How Florida, California, Texas, New York, Nevada, Illinois, Hawaii, Tennessee, and Georgia Are Using Tourist Taxes to Boost the US Tourism Sector: What You Need to Know

Written By: Sara Alhariri

Sara Alhariri

I was a dedicated journalist to The US Sun, the Sun UK, the Irish Sun, and the Scottish Sun and a producer for Fox News Media for some time, too.My value is in sharing this content with my network on LinkedIn, Instagram, etc.—it will get the eyes of media executives who handle travel reporting on it immediately. It will bring more visibility to the brand for sure. Like reporting and PR in one.

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April 8, 2025 11:24 PM

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Across the US, tourist taxes—charged on hotel stays and short-term rentals—are being used not just to collect revenue, but to actively fuel tourism growth and infrastructure investment. In 2025, Florida, California, Texas, New York, Nevada, Illinois, Hawaii, Tennessee, and Georgia are using these funds to expand convention centers, upgrade transportation, support local festivals, fund tourism marketing, and enhance traveler amenities. These efforts are helping states attract more visitors, extend their stays, and drive higher spending, creating a reinvestment loop that strengthens their entire tourism sector. This article reveals how each of these nine states is strategically using tourist taxes to boost U.S. tourism—and why it’s working.

Tourist taxes have become a powerful economic tool across the United States, generating billions in funding for marketing campaigns, convention centers, and hospitality infrastructure. In 2025, states like Florida, California, Texas, New York, Nevada, Illinois, Hawaii, Tennessee, and Georgia are taking their travel economy to the next level by leveraging lodging taxes to draw visitors and drive revenue.

Each of these states uses variations of hotel, motel, and short-term rental taxes to reinvest directly into the tourism ecosystem, enhancing their global competitiveness and improving traveler experiences. Here’s a closer look at how these nine states are maximizing the impact of tourist taxes in 2025.

Florida: Record-Breaking Tourist Tax Fuels Convention and Promotion Power

Florida remains a national leader in leveraging tourist taxes for destination development. Counties across the state can levy up to 6% in Tourist Development Tax (TDT) on hotel stays and vacation rentals.

In February 2025, Orange County—home to Orlando—collected a record $35.48 million in TDT revenue, representing a 4.2% year-over-year increase and the highest monthly haul on record. Hotel occupancy reached 80.4%, and the average daily rate hit $225.50, both figures suggesting a strong tourism rebound.

TDT funds in Florida are earmarked for:

• Tourism marketing and promotion
• Facility improvements like the Orange County Convention Center
• Event venues like the Kia Center
• Arts, sports, and cultural tourism programs

Florida’s performance illustrates how lodging taxes directly power its world-famous travel economy, especially in high-volume counties such as Miami-Dade, Hillsborough, and Orange.

California: Transient Occupancy Tax Backs Local Projects and Community Tourism

In California, the Transient Occupancy Tax (TOT) is typically around 12%, though it varies by city and county. Los Angeles County collects TOT on hotel rooms and properties rented via home-sharing services like Airbnb, with funds primarily used for:

• Public infrastructure
• Tourism bureaus
• Cultural festivals
• Beach maintenance and visitor experience initiatives

In 2025, California cities are enhancing TOT use with an increased focus on sustainability, accessibility, and digital tourism tools. For instance, TOT revenue in Monterey County supports coastline preservation and visitor services. Major destinations like San Diego and San Francisco have also ramped up TOT-supported hospitality workforce development programs.

Texas: Hotel Occupancy Tax Drives Convention Centers and Sports Venues

Texas applies a 6% state Hotel Occupancy Tax (HOT), with municipalities able to add up to an additional 11%, for a potential total of 17%. In Austin and Houston, this revenue has become a key funding mechanism for:

• Expanding convention centers
• Supporting community venue construction
• Local tourism marketing

In 2025, Austin is using HOT funds to support the expansion of its event infrastructure to accommodate the growing tech and cultural festival circuit. Similarly, Houston continues reinvesting hotel tax dollars into public-private partnerships that enhance downtown and airport-area visitor offerings.

New York: Complex Tax Structure Supports Urban Tourism Infrastructure

In New York City, hotel guests face a combination of taxes that include a 4.5% state sales tax, a 5.875% city hotel occupancy tax, and a daily hotel unit fee of $1.50. Altogether, the total tax burden on a hotel stay amounts to approximately 14.75% in addition to a nightly surcharge of $3.50.

