know

TL;DR: If you manage or own short-term rentals, don’t assume Airbnb or VRBO is handling your occupancy taxes correctly. Many STR hosts are unknowingly non-compliant. This guide breaks down what’s taxable, how to register, collect, and remit correctly, and the common mistakes to avoid.



What Are STR Occupancy Taxes?

Occupancy taxes (also known as lodging taxes, transient occupancy taxes, or Airbnb taxes) are charged on short-term stays - typically under 30 days, though some jurisdictions extend this to 90 days. These taxes are collected by cities, counties, or states and can apply to:

  • Nightly accommodation rates
    • Cleaning fees
    • Pool heating
    • Damage waivers (if non-refundable)
    • Late checkout or early check-in fees

And yes, these extras are taxable!

Pro tip: Just because Airbnb or VRBO shows a tax line item doesn’t mean they’re collecting everything required. Always double-check local regulations.



Do Airbnb, VRBO, and Booking.com Handle Taxes for You?

Sometimes. But never assume.

  • Airbnb collects and remits taxes in many locations, but not all. For example, they don’t handle local tax remittance in Hawaii.
  • VRBO is even trickier. Whether they collect taxes often depends on how you’re connected to them (directly or via PMS).
  • Booking.com frequently leaves it to hosts to figure it out.

If you take direct bookings, you’re 100% responsible for collecting and remitting occupancy taxes.

Case in point: We saw a setup in Hawaii where Airbnb’s tax defaults didn’t match local law. We had to override the settings manually to stay compliant.



What’s Actually Taxable? (It’s More Than You Think)

Many STR hosts mistakenly assume only the nightly rate is taxable. In reality, most jurisdictions also tax:

  • Cleaning fees
  • Extra guest fees
  • Optional add-ons (like early check-in or heated pools)
  • Non-refundable charges (like damage waivers)

If a guest pays for it, there’s a good chance it’s taxable.

Real-world mistake: A client in New York  wasn’t taxing cleaning fees. The county required it. We helped them backpay and fix their process.


How to Register for STR Tax Collection

You may need to register with:

  • The state (e.g., Department of Revenue)
  • The county
  • The city

Some places offer an easy online portal; others still require paper forms or email submissions. Once registered, you’ll get a license number to include in your filings.

Tip: Local tax offices are often helpful. Don’t hesitate to call them (just not during lunchtime). They want you to get this right.


How to Make Sure You’re Collecting the Right Amount

Even if Airbnb or VRBO is collecting part of the tax, it might not be all the required tax. Platforms often only handle state-level taxes, skipping city or county obligations.

You should:

  • Review what each booking platform is collecting
  • Compare that to your total tax obligation by location
  • Manually override or add tax collection where needed

Warning: If under-collected, you pay the difference out of pocket - not the guest.


Should Property Managers File Taxes for Owners?

This is a major decision. You have two options:

  1. File on behalf of the owner
    • Pros: More control, reduced compliance risk of losing a license (although it’s a tradeoff with filing correctly), stronger value prop
    • Cons: More work and responsibility
  2. Let owners file individually
    • Pros: Less work for you
    • Cons: Risk of non-compliance, owner churn

Some property managers charge a fee to file on behalf of owners - turning this headache into a profit center.


How Often Do You File and Pay?

It varies widely:

  • Some locations require monthly filings
  • Others are quarterly or annual
  • Some use non-standard quarters (e.g., New York)
  • Filing methods range from online portals to mail-in forms and checks

Always reconcile your collections with what you’re reporting. Miss a filing, and you could face penalties and interest.

Don’t forget to save those PDF’s! Keep organized records to defend yourself in an audit or just to correct the tax agency – they don’t keep great records either.


STR Occupancy Tax Compliance Made Easy

If all of this feels overwhelming, it doesn’t have to be. We offer a full-service STR tax compliance package:

  • Help with multi-jurisdiction registration
  • Review of taxable items and revenue
  • Filing and remittance across platforms and locations
  • Cross-checking collection vs. liability so you don’t overpay

Want help? Schedule a call to see how we can simplify this process and protect your business.


FAQs

Do Airbnb and VRBO handle taxes the same?

No. The general rule of thumb is Airbnb collects and remits while VRBO doesn’t, but both vary by location. Check each OTA's policy and local law.

Are cleaning fees taxable?

Yes. If it’s charged to the guest, it’s likely taxable.

What happens if I don’t file occupancy taxes?

You may face penalties, interest, or even legal trouble. Some cities can revoke STR licenses.

Can I charge the guest for taxes?

Yes - and you should. Just make sure you collect the correct amount and remit it to the proper authorities.

Need help staying compliant and avoiding costly mistakes? Our expert team handles STR lodging tax registration, collection, and filing across the U.S. Reach out today!