California Joins New York, Florida, Nevada, Hawaii on How Hotel and Vacation Rental Taxes Are Crushing Your Travel Plans in the US – Find Out Where They’re Worst

Written By: Tuhin Sarkar

Tuhin Sarkar

Tuhin Sarkar is a Senior Journalist at Travel and Tour World with more than 10 years of experience in travel and tourism journalism. A post-graduate in Journalism and Mass Communication from Jadavpur University, he combines strong research, industry knowledge and storytelling expertise to produce engaging, insightful and impactful travel news and fascinating feature stories.

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October 15, 2025 4:22 AM

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California joins New York, Florida, Nevada, and Hawaii as states where hotel and vacation rental taxes are crushing your travel plans in the US. These states, famous for their stunning destinations and year-round appeal, have hidden tax burdens that can quickly inflate your travel expenses.

In places like California and Florida, the taxes on hotel stays and vacation rentals can be as high as 15%, significantly increasing the total cost of your trip. This surprising and often overlooked cost can derail even the best-laid travel plans.

As a result, tourists visiting California, New York, Nevada, Florida, or Hawaii may face more than just the cost of accommodation—additional taxes add up quickly. Find out exactly where these taxes are the worst and how they impact your wallet, turning what seemed like an affordable vacation into an expensive getaway. Prepare yourself for the hidden price of luxury in these tax-heavy travel hotspots.

When planning a vacation or business trip in the United States, many people are focused on finding the perfect place to stay, the best deals, and activities to enjoy. But there’s one hidden cost that often goes unnoticed until it’s time to check out: taxes. Depending on the state and city, hotel and vacation rental taxes can add a significant amount to the total cost of your trip. These taxes, often referred to as Transient Occupancy Taxes (TOT) or Lodging Taxes, can range from just a few percentage points to as much as 15% or more.

In this article, we’ll take a deep dive into how taxes on hotel and vacation rental stays vary across the US, examining the tax rates state by state, what the tax covers, and why these rates differ from one location to another. We’ll also explore how vacation rentals like Airbnb are included in these taxes and what travelers should know to avoid surprises.

Understanding Hotel and Vacation Rental Taxes in the US

In the US, hotel taxes are levied by local and state governments on stays at hotels, motels, and vacation rentals. These taxes are typically added to the bill at the time of booking or check-out, and the rate can vary widely based on where you are staying. The purpose of these taxes is to generate revenue for the city, county, or state, and the funds are often used to support tourism-related services, infrastructure, and development.

For vacation rentals, including those booked through platforms like Airbnb, many cities and states treat them similarly to traditional hotels when it comes to taxation. In some cases, the platform itself will collect and remit these taxes, while in others, the property owner or manager is responsible for the collection.

The Highest Hotel and Vacation Rental Taxes in the US

Some states and cities impose very high hotel taxes, particularly in popular tourist destinations. Let’s take a look at the states and cities that charge the most for a hotel or vacation rental stay.

1. California: A Tax-Haven for Tourists

Tax Rate: 10% – 15% depending on the city.

California is home to some of the most iconic destinations in the world, from the beaches of Los Angeles to the entertainment capital of Hollywood. But these attractions come with a hefty price tag, and that includes taxes. In California, the Transient Occupancy Tax (TOT) is charged on stays in hotels and vacation rentals.

For instance, in Los Angeles, the tax rate is around 14%, while in San Francisco, it can be up to 16%. In Santa Monica, it’s 14%. Even smaller cities in California like San Diego and Lake Tahoe have taxes on vacation rentals that can go up to 14%.

These high taxes are implemented to support local tourism programs, infrastructure, and other community needs. In areas like San Francisco, the taxes also contribute to programs that address homelessness and support affordable housing.

2. New York: The Empire State’s Price for Luxury

Tax Rate: 8.875% state sales tax, plus 5% city tax in New York City, making the total 13.875%.

New York, home to New York City, one of the most visited cities in the world, imposes high taxes on hotel stays. The New York City Hotel Tax is one of the highest in the country, with a total rate of 13.875%. This includes a state tax of 8.875%, plus an additional 5% city tax on all hotel accommodations. For vacation rentals, the tax rate is similar, and platforms like Airbnb are required to collect and remit the taxes to the city.