These revenues feed directly into:

• Transit infrastructure near major hotels
• Convention Center upgrades (e.g., Javits Center)
• Tourism and event grants
• Cultural institutions and the arts

Despite high rates, New York City remains a top global tourism hub, and officials are planning strategic reinvestments to sustain post-pandemic recovery throughout 2025 and beyond.

Nevada: Las Vegas Room Taxes Power Tourism-Driven Economy

Nevada, particularly Clark County, relies heavily on a 13% transient lodging tax, plus a 0.05% special room surcharge. In Las Vegas, this tax supports:

• The Las Vegas Convention and Visitors Authority
• Convention center improvements
• Airport transit links
• Special events and festivals

As Las Vegas hosts global events like Formula 1 and continues to court business travel and international tourism in 2025, room tax revenue is central to its high-profile promotional efforts.

Illinois: Hotel Occupancy Tax Fuels Chicago’s Convention and Cultural Sector

Illinois applies a 6% state-level Hotel Operators’ Occupation Tax (HOOT), and additional local surcharges push the total lodging tax in Chicago to approximately 17.4%.

In 2025, HOOT funds are used to:

• Enhance McCormick Place, one of the largest convention centers in North America
• Support tourism marketing campaigns
• Fund public transportation serving tourist-heavy zones
• Back major cultural institutions and museums

The tax structure supports Illinois’ goal of drawing back international visitors and restoring Chicago’s high pre-pandemic hotel occupancy levels.

Hawaii: Transient Accommodations Tax Anchors State’s Tourism Strategy

Hawaii’s Transient Accommodations Tax (TAT) includes a 10.25% state rate and up to 3% county surcharge. The TAT is the primary funding source for the Hawaii Tourism Authority (HTA).

Revenues are invested in:

• Environmental protection and sustainable tourism
• Native Hawaiian cultural programming
• Visitor education campaigns
• State park maintenance and beach restoration

As 2025 focuses on regenerative tourism, Hawaii’s TAT is helping balance economic goals with cultural and ecological preservation, especially on high-impact islands like Maui, Oahu, and Kauai.

Tennessee: Local Occupancy Taxes Reinforce Convention Growth

Municipalities across Tennessee have the authority to levy local lodging taxes of up to 3%, while in Nashville-Davidson County, that rate can go as high as 6%. Additionally, the area imposes a supplemental $2.50 charge per room for each night of stay.

Funds are used for:

• Convention center expansions (e.g., Music City Center)
• Downtown entertainment districts
• Live music venue support
• Local destination marketing

In 2025, Nashville is experiencing record hotel demand, with tax revenues funding pedestrian enhancements and hospitality training to improve tourist satisfaction.

Georgia: Hotel/Motel Excise Tax Powers Tourism in Atlanta and Beyond

Since September 1, 2023, Georgia enforces an 8% Hotel/Motel Excise Tax. The tax supports local convention and visitors bureaus, event venues, and public tourism infrastructure.

In Atlanta, revenue goes toward:

• Expanding Georgia World Congress Center
• Attracting sports and entertainment events
• Marketing campaigns for the Southeast travel market

Statewide, smaller municipalities like Savannah and Augusta use this funding to maintain historic tourism districts and promote cultural heritage experiences.

Florida, California, Texas, New York, Nevada, Illinois, Hawaii, Tennessee, and Georgia are using tourist taxes to boost U.S. tourism by reinvesting hotel-generated revenue into marketing, infrastructure, and visitor experiences—driving more arrivals, longer stays, and stronger local economies.

A Nationwide Strategy to Strengthen Tourism Through Smart Taxation

From Orlando to Honolulu, Las Vegas to New York City, and Austin to Chicago, tourist taxes have evolved into more than a revenue tool—they’re a reinvestment strategy.

By channeling billions into:

• Convention centers
• Destination marketing
• Sustainable travel
• Cultural institutions
• Transportation infrastructure

…these nine states are ensuring that tourism remains resilient, competitive, and growth-oriented in a post-pandemic economy.

As shown by Florida’s record-breaking February 2025 collection, lodging taxes are doing more than funding cities—they’re shaping the future of U.S. tourism.