Airbnb Host Taxes in Michigan - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Basics for Airbnb Hosts in Michigan

Michigan’s Great Lakes and vibrant cities attract visitors year-round, making short-term rentals a popular income source. However, revenue generated through platforms like Airbnb is subject to both federal and Michigan state income taxes. Understanding these obligations is crucial for compliant and optimized tax filing for the 2025 tax year.

Michigan State Tax Rules for Rental Income

As a resident of Michigan, a state income tax return is required regardless of the amount of Airbnb income earned. Michigan operates under a flat income tax rate, currently at 4.05% for the 2025 tax year. This means all taxable income is taxed at the same rate. Airbnb income is reported as part of your overall adjusted gross income (AGI) on the Michigan income tax return. The primary form used for reporting self-employment or business income, including Airbnb income reported on Schedule C, is Form MI-1040, along with Schedule 1 (Additional Income, Adjustments, and Credits). Even if reporting on Schedule E, the net rental income (or loss) will flow to your MI-1040. Michigan also requires taxpayers to pay estimated taxes quarterly if they expect to owe $500 or more in taxes for the year. This is particularly relevant for Airbnb hosts with consistent rental income. Failure to pay estimated taxes can result in penalties. Michigan does not have a separate tax specifically for short-term rentals, but all income is subject to the standard state income tax. Keep meticulous records of all income and expenses related to your Airbnb activity, as the Michigan Department of Treasury may request documentation to support your reported figures. Resources and further information can be found on the Michigan Department of Treasury website: Michigan Department of Treasury.

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): Most casual hosts report their Airbnb income and expenses on Schedule E (Supplemental Income and Loss). This is generally appropriate 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 consider your Airbnb activity 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).

Top Tax Write-offs for Michigan 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 percentage of your home used for rental purposes and the number of days it was rented.
• Repairs, Maintenance & Cleaning: Expenses for repairs, routine maintenance (like landscaping), and professional cleaning services are deductible. This includes the cost of cleaning supplies.
• Depreciation: This is a powerful deduction that allows you to recover the cost of your rental property (or portions thereof) over its useful life. Depreciation calculations can be complex, and consulting a tax professional is often recommended.