The money collected from hotel and vacation rental taxes in New York City helps fund city services, including public transportation, tourism marketing, and infrastructure development. For tourists visiting New York, these taxes are just another part of the cost of experiencing one of the world’s top travel destinations.

3. Florida: The Sunshine State’s Heavy Taxation

Tax Rate: 12% – 13.5% depending on the county.

Florida’s hotel and vacation rental taxes vary significantly based on location. The state sales tax is 6%, but local counties can add up to an additional 7.5% in hotel taxes. This means that in cities like Orlando and Miami, the total tax on a hotel stay can reach as high as 13.5%. Vacation rentals, including those in places like Key West or Fort Lauderdale, are subject to the same taxes as hotels.

In Florida, these taxes are used to support local infrastructure, promote tourism, and fund various community programs. Given that Florida attracts millions of visitors each year to its beaches and theme parks, these taxes are a major source of revenue for the state and local governments.

4. Nevada: The Entertainment Capital’s Tax Costs

Tax Rate: 13% – 14% depending on the city.

Las Vegas, one of the most popular tourist destinations in the United States, is home to some of the highest hotel taxes in the country. The state hotel tax in Nevada is 8%, with local taxes pushing the total rate up to 13% in Las Vegas and surrounding areas. Even smaller cities like Lake Tahoe can have taxes of up to 14% on hotel accommodations.

Vacation rentals in Nevada, especially in areas like Las Vegas and Reno, are subject to these same taxes, which can add up quickly for those booking a short-term stay. These taxes fund tourism-related services and infrastructure in Nevada, which is heavily reliant on the tourism industry.

5. Hawaii: The Islands’ Tax on Paradise

Tax Rate: 10.25% statewide.

Hawaii has a state hotel tax of 10.25%, one of the highest in the US. The state also collects taxes on vacation rentals, making it important for travelers to factor in these costs when booking accommodations. The tax is collected by property owners and platforms like Airbnb, and is used to support the islands’ tourism infrastructure and environmental conservation efforts.

Hawaii is a top vacation destination for travelers seeking sun, sand, and stunning views. With its high tax rates, the state has been able to invest heavily in maintaining its natural beauty and supporting its local communities.

States with Moderate Hotel and Vacation Rental Taxes

1. Texas

Tax Rate: 6% state sales tax, plus local taxes (up to 9%).

Texas has a state sales tax of 6% on hotel stays, and cities like Austin and Dallas add up to 9% in local taxes. In total, the tax rate can range from 6% to 15%, depending on the location. This tax also applies to vacation rentals, and platforms like Airbnb are required to collect it.

2. Washington

Tax Rate: 10.1% – 15.6% depending on the county.

Washington has a state sales tax of 6.5%, with additional local taxes added in cities like Seattle and Tacoma. In Seattle, the total tax rate on hotel stays can go as high as 15.6%. Vacation rentals are also taxed similarly, with Airbnb hosts responsible for collecting these taxes.

3. Illinois

Tax Rate: 6.25% state sales tax, plus local taxes (up to 4.5%).

In Chicago, the combined hotel tax rate can reach 10.75%. Illinois applies a state tax of 6.25% and adds local taxes of up to 4.5%, depending on the city. Vacation rentals in Chicago and other areas in Illinois are subject to these same taxes, which help fund the local tourism industry.

Why Do Hotel and Vacation Rental Taxes Vary So Much?

The variation in hotel and vacation rental taxes from state to state, and even city to city, is due to a number of factors:

1. Tourism Demand: Cities with high tourism demand, such as New York, Las Vegas, and California, tend to have higher taxes as they rely heavily on tourism revenue to fund infrastructure and services.
2. Local Government Policies: Each city or state has the authority to set its own tax rates, and these rates can vary depending on local needs and priorities.
3. Tourism Promotion: Taxes are often used to fund marketing campaigns and initiatives that promote tourism, so areas with a strong tourism industry often have higher rates.
4. Revenue for Local Services: Taxes on hotel and vacation rental stays help fund various local services, including public transportation, cultural programs, and infrastructure improvements, which are particularly important in high-traffic areas.

