VRBO Host Taxes in Oklahoma - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Basics for VRBO Hosts in Oklahoma

Oklahoma’s hospitality scene is booming, with short-term rentals becoming increasingly popular, especially near attractions like Turner Falls and the Oklahoma City National Memorial & Museum. However, alongside the benefits of hosting on platforms like VRBO comes the responsibility of accurately reporting rental income. Income earned through VRBO, Airbnb, or similar platforms is generally taxable at both the federal and Oklahoma state levels. This guide provides an overview of the key tax considerations for VRBO hosts in Oklahoma for the 2025 tax year.

Oklahoma State Tax Rules for Rental Income

As a resident of Oklahoma, a state income tax return is required regardless of the amount of rental income earned. Oklahoma utilizes a graduated income tax system, meaning the tax rate increases as your income increases. For the 2025 tax year (filed in 2026), Oklahoma’s tax rates are expected to remain consistent with recent years, ranging from 0% to 4.75% based on income brackets. Rental income is reported as part of your overall adjusted gross income (AGI) on Form 540, the Oklahoma Individual Income Tax Return. Specifically, if reporting rental income as a business (Schedule C – see section 2), the net profit from Schedule C will flow to Form 540. If reporting as passive income (Schedule E), the net rental income or loss from Schedule E will also flow to Form 540. Oklahoma also allows for certain deductions similar to the federal level, such as mortgage interest and property taxes, which can reduce your taxable income. It’s crucial to maintain accurate records of all income and expenses related to your rental property. Furthermore, Oklahoma requires the payment of estimated taxes if you expect to owe more than $1,000 in state income tax. Failure to do so may result in penalties. For detailed information and the latest updates on Oklahoma tax laws, please visit the Oklahoma Tax Commission website: https://www.ok.gov/tax/. Remember to consult with a qualified tax professional to ensure compliance with all applicable state and federal regulations.

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 differently, impacting your tax obligations.

• Schedule E (Passive Rental Income): Most casual hosts report on Schedule E (Supplemental Income and Loss). This applies if you primarily 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" to guests – such as daily cleaning, providing meals, or offering concierge-type services – the IRS may consider your rental activity an active business. In this case, you report on Schedule C (Profit or Loss from Business) and must pay the 15.3% self-employment tax on your net profit.

Top Tax Write-offs for Oklahoma 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. Note the difference between repairs (deductible) and improvements (depreciated).
• Depreciation: A powerful but complex deduction that allows you to deduct a portion of the cost of your rental property over its useful life. This accounts for the wear and tear on the property. Often, consulting a tax professional is recommended to properly calculate depreciation.