Airbnb Host Taxes in Colorado - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Basics for Airbnb Hosts in Colorado

The Rocky Mountain High extends to the potential income from short-term rentals, but remember that revenue generated through platforms like Airbnb is subject to both federal and Colorado state taxes. Understanding these obligations is crucial for compliant and optimized tax filing for the 2025 tax year.

Colorado State Tax Rules for Rental Income

As a resident of Colorado, even if your Airbnb property is located elsewhere, you are generally required to file a Colorado state income tax return. Colorado operates under a flat income tax rate, currently at 4.40% for the 2025 tax year (subject to change by legislation). Rental income reported on your federal tax return must also be included on your Colorado return. The primary form used for reporting self-employment or business income, including Airbnb income reported on Schedule C, is Form DR 0104, Colorado Declaration of Income. Even if your Airbnb income is reported on Schedule E (passive rental income), it still needs to be included as part of your overall Colorado income on Form DR 0104. Colorado also requires taxpayers to report any income received from out-of-state sources. It's important to maintain accurate records of all rental income and expenses, as Colorado may request documentation to support your reported figures. Furthermore, Colorado has specific rules regarding the allocation of expenses if the property is used for both personal and rental purposes. The portion of expenses attributable to the rental activity is deductible, while the personal use portion is not. Local jurisdictions within Colorado (cities and counties) may also impose lodging taxes or other fees on short-term rentals, requiring separate registration and reporting. Always check local regulations in addition to state requirements. You can find more information and access tax forms on the Colorado Department of Revenue website: https://www.colorado.gov/revenue.

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

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

• Schedule E (Passive Rental Income): Most casual hosts report their income and expenses on Schedule E (Supplemental Income and Loss). This applies if you primarily provide lodging and minimal services – essentially, cleaning between guests. Reporting on Schedule E exempts you from the 15.3% self-employment tax (Social Security and Medicare).
• Schedule C (Active Business Income): If you provide “substantial services” to guests – such as daily cleaning, providing meals, concierge services, or offering amenities akin to a hotel – the IRS may classify your activity as 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.

Top Tax Write-offs for Colorado 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 period it was rented.
• Repairs, Maintenance & Cleaning: Expenses for repairing damage, routine maintenance (like plumbing or electrical work), and professional cleaning services are deductible. Supplies used for cleaning are also deductible.
• Depreciation: This is a powerful deduction that allows you to recover the cost of your rental property (or portions thereof) over its useful life. Depreciation calculations can be complex, and consulting a tax professional is often recommended.