What Travelers Need to Know

Before booking a hotel or vacation rental in the US, it’s important to be aware of the taxes that may apply to your stay. These taxes can significantly increase the cost of your trip, especially in cities with higher rates. Many Airbnb hosts and hotel chains will include taxes in the final bill, but it’s always a good idea to double-check so you’re not caught off guard at check-out.

Be Prepared for Hidden Costs

Taxes on hotel and vacation rental stays are an important part of the overall cost of travel in the US. While they are often used to fund tourism infrastructure and community services, they can also add up quickly. From California’s high tax rates to Hawaii’s paradise price tag, it’s essential for travelers to factor these costs into their budgets. By being aware of these taxes in advance, travelers can make informed decisions and avoid unpleasant surprises when it’s time to check out.

When planning a vacation or a business trip, one of the last things on most people’s minds is the tax they’ll have to pay on hotel and vacation rental stays. However, understanding how tax works on lodging and vacation rentals in the United States is more important than ever. These taxes vary widely from state to state and even city to city, and if you’re not careful, they can quickly add up and cause surprises during checkout. Whether you’re booking a hotel room in Florida, a vacation rental in California, or an Airbnb in New York, this article will guide you through the tax landscape for accommodations across the United States.

A Look at Lodging Taxes in the US

In the United States, lodging taxes, sometimes called transient occupancy taxes, are applied to hotel stays, vacation rentals, and other types of short-term accommodations. These taxes are designed to generate revenue for local governments, helping fund tourism infrastructure, community programs, and local services. However, there is no one-size-fits-all tax rate. States, counties, and even cities can levy their own taxes, which means travellers must pay attention to the details of their bookings.

State-Level Lodging Taxes: What Are the Rules?

Several U.S. states impose a statewide lodging tax on hotel accommodations. For example, Texas charges a 6% state hotel occupancy tax. However, the local government can add its own taxes, making the total tax rate higher. In cities like Austin and Houston, local taxes on hotel stays can range from 7-17%, depending on the area. If you’re staying in a hotel or vacation rental in Texas, you’ll likely pay the state tax plus any additional local taxes specific to your location.

Similarly, Florida also imposes a 6% state sales tax on accommodations. However, this is just the beginning. Local jurisdictions across Florida can add their own taxes, with popular tourist destinations like Miami, Orlando, and Key West charging additional fees, making the total tax rate as high as 13% in some areas.

On the other hand, states like Delaware and New Hampshire don’t impose a statewide sales tax, which includes lodging taxes. For example, Delaware has a rental tax of just 1.991% on short-term rentals. New Hampshire is another state without a sales tax on lodging, providing travellers with a tax-free experience when booking hotels.

Local Lodging Taxes: A Major Factor in Your Total Stay Cost

While state-level taxes are common, many cities and counties also impose their own lodging taxes. These local taxes can add up quickly, especially in major tourist destinations. Let’s look at a few examples from around the United States.

In California, Los Angeles and San Francisco both charge a 14% transient occupancy tax on hotel stays. In contrast, other cities like San Diego have a lower 10.5% tax, which can vary based on factors like hotel location and the type of accommodation. This tax applies to both traditional hotel rooms and vacation rentals, like those listed on Airbnb.

San Francisco’s tax rate is particularly high, and this reflects the city’s heavy reliance on tourism revenue. These taxes help fund city services and tourism marketing, ensuring that visitors have a positive experience. For example, San Francisco’s tax rate applies not only to hotel rooms but also to vacation rentals. Therefore, if you’re renting a property through Airbnb in San Francisco, expect to pay the same 14% tax rate as you would in a hotel.

Cities like New York City and Boston also charge hefty local taxes. In New York City, the tax on hotels and short-term rentals is made up of a 5.875% city tax, plus a 14.75% hotel room occupancy tax. Together, this brings the total tax rate for accommodations to nearly 20%. In cities like Boston, the combined tax rate for lodging can be as high as 16.45%.

