Airbnb Host Taxes in Arkansas - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Basics for Airbnb Hosts in Arkansas

The Natural State welcomes visitors eager to explore its beauty, and Airbnb hosting provides a fantastic opportunity to share Arkansas hospitality while generating income. However, that income is subject to both federal and Arkansas state taxes, requiring careful record-keeping and understanding of applicable regulations for the 2025 tax year.

Arkansas State Tax Rules for Rental Income

As a resident of Arkansas, any income earned through Airbnb hosting is subject to Arkansas state income tax. Arkansas operates on a graduated income tax system, meaning the tax rate increases as your income rises. For the 2025 tax year (filed in 2026), it's crucial to understand how your rental income fits into this system. Arkansas requires all residents with taxable income to file a state income tax return. The primary form for self-employed individuals, including Airbnb hosts reporting income on Schedule C, is Form AR1040. Even if your rental income is reported on Schedule E, you still need to file Form AR1040 to report all sources of income.

Arkansas does not have a specific short-term rental tax or registration requirement beyond standard income tax reporting, unlike some other states. However, local municipalities (cities and counties) may have their own ordinances regarding short-term rentals, including potential registration or permitting requirements. It is the host’s responsibility to ensure compliance with all local regulations.

Accurate record-keeping is paramount. Maintain detailed records of all rental income and expenses. The Arkansas Department of Finance and Administration provides resources and information on state tax laws. You can find more information at Arkansas Department of Finance and Administration. Failure to accurately report income can result in penalties and interest.

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

This is the most important tax question for an Airbnb host, as it determines if you owe self-employment tax. The IRS classifies rental activity based on the level of services provided.

• Schedule E (Passive Rental Income): Most casual hosts report on Schedule E (Passive Income) and are exempt from Self-Employment Tax. This applies if you only provide basic lodging and cleaning between guests. Think of it as simply providing a space for someone to stay.
• Schedule C (Active Business Income): However, if you provide "substantial services" (daily cleaning, meals, providing toiletries beyond basic soap, concierge services), you report on Schedule C and must pay the 15.3% self-employment tax. This is because the IRS considers this an active business, not just a passive rental.

Top Tax Write-offs for Arkansas Hosts

• Platform Fees: Fees from Airbnb, VRBO, etc., are fully deductible. These are considered expenses directly related to generating rental income.
• Mortgage Interest & Property Taxes: Deduct the portion of mortgage interest and property taxes corresponding to the rental space and the period it was rented. If the property is used for both personal and rental purposes, you must allocate these expenses accordingly.
• Repairs, Maintenance & Cleaning: Deduct costs for fixing items (leaky faucets, broken appliances), professional cleaning services, and cleaning supplies. Routine maintenance is deductible; improvements that add value to the property are depreciated.
• Depreciation: A powerful but complex deduction for wear and tear on your property. This allows you to deduct a portion of the property's cost over its useful life. Often requires a tax professional to calculate correctly.