For Texas short-term rental (STR) owners, one of the most confusing and stressful aspects of running their business is navigating tax obligations. The Texas hotel occupancy tax for STRs is a primary requirement that cannot be overlooked, regardless of whether you manage a single property or a portfolio of vacation rentals.

This guide covers everything about Texas's STATE-level hotel occupancy tax. We'll explain what it is, who pays it, and how to comply. At Surge Airbnb Management, we specialize in Texas STRs, and handling tax compliance is a core part of our management service.

What is the Texas State Hotel Occupancy Tax?

The State Hotel Occupancy Tax is a 6% tax imposed by Texas on renting a hotel room or similar establishment, including short-term rentals, for less than 30 consecutive days. The revenue supports tourism promotion, arts programs, and initiatives to attract visitors.

Texas has two levels of hotel occupancy tax: State and Local (city and/or county). The state tax rate is 6% of the room cost, paid to the Texas Comptroller. Local taxes vary; cities can impose up to 7%, and counties can add their own tax. This guide focuses on the 6% state tax. Local taxes are a separate, additional obligation with varying rates and remittance procedures.

Overview of State vs. Local Hotel Tax

• State Tax: 6%, paid to the Texas Comptroller.
• Local Tax: Varies by city/county, paid to local tax authorities.
• Your Responsibility: You must comply with BOTH.

This guide focuses on state requirements, but it is important to understand city and county rules. Learn more in our [Guide to Local STR Permits in Texas].

Who Must Collect and Remit State Hotel Tax?

The Texas hotel occupancy tax law applies to anyone who owns, operates, manages, or controls a property providing paid sleeping accommodations. The state uses "operator" to describe this role. As an STR owner, you are considered an operator under Texas tax law.

You must collect this tax if:

• You own a Short-Term Rental (STR): This includes any residential property, house, condo, apartment, or single room, that you rent out for lodging. Properties listed on Airbnb, VRBO, HomeAway, or other booking platforms fall under this requirement.
• You rent it for less than 30 consecutive days: This timeframe defines "short-term" in Texas. Once a guest crosses the 30-day threshold, different rules apply (which we'll cover in the exemptions section).
• You receive payment for the stay: The tax applies if you're charging guests to stay there, whether your STR is your primary residence rented occasionally or a dedicated investment property.
• Your property is located in Texas: This tax requirement is specific to properties within Texas state boundaries, regardless of where you as the owner reside.

Key Exemptions to the State Hotel Occupancy Tax

While the hotel occupancy tax applies to STR owners, there are specific exemptions every host should know. Understanding these can help you apply the tax correctly and avoid unnecessary collection.

The 6% State Tax Exemptions:

1. The 30-Day Rule (Permanent Residents): This is the most common exemption for STR owners. If a guest stays for 30 or more consecutive days and does not have another permanent residence, they are considered a permanent resident, and no hotel tax is due. For example, a traveling nurse renting your property for a 6-week assignment qualifies.
2. Certain Nonprofit and Government Entities: Official government agencies and certain religious, charitable, or educational organizations are exempt if they provide a valid exemption certificate upon payment. As the host, you must obtain and keep this certificate for your records as proof of the exemption.
3. Other Cases: The 30-day rule is the most relevant for STR owners, but there are a few rare exemptions, like certain medical treatment stays.

For a complete list of official exemptions, refer to the Texas Comptroller's guidelines on Hotel Occupancy Tax.

How to Comply: A Step-by-Step Guide to State Hotel Tax

Now that you understand the tax and collection responsibilities, let's break down the compliance process into manageable steps. Following this guide will help ensure you meet your legal obligations as a Texas STR operator.

Step 1: Get Your Texas Sales and Use Tax Permit

Before you can legally collect or remit hotel occupancy tax in Texas, you must obtain a permit. The Texas Sales and Use Tax Permit authorizes you to collect this tax from guests. The Hotel Occupancy Tax is administered under the Sales and Use Tax system in Texas.

This permit is required for occasional property rentals. Apply for it for free through the Texas Comptroller's eSystems website. The application requires basic information about your business structure, location, and expected start date. Once approved, you will receive a permit number for your tax returns.

Step 2: Understand What's Taxable (The "Cost of the Room")

The 6% state hotel tax is calculated on the "taxable amount," the total room cost. However, for STR owners, determining the "cost of the room" can be nuanced.

