Airbnb Host Taxes in Indiana - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Basics for Airbnb Hosts in Indiana

The Hoosier State's hospitality is extending to short-term rentals, with Airbnb hosting becoming increasingly popular. Income earned through Airbnb, VRBO, or similar platforms is generally considered taxable income at both the federal and Indiana state levels. Proper record-keeping and understanding of applicable tax rules are crucial for compliance.

Indiana State Tax Rules for Rental Income

As a resident of Indiana, a state income tax return is required regardless of the amount of Airbnb income earned. Indiana operates under a flat income tax rate, currently at 3.15% for the 2025 tax year. This means all taxable income is subject to the same rate. Airbnb income is reported as part of your overall adjusted gross income (AGI) on Form IT-1040, Indiana Resident Individual Income Tax Return. If your Airbnb activity is considered a business (see section 2), you will likely need to file Schedule IN-1040, Schedule SE (Self-Employment) to calculate your self-employment tax liability. Indiana also requires estimated tax payments if you expect to owe $1,000 or more in state income tax. These payments are typically made quarterly. It's important to note that Indiana does not have a specific form dedicated solely to Airbnb income; it's integrated into the standard income tax reporting process. The Indiana Department of Revenue provides detailed information and resources for self-employed individuals, including guidance on estimated taxes and filing requirements. Failure to properly report and pay Indiana state income tax can result in penalties and interest. Keep meticulous records of all income and expenses related to your Airbnb activity to support your tax filings. Indiana also offers various credits and deductions that may be applicable, so exploring those options is recommended.

For more information, visit the Indiana Department of Revenue: https://www.in.gov/dor/

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 short-term rentals differently based on the level of service provided.

• Schedule E (Passive Rental Income): Most casual hosts report on Schedule E (Supplemental Income and Loss) and are exempt from Self-Employment Tax. This applies if you only provide basic lodging and cleaning between guests. Think of it as simply renting out a space.
• 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 (Profit or Loss from Business) and must pay the 15.3% self-employment tax. This is treated as running a bed and breakfast-style operation.

Top Tax Write-offs for Indiana Hosts

• Platform Fees: Fees from Airbnb, VRBO, etc., are fully deductible.
• Mortgage Interest & Property Taxes: Deduct the portion corresponding to the rental space and period. If the property is used for both personal and rental purposes, you must allocate these expenses accordingly.
• Repairs, Maintenance & Cleaning: Deduct costs for fixing items, professional cleaning, and supplies. Routine maintenance is deductible; major improvements are depreciated.
• 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.