Airbnb Host Taxes in Arizona - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Basics for Airbnb Hosts in Arizona

The Sonoran Desert’s hospitality extends to short-term rentals, making Arizona a popular destination for Airbnb hosts. However, alongside welcoming guests, understanding the tax implications of rental income is crucial. Income earned through Airbnb and other short-term rental platforms is generally taxable at both the federal and Arizona state levels. Proper record-keeping and accurate reporting are essential to avoid penalties and maximize potential deductions.

Arizona State Tax Rules for Rental Income

As a resident of Arizona earning income from an Airbnb property, filing a state income tax return is required, even if no federal tax is due. Arizona operates under a flat income tax system, meaning all income is taxed at the same rate. For the 2025 tax year, the flat tax rate is 2.5%. This rate is subject to change, so it’s important to verify the current rate when filing. Rental income is reported on Form 140, Arizona Individual Income Tax Return, and typically requires the use of Schedule A (Arizona Itemized Deductions) to detail rental expenses. Self-employed individuals, including Airbnb hosts reporting income on Schedule C at the federal level, will also need to file Form 140-SE, Arizona Self-Employment Tax Calculation. Arizona does not offer a specific form solely for rental income; it's integrated into the standard individual income tax return. It's important to note that Arizona follows federal guidelines regarding deductible expenses, but may have specific rules or limitations. For example, Arizona allows a credit for property taxes paid, which can reduce your overall tax liability. Keep detailed records of all rental income and expenses, including dates, amounts, and descriptions. The Arizona Department of Revenue provides comprehensive information and resources for taxpayers, including online filing options and tax forms. You can find more information at Arizona Department of Revenue.

The Critical Tax Question: Are You a Business or a Rental?

Determining whether your Airbnb activity constitutes a passive rental or an active business is the most important tax question for a host, as it directly impacts whether you owe self-employment tax.

• Schedule E (Passive Rental Income): Most casual hosts report their rental income and expenses on Schedule E (Supplemental Income and Loss). This applies if you primarily provide basic lodging and minimal services, such as cleaning between guests. Reporting on Schedule E exempts you from the 15.3% self-employment tax.
• Schedule C (Active Business Income): If you provide "substantial services" to guests – such as daily cleaning, providing meals, or offering concierge-style services – the IRS may consider your Airbnb activity an active business. In this case, you report income and expenses on Schedule C (Profit or Loss from Business) and are subject to the 15.3% self-employment tax (Social Security and Medicare).

Top Tax Write-offs for Arizona Hosts

• Platform Fees: Fees charged by Airbnb, VRBO, and other platforms are fully deductible as business expenses.
• Mortgage Interest & Property Taxes: You can deduct the portion of your mortgage interest and property taxes that corresponds to the percentage of your home used for rental purposes and the number of days it was rented.
• Repairs, Maintenance & Cleaning: Expenses for repairs, routine maintenance (like landscaping), and professional cleaning services are deductible. This includes the cost of cleaning supplies.
• Depreciation: This is a powerful deduction that allows you to recover the cost of your rental property (or portions thereof) over its useful life. It’s a complex calculation and often requires the assistance of a qualified tax professional.