VRBO Host Taxes in Philadelphia, Pennsylvania - 2026

Updated for 2026 (Filing 2025 Taxes)

Tax Basics for VRBO Hosts in Philadelphia, Pennsylvania

Philadelphia’s vibrant tourism, fueled by historical landmarks and a thriving arts scene, makes it a popular destination for short-term rentals. However, income earned through platforms like VRBO is subject to both federal and Pennsylvania state taxes. Understanding these obligations is crucial for compliant and optimized tax filing for the 2025 tax year.

Pennsylvania State Tax Rules for Rental Income

As a resident of Pennsylvania, a state income tax return is required regardless of the amount of rental income earned. Pennsylvania operates under a flat income tax rate of 3.07% for the 2025 tax year. Rental income is reported on Pennsylvania Schedule E, which is then included with Form PA-1040, the Pennsylvania Resident Income Tax Return. Self-employed individuals, including VRBO hosts operating as a business (see section 2), will also need to file Schedule UE for the calculation of net profit or loss from a business or profession. It’s important to note that Pennsylvania does not offer a specific deduction for short-term rental income like some other states. Therefore, maximizing federal deductions is particularly important. Philadelphia, with its unique challenges like limited parking and high demand in certain neighborhoods, may influence the types of expenses incurred (e.g., parking permits for cleaning staff, higher cleaning costs due to quick turnarounds). Furthermore, while Philadelphia does not currently have a specific short-term rental tax in addition to the standard sales tax, local regulations are subject to change, so staying informed about city ordinances is vital. Keep meticulous records of all income and expenses, as Pennsylvania’s Department of Revenue actively audits tax returns. You can find more information and access tax forms on the Pennsylvania Department of Revenue website: https://www.revenue.pa.gov/

The Critical Tax Question: Are You a Business or a Rental?

This is the most important tax question for a host, as it determines if you owe self-employment tax.

• Schedule E (Passive Rental Income): Most casual hosts report on Schedule E (Passive Income) and are exempt from Self-Employment Tax. This applies if you only provide basic lodging and cleaning between guests. Essentially, if you're simply making a space available for rent, Schedule E is likely appropriate.
• Schedule C (Active Business Income): However, if you provide "substantial services" (daily cleaning, meals, concierge services, providing toiletries beyond basic soap), you report on Schedule C and must pay the 15.3% self-employment tax. This tax covers Social Security and Medicare. The IRS looks at the degree of services provided – more than just making the property habitable.

Top Tax Write-offs for Philadelphia, Pennsylvania Hosts

• Platform Fees: Fees from Airbnb, VRBO, etc., are fully deductible. These are considered expenses directly related to generating rental income.
• Mortgage Interest & Property Taxes: Deduct the portion corresponding to the rental space and period. If the property is used both personally and as a rental, you must allocate these expenses accordingly (based on square footage or days used).
• Repairs, Maintenance & Cleaning: Deduct costs for fixing items (leaky faucets, broken appliances), professional cleaning, and cleaning supplies. Routine maintenance is deductible; improvements that add value to the property are depreciated.
• Depreciation: A powerful but complex deduction for wear and tear on your property. This allows you to deduct a portion of the property's cost over its useful life. Often requires a tax professional to calculate correctly.