VRBO Host Taxes in Idaho - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Basics for VRBO Hosts in Idaho

Idaho’s stunning landscapes and outdoor recreation draw visitors year-round, making vacation rentals a popular source of income. However, that income is subject to both federal and Idaho state taxes, requiring careful record-keeping and understanding of applicable rules. This guide provides an overview of the tax implications for VRBO hosts in Idaho for the 2025 tax year.

Idaho State Tax Rules for Rental Income

As a resident of Idaho, a state income tax return is required regardless of the amount of rental income earned. Idaho operates under a flat income tax rate, currently at 5.8% for the 2025 tax year (subject to change by the Idaho legislature). This means all taxable income, including rental income, is taxed at the same rate. Idaho considers rental income as part of your overall adjusted gross income (AGI). Rental income is reported on Schedule E of your federal tax return, and that amount flows to Form 40, Idaho’s Individual Income Tax Return. Self-employed individuals, including those operating a rental property as a business (see section 2), will also need to file Form 540, Idaho Estimated Tax for Individuals, to pay estimated taxes throughout the year. It’s crucial to maintain accurate records of all rental income and expenses. Idaho also allows for certain deductions mirroring federal rules, such as depreciation and mortgage interest, which can reduce your taxable income. The Idaho State Tax Commission provides detailed information and resources for taxpayers, including publications specifically addressing rental income. Failure to accurately report rental income can result in penalties and interest. Remember to consult the latest guidance from the Idaho State Tax Commission, as tax laws are subject to change. Idaho does not have a separate tax specifically for short-term rentals like some other states, but the income is fully integrated into the state’s individual income tax system.

You can find more information on the Idaho State Tax Commission website: https://tax.idaho.gov/

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

This is the most important tax question for a VRBO 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 it an active business, not just a rental.

Top Tax Write-offs for Idaho 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 corresponding to the rental space and period. If the property is used both personally and as a rental, you must allocate these expenses accordingly.
• Repairs, Maintenance & Cleaning: Deduct costs for fixing items, professional cleaning, and supplies. Repairs maintain the property's value, while maintenance keeps it in good working order.
• Depreciation: A powerful but complex deduction for wear and tear on your property. Often requires a tax professional to calculate correctly. This allows you to deduct a portion of the property's cost over its useful life.