Cities in states like Alaska also charge lodging taxes, though the rates are generally lower. For example, Anchorage imposes a 9% hotel tax, which is higher than the average for non-coastal U.S. cities but still lower than tourist-heavy cities like New York or San Francisco.

The Rise of Short-Term Rental Taxes

With the explosion of short-term rental platforms like Airbnb and Vrbo, many cities have introduced taxes specifically for vacation rentals. These taxes are generally similar to hotel taxes but may have different rates or rules.

In Tennessee, for example, Nashville has been actively implementing taxes on short-term rentals. Hosts who list their properties on platforms like Airbnb are required to collect both state and local taxes on stays. This includes a 6% state sales tax and a local 6% occupancy tax, bringing the total to 12%. Similarly, short-term rentals in New York City are subject to both state sales tax (4%) and city occupancy taxes (14.75%).

It’s important to note that in some cases, platforms like Airbnb and Vrbo may handle the collection and remittance of these taxes for hosts. For example, Airbnb automatically collects and remits taxes for hosts in many cities, including New York City and Los Angeles. This means that guests don’t have to worry about paying the tax directly, and the platform takes care of the heavy lifting.

Local and State Tax Changes: What’s New?

As the popularity of short-term rentals continues to rise, states and local governments are updating their tax policies to keep up with the growth of platforms like Airbnb. In Colorado, for instance, there has been an increase in lodging taxes. Starting in 2025, counties are allowed to levy up to 5% lodging taxes, a significant increase from the previous cap of 2%. This change aims to generate more revenue from the booming tourism industry.

Meanwhile, Hawaii introduced a new “green fee” to its lodging tax in 2025. The state increased its lodging tax to fund environmental protection efforts and climate resilience. In some parts of Hawaii, the total tax rate for accommodations now exceeds 18%, which includes the standard hotel tax plus the additional green fee.

These changes reflect the growing role of taxes in supporting state and local tourism-related initiatives. Whether it’s improving infrastructure, marketing the destination, or supporting environmental conservation, lodging taxes are an essential part of the financial landscape for many cities and states.

How Do These Taxes Impact You?

So, why should you care about lodging taxes when booking your next hotel room or vacation rental? For one, understanding these taxes helps you avoid surprises at checkout. The taxes can add up to a significant amount, especially if you’re staying in an expensive hotel or a popular tourist destination. Knowing about them in advance allows you to budget for your stay and ensures you won’t be caught off guard when you see the final price.

If you’re booking a short-term rental, knowing the tax rates can also help you determine whether it’s more affordable than staying in a hotel. While vacation rentals can be a cheaper option in many places, the added taxes can sometimes make them just as expensive as a hotel stay.

How to Handle These Taxes as a Property Owner

If you’re a property owner offering short-term rentals in one of the many cities or states with lodging taxes, you must stay up-to-date on the local regulations. Some cities require property owners to register their properties and collect taxes themselves, while others, like Airbnb, collect taxes on behalf of hosts. Be sure to check with local tax authorities to ensure you’re compliant with all applicable rules and regulations.

For example, in San Francisco, property owners must register their short-term rental with the city and collect a 14% transient occupancy tax on all bookings. Similarly, property owners in Nashville are required to collect both state and local taxes, making it essential for hosts to stay on top of their responsibilities.

Conclusion: Navigating the Tax Landscape

Lodging taxes in the U.S. can be complex, with state, city, and even platform-specific rules. From California’s hefty hotel taxes to the tax-free experience in New Hampshire, each state has its own approach to taxation. It’s important to understand these taxes when planning your trip or managing a short-term rental to avoid unexpected costs and ensure compliance with local laws.

As local governments continue to adapt to the growing popularity of vacation rentals, it’s likely that more cities and states will implement specific taxes for short-term rentals. Whether you’re booking a hotel stay in New York City or a vacation rental in Nashville, make sure to research the tax rates for your destination. With this knowledge, you can enjoy your travels with confidence and avoid surprises along the way.

For property owners, keeping up-to-date with lodging tax laws is essential. By understanding the rules in your area and ensuring compliance, you can avoid fines and provide a smooth experience for your guests.