Airbnb Host Taxes in Connecticut - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Basics for Airbnb Hosts in Connecticut

Connecticut’s charming towns and vibrant cities, from Mystic to New Haven, make it a popular destination for travelers, creating opportunities for successful Airbnb hosting. However, alongside the benefits of sharing your space comes the responsibility of accurately reporting rental income to both the federal government and the State of Connecticut. Rental income is generally taxable at both the federal and state levels, and understanding the rules is crucial for avoiding penalties.

Connecticut State Tax Rules for Rental Income

As a resident of Connecticut, a state income tax return is required regardless of the amount of Airbnb income earned. Connecticut operates on a graduated income tax system, meaning the tax rate increases as your income rises. For the 2025 tax year, Connecticut residents filing as self-employed individuals will primarily use Form CT-1040, Connecticut Resident Income Tax Return, along with Schedule 1, Additions to Income, and Schedule 2, Subtractions from Income. Rental income reported on your federal Schedule E will need to be reported on your Connecticut return. It’s important to note that Connecticut does not offer a specific deduction for short-term rental expenses mirroring the federal Qualified Business Income (QBI) deduction, so careful record-keeping is essential to maximize allowable subtractions. Connecticut also requires the payment of estimated taxes quarterly if your tax liability exceeds $1,000. Failure to do so can result in underpayment penalties. The state also considers the economic nexus rules for out-of-state hosts, meaning if you derive substantial income from Connecticut rentals, you may be required to file a Connecticut income tax return even if you don’t reside in the state. Consulting with a Connecticut tax professional is highly recommended to ensure full compliance with state regulations, especially regarding the proper allocation of expenses and the application of the state’s tax laws to short-term rentals. For more information, please visit the Connecticut Department of Revenue Services website: https://portal.ct.gov/DRS

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 (Supplemental Income and Loss). This applies if you only provide basic lodging and cleaning between guests. Reporting on Schedule E means you are not subject to the 15.3% self-employment tax.
• Schedule C (Active Business Income): However, if you provide "substantial services" – think daily cleaning, providing meals, or concierge-style services – you report on Schedule C (Profit or Loss from Business). This triggers the 15.3% self-employment tax (Social Security and Medicare) on your net earnings.

Top Tax Write-offs for Connecticut 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. Proper allocation is key.
• Repairs, Maintenance & Cleaning: Deduct costs for fixing items in the rental property, professional cleaning services, and cleaning supplies. Routine maintenance is deductible; major improvements are 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 professional assistance is often recommended.