Airbnb Host Taxes in California - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Basics for Airbnb Hosts in California

California’s vibrant tourism industry makes short-term rentals a popular income source, but success as an Airbnb host requires understanding the associated tax obligations. Income earned through Airbnb, VRBO, or similar platforms is generally taxable at both the federal and California state levels. Proper record-keeping and understanding of applicable deductions are crucial for minimizing tax liability.

California State Tax Rules for Rental Income

As a resident of California, a state income tax return is required regardless of the amount of Airbnb income earned. California operates on a graduated income tax system, meaning the tax rate increases as your income rises. This means your Airbnb income will be added to your other sources of income to determine your overall tax bracket. The primary form for reporting self-employment or business income is Form 540, California Resident Income Tax Return, along with Schedule CA(540), California Adjustments – Residents. Airbnb income reported on Schedule C (discussed below) will flow through to these forms. Rental income reported on Schedule E will also be reported on Form 540. California also requires taxpayers to report income from sources outside of traditional employment, including short-term rentals. It’s important to note that California’s Franchise Tax Board (FTB) actively audits short-term rental income, so maintaining meticulous records is paramount. Furthermore, some cities and counties within California may impose additional taxes or require business licenses for short-term rentals; hosts should verify local regulations. The FTB provides detailed information and resources for taxpayers on their website: California Franchise Tax Board. Failure to properly 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 whether you owe self-employment tax. The IRS classification significantly impacts your tax obligations.

• Schedule E (Passive Rental Income): Most casual hosts report on Schedule E (Supplemental Income and Loss). This applies if you primarily provide basic lodging and cleaning between guests. If your involvement is limited to making the property available and handling minimal guest services, you’ll likely fall under this category and are exempt from the 15.3% self-employment tax (Social Security and Medicare).
• Schedule C (Active Business Income): However, if you provide "substantial services" – think daily cleaning, providing meals, concierge services, or offering amenities comparable to a hotel – you report on Schedule C (Profit or Loss from Business). This means your Airbnb activity is considered an active business, and you must pay the 15.3% self-employment tax on your net profits.

Top Tax Write-offs for California 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 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 associated with fixing items in the rental property, professional cleaning services, and cleaning supplies. Routine maintenance is deductible; however, improvements that increase the property's value are generally depreciated.
• Depreciation: A powerful but complex deduction that allows you to deduct a portion of the property's cost each year to account for wear and tear. Depreciation calculations can be intricate, and consulting a tax professional is often recommended.