Airbnb Host Taxes in Montana - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Basics for Airbnb Hosts in Montana

Montana’s Big Sky Country welcomes visitors seeking adventure, and increasingly, travelers are choosing the personalized experience of short-term rentals. However, alongside the benefits of hosting on platforms like Airbnb, comes the responsibility of accurately reporting rental income for both federal and Montana state taxes. Rental income is generally considered taxable income, and understanding the rules is crucial for compliance and maximizing potential deductions.

Montana State Tax Rules for Rental Income

As a resident of Montana, filing a state income tax return is required regardless of the amount of rental income earned. Montana operates under a graduated income tax system, meaning the tax rate increases as your income rises. For the 2025 tax year, Montana’s income tax rates are expected to remain consistent with prior years, ranging from 1% to 6.75% based on taxable income brackets. Rental income is reported on your Montana individual income tax return, specifically using Form 17 (Individual Income Tax Return), and Schedule 1 (Additional Income and Adjustments). If your rental activity is considered a business (see section 2), you will likely need to file Schedule C with your Form 17. Montana also allows for certain deductions similar to the federal level, such as mortgage interest and property taxes, which can reduce your overall tax liability. It’s important to note that Montana’s Department of Revenue actively monitors short-term rental activity and may issue guidance specific to these arrangements. Furthermore, Montana counties may impose local resort taxes or occupancy taxes on short-term rentals; these are not deductible on your state income tax return but must be collected and remitted separately. Keep meticulous records of all income and expenses related to your rental property to ensure accurate reporting. For the most up-to-date information and forms, please visit the Montana Department of Revenue website: Montana Department of Revenue.

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 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. Reporting on Schedule E means you are not subject to 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, concierge services, or similar hotel-like amenities – you report on Schedule C (Profit or Loss from Business). This triggers the 15.3% self-employment tax on your net rental income.

Top Tax Write-offs for Montana 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. For example, if 20% of your home is rented, you can deduct 20% of these expenses.
• Repairs, Maintenance & Cleaning: Deduct costs for fixing items in the rental property, professional cleaning services, and cleaning supplies. Routine maintenance is deductible; major improvements that increase the property's value are generally 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.