Airbnb Host Taxes in Austin, Texas - 2026

Updated for 2026 (Filing 2025 Taxes)

Tax Basics for Airbnb Hosts in Austin, Texas

Austin’s vibrant music scene and thriving tech industry draw visitors year-round, making it a prime location for short-term rentals. However, alongside the potential for strong rental 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 state levels, even if it feels like a side hustle. This guide provides an overview of the key tax considerations for Airbnb hosts operating in Austin, Texas, for the 2025 tax year.

Texas State Tax Rules for Rental Income

The big perk in the Lone Star State is no personal income tax. However, be aware of the Texas Franchise Tax. While it has a high threshold (over $1.2 million in revenue) that rarely applies to solo gig workers, it's a key part of the state's business tax structure. Rental income itself isn’t subject to state income tax in Texas, but it is subject to federal income tax. As an Airbnb host in Austin, you’ll need to accurately track your income and expenses. Consider the unique aspects of the Austin market – parking can be a premium, impacting guest satisfaction and potentially influencing your pricing and income. Furthermore, the City of Austin has specific regulations regarding short-term rentals, including permitting requirements and occupancy limits. While these regulations don’t directly impact state tax liability, non-compliance can lead to fines that are not tax deductible. It’s crucial to stay informed about local ordinances. The Texas Comptroller of Public Accounts is the primary state agency responsible for tax administration. Even without state income tax, accurate record-keeping is vital for federal reporting and potential future changes in state tax laws. Remember to maintain detailed records of all rental income and related expenses, as these will be necessary when filing your federal tax return. Finally, if your rental activity is substantial enough to be considered a business (see section 2), you may have additional state reporting requirements related to sales tax collected on behalf of the state.

For more information, visit the Texas Comptroller website.

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 differently, and the distinction significantly impacts your tax obligations.

• 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. Think of it as simply providing a space for someone to stay.
• Schedule C (Active Business Income): However, if you provide "substantial services" (daily cleaning, meals, providing toiletries beyond basic soap, concierge services), you report on Schedule C and must pay the 15.3% self-employment tax. This is because the IRS views this as operating a business, not just renting property.

Top Tax Write-offs for Austin, Texas Hosts

Maximizing your deductions is key to minimizing your tax liability. Here are some common write-offs for Airbnb hosts in Austin:

• Platform Fees: Fees from Airbnb, VRBO, etc., are fully deductible.
• Mortgage Interest & Property Taxes: Deduct the portion corresponding to the rental space and period. If you rent out a portion of your home, you can only deduct the percentage of these expenses related to the rental portion.
• Repairs, Maintenance & Cleaning: Deduct costs for fixing items (leaky faucets, broken appliances), professional cleaning, and supplies. In Austin, with its high humidity, addressing moisture issues promptly is crucial, and those repair costs are deductible.
• 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.