• Generally Taxable: The nightly rate, mandatory cleaning fees, pet fees, extra person charges, and any other non-optional fees to occupy the room.
• Generally Non-Taxable: Refundable security deposits, separately stated and optional fees (like charges for rollaway beds or cribs when not provided), and local taxes. If the fee is a mandatory part of the room charge, it is generally taxable.

Step 3: Collect Tax from Guests

When hosting guests, you must collect and account for the hotel occupancy tax. This tax should be listed as a separate line item on the guest's bill or invoice, not bundled into the nightly rate. For example, your billing might show: Nightly Rate: $200, State Hotel Tax (6%): $12, Total: $212.

Set aside the collected tax money in a separate account rather than commingling it with your regular business funds. This helps you avoid spending money that belongs to the State of Texas. You are acting as a tax collector for the state, and these funds must be remitted in full when due.

Step 4: File Your Return and Pay the Tax

As an STR operator, you must regularly file a tax return with the Comptroller's office, even for periods with zero rental income. When you first register, you will typically be assigned a quarterly filing frequency, but this can change to monthly if your tax liability grows.

You will file through the Texas Comptroller's eSystems portal, where you'll report total receipts, exempt sales, and calculate the tax due. Have records of all bookings, amounts charged, and exemptions claimed during the reporting period.

To make the payment, use electronic funds transfer (EFT), credit card (via a fee-charging third-party processor), or other methods accepted by the Comptroller. Texas allows you to keep 1% of the collected tax as compensation for timely filing and payment.

Quick Tip: Set a recurring calendar reminder for your tax deadlines. In Texas, returns are due on the 20th of the month after the reporting period.

The Role of Marketplace Platforms (Airbnb, VRBO, etc.)

The Texas Marketplace Provider law has evolved the STR tax collection landscape. As of 2023, major platforms like Airbnb and VRBO must collect and remit the 6% STATE hotel occupancy tax for bookings made through them. This means many hosts now have automatic state-level tax collection.

Verify this by checking your host dashboard and transaction details. The platforms typically show the tax being collected separately, and these amounts should not appear in your payout since the platform is remitting them directly to the state.

Your Responsibility

Even with platforms handling state tax collection, as the property owner, you have several responsibilities:

• Local Taxes: These platforms often DO NOT handle local (city/county) hotel taxes. In most Texas cities, you must register with your city/county tax authority and remit local hotel taxes yourself, even for bookings through major platforms.
• Direct Bookings: If you accept direct bookings (through your website, repeat guests booking by phone, etc.), you are 100% responsible for collecting and remitting BOTH state and local taxes.
• Reporting: You must file a state tax return. First, report your total receipts, then deduct the marketplace receipts to show you don't owe tax on those bookings (since the marketplace already paid it).

The Surge Airbnb Management Advantage: Effortless Tax Compliance

Staying compliant involves multiple steps, deadlines, and understanding state and local rules. It's a significant administrative burden that distracts you from focusing on your investment.

This complexity is why savvy investors partner with Surge Airbnb Management for their Texas STR management needs. Our approach ensures your property performs at its peak and remains fully compliant with regulations.

Working with us benefits you:

• Full-Service Handling: We manage the entire tax process, ensuring correct tax collection on every booking (platform or direct), maintaining records, and filing timely state and local returns.
• Local Expertise: We exclusively operate in Texas, so we know the specific requirements of the state and key markets like Austin, Dallas, Houston, and the Hill Country. Our local knowledge is invaluable because tax rules vary between cities.
• Peace of Mind: Our clients enjoy a hands-off experience, knowing that all regulatory details, including tax compliance, are managed professionally. This eliminates the risk of penalties, interest, or compliance issues.
• Integrated with Your Success: Our tax management is part of our property management approach, designed to maximize your revenue while protecting your investment long-term.

Stop worrying about tax forms and deadlines. Learn about our full-service STR property management and let our Texas experts handle it.

Conclusion

Understanding and complying with the Texas hotel occupancy tax is essential for operating a successful short-term rental. The state tax is a flat 6%, separate from local taxes, and compliance is mandatory for all STR operators. Platforms like Airbnb collect the state tax for most bookings, but they don't eliminate all host responsibilities, particularly for local taxes and direct bookings.

Managing a successful STR in Texas goes beyond great interior design and 5-star reviews. It requires professional operational management and meticulous tax compliance. If you're ready to turn your property into a high-performing, hassle-free investment, Surge Airbnb Management is here to help.