Airbnb Host Taxes in Seattle, Washington - 2026

Updated for 2026 (Filing 2025 Taxes)

Navigating Seattle Airbnb Taxes: The 2025 Host's Strategy Guide

Seattle is a premier destination for short-term rentals, fueled by tech giants like Amazon and Microsoft, alongside iconic landmarks like the Space Needle and Climate Pledge Arena. However, the Emerald City's tax landscape is unique. While Washington's lack of a state income tax is a massive win for hosts, the complex web of local B&O taxes and federal requirements means you'll need a sharp strategy to protect your margins. This guide breaks down what you need to know for the 2025 tax year.

Washington State and Seattle Local Tax Nuances

Washington is famous for not having a personal income tax, but the state makes up for it through the Business and Occupation (B&O) tax. As a Seattle host, you're essentially running a small business in the eyes of the Department of Revenue. Most small-scale hosts won't owe B&O tax if their gross income falls below certain thresholds, but you're still required to register your business and report your income.

Beyond state taxes, Seattle hosts must navigate the city's specific Short-Term Rental (STR) regulations. You're required to obtain a Seattle STR operator's license, which currently costs $75 and must be renewed annually. Additionally, you're responsible for collecting and remitting various lodging taxes, including the Seattle Convention and Trade Center Tax and the King County Regional Transit Authority (RTA) tax. While platforms like Airbnb often collect these automatically, it's your responsibility to verify that the rates are correct and that your property is compliant with local zoning laws.

The Federal Pivot: Schedule E vs. Schedule C

The biggest decision you'll make for your federal return is how you classify your activity. This choice dictates whether you'll pay an extra 15.3% in self-employment taxes. Most hosts aim for Schedule E (Passive Income), but providing "substantial services" can force you onto Schedule C (Active Business).

• Schedule E (Passive Rental): This is the standard for most hosts. If you provide a clean room, utilities, and basic amenities, it's considered passive. You'll avoid self-employment tax, which saves you a significant chunk of change.
• Schedule C (Active Business): If you're providing "hotel-like" services, such as daily linen changes, guest breakfast, or guided tours of Pike Place, the IRS views you as a business owner. While this triggers self-employment tax, it also opens the door to more aggressive business deductions.

Unlocking the 20% QBI Deduction

One of the most powerful tools in your kit is the Qualified Business Income (QBI) deduction. Under Section 199A, many Airbnb hosts can deduct up to 20% of their net rental income directly from their taxable income. This isn't just a deduction for expenses: it's a flat reduction in the amount of income the IRS can touch. To qualify, your rental activity must generally rise to the level of a "trade or business," which often requires 250 hours of service per year (including cleaning, guest communication, and maintenance). If you're hitting those numbers, the QBI deduction can significantly lower your 2025 tax bill.

Maximizing Deductions with Our Advanced Calculator

Tracking expenses by hand is a recipe for missed savings. We recommend using our Advanced Calculator to compare different deduction methods and ensure you're not leaving money on the table. Here is how it helps you optimize:

• Standard Mileage vs. Actual Expenses: Seattle traffic is legendary, and those trips to the hardware store or the property add up. Our calculator lets you compare the IRS Standard Mileage Rate against "Actual Expenses." If you drive a gas-guzzling SUV or have high repair bills for your vehicle, the actual expense method (including depreciation on the car) often beats the standard rate.
• The Home Office Deduction: If you have a dedicated space in your home used exclusively for managing your Seattle rentals, you can deduct a portion of your rent or mortgage, insurance, and utilities. Our calculator simplifies this "square footage" math so you don't trigger an audit.
• Complex Depreciation: Depreciation is your biggest non-cash expense. It allows you to write off the value of the building and its improvements over 27.5 years. Our tool helps you track these long-term assets without needing a math degree.

Top Tax Write-offs for Seattle Hosts

• Platform and Management Fees: The 3% to 5% fee Airbnb takes off the top is 100% deductible. Don't forget to deduct any professional management fees if you use a local Seattle co-host.
• Utilities and Connectivity: In Seattle, heating costs in the winter and high-speed internet (a must for tech-traveler guests) are fully or partially deductible based on the percentage of the home being rented.
• Seattle-Specific Costs: This includes your $75 Seattle STR license fee, parking permits for guests, and even the cost of professional photography used to market your listing.
• Repairs and Maintenance: From fixing a leaky faucet to repainting after a guest's stay, these costs are fully deductible in the year they occur.

For more detailed information on state-level requirements, visit the Washington State Department of Revenue.