VRBO Host Taxes in Maryland - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Basics for VRBO Hosts in Maryland

Maryland’s vibrant tourism, fueled by destinations like Ocean City and the Chesapeake Bay, makes short-term rentals a popular income source. However, revenue generated through platforms like VRBO is generally taxable income 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 income level. Maryland utilizes a graduated income tax system, meaning the tax rate increases as your income rises. For the 2025 tax year, Maryland residents earning income from VRBO rentals will report this income on Form 502, Individual Income Tax Return. If the rental activity is considered a business (see section 2), the income and expenses will be reported on Schedule SE (Self-Employment Tax) and then transferred to Form 502. Maryland also has a county income tax, which varies depending on the county where the property is located. It's important to factor this into your overall tax liability. Furthermore, Maryland requires estimated tax payments if you expect to owe $100 or more in state taxes. These payments are typically made quarterly. Failure to make timely estimated payments can result in penalties. The Maryland Comptroller's Office provides detailed information and resources for taxpayers, including guidance on estimated taxes and filing requirements. You can find this information at https://www.marylandtaxes.gov/. Keep meticulous records of all rental income and expenses, as Maryland actively audits short-term rental income. Remember to account for any local taxes or registration requirements imposed by the city or county where your rental property is located, as these are separate from state income tax.

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 activities 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. If you fall into this category, you are generally exempt from the 15.3% self-employment tax (Social Security and Medicare).
• Schedule C (Active Business Income): However, if you provide "substantial services" – think daily cleaning, providing meals, or offering concierge-style services – you report on Schedule C (Profit or Loss from Business). This means you’ll be considered to be actively engaged in a business and must pay the 15.3% self-employment tax on your net rental income.

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 (repairs), 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.