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Hotel Occupancy Tax: Complete Guide 2026

Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.

Hotel occupancy taxes — also called transient occupancy taxes, room taxes, or lodging taxes — are levied by states, counties, and cities on short-term accommodations. These taxes are typically imposed on guests staying at hotels, motels, resorts, vacation rentals, and increasingly on short-term rental platforms like Airbnb and VRBO. Combined state and local hotel tax rates can range from approximately ~5% in lower-tax jurisdictions to over ~18% in major tourist destinations. Unlike sales taxes, hotel occupancy taxes are specifically earmarked in many jurisdictions for tourism promotion, convention center financing, and local infrastructure.

Hotel Tax Rates by Select City (2026)

City	Combined Hotel Tax Rate	Components
New York City, NY	~14.75% + ~$3.50/night	State, city, MCTD surcharge, flat fee
Chicago, IL	~17.4%	State, city, county, McCormick Place tax
Houston, TX	~17.0%	State (~6%), city (~7%), county/venue (~4%)
San Francisco, CA	~14.0%	City rate + tourism improvement district
Seattle, WA	~15.6%	State, city, convention center
Miami Beach, FL	~13.0%	State (~6%), county (~4%), resort (~3%)
Nashville, TN	~17.25%	State, city, Davidson County
Las Vegas, NV	~13.38%	State, county, various surcharges
New Orleans, LA	~15.75%	State, city, parish, convention
Orlando, FL	~12.5%	State (~6%), county (~6.5%)

How Hotel Occupancy Taxes Work

State-Level Taxes

Most states impose a statewide hotel or transient occupancy tax that applies to all short-term lodging. Rates vary from approximately ~2% to ~7%. Some states fold lodging into their general sales tax, while others impose a separate lodging-specific tax.

State	State Hotel Tax Rate	Sales Tax Also Applies?
Texas	~6.0%	Yes (~6.25% sales tax)
Florida	~6.0% (sales tax)	Lodging subject to sales tax
California	None (state level)	Local TOT only
New York	~4.0% (sales tax)	Plus local taxes
Hawaii	~10.25% (TAT)	Plus GET (~4.712%)
Colorado	~0% (state level)	Local lodging taxes only

Local Taxes

Cities and counties frequently add their own lodging taxes on top of state rates. These local taxes often fund:

Convention and visitors bureaus
Tourism marketing programs
Convention center construction and maintenance
Local infrastructure (roads, transit, public safety)
Stadium and arena financing

Short-Term Rental Platforms

Since approximately 2017, most major short-term rental platforms (Airbnb, VRBO, Booking.com) have entered agreements with state and local governments to collect and remit hotel occupancy taxes automatically. However, coverage varies:

Some jurisdictions require the platform to collect all applicable taxes
Others require the host to collect and remit certain local taxes separately
A few jurisdictions have not reached agreements, leaving full responsibility with the host

Who Is Exempt

Common exemptions from hotel occupancy taxes include:

Government employees on official business (federal employees with proper documentation in many states)
Long-term stays (typically ~30 consecutive days or more; the threshold varies by jurisdiction)
Diplomatic personnel with appropriate exemption certificates
Certain nonprofit organizations (varies by jurisdiction)
Permanent residents of hotels or residential facilities

Business travelers should note that hotel taxes are generally a deductible business expense for tax purposes, even though no exemption from the tax itself applies.

Impact on Travel Budgets

Example: $200/Night Room in Select Cities

City	Room Rate	Estimated Tax	Total Per Night
New York City	~$200	~$33.00	~$233.00
Chicago	~$200	~$34.80	~$234.80
Houston	~$200	~$34.00	~$234.00
Las Vegas	~$200	~$26.76	~$226.76
Portland, OR	~$200	~$23.50	~$223.50

A four-night stay at ~$200/night in a high-tax city can add ~$100 to ~$140 in taxes alone.

Common Mistakes to Avoid

Not budgeting for hotel taxes. Advertised room rates do not include occupancy taxes, which can add ~12-18% to the bill in major cities.
Short-term rental hosts not collecting taxes. If your platform does not collect all applicable taxes, you are personally responsible for registering and remitting them.
Missing the long-stay exemption. If you are staying ~30+ days, verify whether the jurisdiction exempts long-term stays from occupancy tax. This can save hundreds of dollars.
Government travelers not claiming exemptions. Federal and some state employees can present exemption forms to avoid paying hotel tax, but must do so at check-in.
Not deducting hotel taxes on business travel. Hotel occupancy taxes paid for business purposes are fully deductible as a travel expense on Schedule C or as an employee business expense where applicable.

Key Takeaways

Hotel occupancy taxes range from approximately ~5% to over ~18% depending on the jurisdiction
Combined state, county, and city taxes create layered rates that significantly increase lodging costs
Short-term rental platforms increasingly collect and remit hotel taxes, but coverage varies
Long-term stays (typically ~30+ days) are often exempt from occupancy taxes
Government employees may qualify for exemptions with proper documentation
Hotel taxes paid for business travel are deductible as business expenses

Next Steps

Federal Income Tax Guide 2026 — Understand travel expense deductions on your federal return.
Self-Employment Tax Guide — Deducting hotel taxes as a business travel expense.
Small Business Tax Guide — Business travel deductions and documentation requirements.
State Income Tax Rates Comparison 2026 — See overall tax burdens by state.
Find a CPA Near You — Get professional help with travel expense deductions.