Airbnb Host Taxes in Hawaii - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Basics for Airbnb Hosts in Hawaii

Welcoming guests to the Aloha State through platforms like Airbnb offers a unique opportunity, but it also introduces tax obligations. Rental income generated from short-term rentals in Hawaii is subject to both federal and Hawaii state income taxes, requiring careful record-keeping and understanding of applicable regulations.

Hawaii State Tax Rules for Rental Income

As a resident of Hawaii, filing a state income tax return is mandatory, even if no federal tax is due. Hawaii operates under a graduated income tax system, meaning the tax rate increases as your income rises. The Hawaii Department of Taxation requires individuals earning income from self-employment, including Airbnb hosting, to report this income on Form N-11, Hawaii Individual Income Tax Return, and potentially Schedule E (if reporting as a passive rental) or Schedule C (if reporting as an active business). It's crucial to understand that Hawaii treats Transient Accommodations Tax (TAT) collection differently depending on whether you manage the property yourself or through a property manager. If you collect TAT, you are responsible for remitting it to the state. Failure to do so can result in penalties. Furthermore, income derived from short-term rentals may also be subject to the General Excise Tax (GET), depending on your gross income. The GET rate is currently 4% statewide, but counties may impose additional rates. Accurate record-keeping of all rental income and expenses is paramount for proper tax reporting. Consulting with a qualified tax professional familiar with Hawaii’s tax laws is highly recommended to ensure compliance and maximize potential deductions. You can find more information and access tax forms on the Hawaii Department of Taxation website: https://tax.hawaii.gov/

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 decision for a host, as it directly impacts your self-employment tax liability.

• Schedule E (Passive Rental Income): The majority of casual Airbnb hosts report their income and expenses on Schedule E (Supplemental Income and Loss). This classification generally applies if you primarily provide lodging and minimal services, such as basic cleaning between guests. Reporting on Schedule E exempts you from paying the 15.3% self-employment tax.
• Schedule C (Active Business Income): If you provide “substantial services” to guests – such as daily cleaning, providing meals, concierge services, or offering amenities comparable to a hotel – the IRS may classify your activity as an active business. In this case, you must 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) on your net earnings.

Top Tax Write-offs for Hawaii Hosts

• Platform Fees: All fees charged by Airbnb, VRBO, and other rental 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 related to maintaining and repairing your rental property, including professional cleaning services and cleaning supplies, are deductible.
• Depreciation: This is a powerful deduction that allows you to recover the cost of your rental property over its useful life. It accounts for the wear and tear on your property. Depreciation calculations can be complex, and professional tax assistance is often recommended.