Airbnb Host Taxes in Maryland - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Basics for Airbnb Hosts in Maryland

Maryland’s vibrant tourism, from the Chesapeake Bay to historic Annapolis, makes short-term rentals a popular option for property owners. However, income earned through platforms like Airbnb is generally taxable at both the federal and Maryland state levels. Understanding these tax obligations is crucial for compliance and maximizing potential deductions.

Maryland State Tax Rules for Rental Income

As a resident of Maryland, a state income tax return is required regardless of the amount of Airbnb income earned. Maryland utilizes a graduated income tax system, meaning the tax rate increases as your income rises. For the 2025 tax year, Maryland residents reporting self-employment income, including Airbnb hosting income reported on Schedule C, will file Form 502, Individual Income Tax Return. The state also offers various credits and deductions that may reduce your overall tax liability. It’s important to note that Maryland considers rental income as potentially subject to both income tax and sales and use tax, depending on the length of stay and the services provided. Stays of 182 days or less are generally subject to sales and use tax, requiring registration with the Comptroller of Maryland and collection/remittance of these taxes. Failure to comply with sales and use tax regulations can result in penalties. Furthermore, local counties and municipalities may impose additional taxes on short-term rentals, so hosts should verify local requirements. The Maryland Department of Labor also has specific rules regarding independent contractor status, which can impact tax obligations. Accurate record-keeping of all income and expenses is essential for accurate tax reporting. Resources are available through the Maryland Comptroller's Office to assist with understanding and complying with state tax laws: Maryland Comptroller of the Treasury.

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 generally exempts you from 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 Maryland 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. If the property is both a personal residence and a rental, allocation is required.
• Repairs, Maintenance & Cleaning: Deduct costs for fixing items in the rental property, professional cleaning services, and cleaning supplies. Routine maintenance is deductible; improvements that increase the property's value 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 consulting a tax professional is often recommended.