Airbnb Host Taxes in Rhode Island - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Basics for Airbnb Hosts in Rhode Island

From the historic streets of Newport to the vibrant capital city of Providence, Rhode Island’s short-term rental market offers unique opportunities for property owners. However, alongside the potential income comes the responsibility of accurate tax reporting. Income earned through Airbnb and other short-term rental platforms is generally taxable at both the federal and Rhode Island state levels. This guide provides an overview of the key tax considerations for Airbnb hosts in the Ocean State for the 2025 tax year.

Rhode Island State Tax Rules for Rental Income

As a resident of Rhode Island, a state income tax return is required regardless of the amount of rental income earned. Rhode Island operates under a graduated income tax system, meaning the tax rate increases as your income rises. For the 2025 tax year, the rates are expected to remain consistent with prior years, ranging from 3.75% to 9.99% based on income brackets. Airbnb income is considered taxable income and must be reported on your Rhode Island income tax return. The primary form used for reporting self-employment or business income, including rental income reported on Schedule C, is Form RI-1040NR (Nonresident Income Tax Return) or RI-1040 (Resident Income Tax Return) along with the appropriate schedules. It's crucial to accurately track all income received through Airbnb and other platforms. Rhode Island also requires the reporting of sales tax collected on short-term rentals, which is remitted directly to the Division of Taxation. Failure to properly report rental income can result in penalties and interest. The state also has specific rules regarding the deductibility of expenses related to rental properties, which may differ from federal guidelines. Consulting with a qualified tax professional familiar with Rhode Island tax law is highly recommended to ensure compliance and maximize potential deductions. You can find more information and access tax forms on the Rhode Island Division of Taxation website: Rhode Island Division of Taxation.

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 short-term rentals 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 generally exempts you from the 15.3% self-employment tax.
• Schedule C (Active Business Income): However, if you provide "substantial services" – think daily cleaning, providing meals, concierge services, or similar amenities – you report on Schedule C (Profit or Loss from Business). This triggers the 15.3% self-employment tax (Social Security and Medicare) on your net rental income.

Top Tax Write-offs for Rhode Island 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 professional assistance is often recommended.