April 6, 2026 · Eureka Springs, AR STR Tax Guide

Eureka Springs Short-Term Rental Tax Guide for Airbnb Hosts (2025)

Perched in the Ozark Mountains of northwest Arkansas, Eureka Springs is one of the South's most unusual destinations — a fully intact Victorian spa town listed on the National Register of Historic Places where no two streets run parallel and no downtown building sits on flat ground. That quirky charm draws over 1 million visitors annually to a town of fewer than 2,000 residents, making it one of the most tourism-concentrated small cities in America.

For Airbnb hosts, this translates to exceptional occupancy rates and ADRs of $150–$250/night for well-positioned Victorian cottages and Ozark cabins. But Arkansas's layered sales tax system — state, county, and city rates that stack together — means your effective lodging tax rate can exceed 12%. This guide explains what you owe and how to minimize your overall tax burden.

Eureka Springs STR Tax Rates

Short-term rentals in Eureka Springs are subject to Arkansas sales tax, Carroll County sales tax, and Eureka Springs city taxes. The city also imposes a tourism tax that funds marketing and event promotion.

Arkansas State Sales Tax

Arkansas imposes a 6.5% state sales tax on short-term lodging rentals (defined as rentals of less than 30 days). This makes Arkansas one of the higher sales tax states for lodging nationally. Airbnb is registered as a marketplace facilitator in Arkansas and collects/remits this tax on behalf of hosts for transactions processed through Airbnb.

If you rent through VRBO, direct bookings, or other platforms, you must register with the Arkansas Department of Finance and Administration (DFA) and collect/remit sales tax yourself. Registration is done online through the Arkansas Taxpayer Access Point (ATAP) portal.

Arkansas State Income Tax

Arkansas has a graduated state income tax. Net rental income from your Eureka Springs STR is taxable on your AR 1000 return. Current rates for 2024:

• 2% on income up to $4,999
• 4% on $5,000–$9,999
• 4.7% on income above $10,000 (flat rate for higher earners under 2023 reforms)

Arkansas has recently been reducing its top income tax rate. The current top rate is 4.7% (reduced from higher historical rates), making Arkansas relatively competitive on income tax compared to states like Minnesota or California.

Business Licensing Requirements

Operating a short-term rental in Eureka Springs requires:

• Eureka Springs Business License — required annually; apply through the City of Eureka Springs City Clerk's office
• Arkansas Sales Tax Permit — required to collect/remit state sales tax; free to obtain via the DFA ATAP portal
• Property Registration — Eureka Springs has implemented STR tracking; confirm current requirements with the city
• Inspection Requirements — some property types may require a city inspection for business licensing purposes

The Eureka Springs STR Market

Eureka Springs is a remarkably strong STR market for its size. The combination of historic architecture, year-round events, and regional draw from a large surrounding population (within 3–4 hours of 20+ million people in Arkansas, Missouri, Oklahoma, and Kansas) creates consistent demand.

Seasonal Revenue Patterns

• Fall (September–November): Peak season; fall foliage + Ozark Folk Festival + Halloween events; ADR $200–$280/night; occupancy 80–90%
• Spring (April–June): Wedding season, wildflower blooms, outdoor recreation; ADR $175–$250/night; occupancy 70–80%
• Summer (July–August): Family vacation travel; ADR $160–$230/night; occupancy 65–75%
• Winter (December–February): Christmas events offset post-holiday slow; ADR $140–$190/night; occupancy 40–55%

Property Types

Victorian bed-and-breakfast style properties with multiple rooms can be extraordinarily profitable if licensed appropriately. Single-family cottage rentals are the most common STR format and the easiest to manage. Tree house and cabin properties in the surrounding Ozark landscape command premium rates from nature tourists and have grown significantly in popularity post-2020.

Federal Tax Treatment and Deductions

Most Eureka Springs STR hosts report on Schedule E (passive rental income). If you provide substantial services (daily housekeeping, concierge, activity bookings), you may need to report on Schedule C as an active trade or business.

Victorian Property Deductions

Eureka Springs properties often have unique deduction opportunities tied to their historic character:

• Historic restoration costs: Significant repairs to historic properties may qualify for the Federal Historic Tax Credit (20% credit on qualified rehabilitation expenses) if the property is income-producing and certified by the National Park Service
• Period-appropriate furnishings: Victorian antiques, period decor, and historically accurate fixtures are deductible as furnishings (5-year depreciation or Section 179)
• Structural repairs: Foundation work, roof repair, window restoration on old buildings are generally deductible repairs rather than improvements
• Garden and landscape maintenance: Ozark rock gardens, perennial plantings, and exterior landscape that enhances guest appeal is deductible

Standard Operating Deductions

• Platform service fees (Airbnb host fees)
• Cleaning and turnover services
• Linen and supply replacement
• Utilities proportional to rental use
• Insurance (homeowner, liability, flood if applicable)
• Property management fees
• Marketing costs (professional photography, listing enhancement)
• Depreciation: 27.5-year residential depreciation

The 14-Day Rule for Mixed-Use Properties

Many Eureka Springs hosts also use their property personally. The IRS 14-day / 10% rule applies here as it does anywhere:

• Rent fewer than 15 days per year: rental income is tax-free; no rental deductions beyond Schedule A items
• Personal use exceeds the greater of 14 days or 10% of rental days: mixed-use rules apply with proportional expense allocation
• No personal use: full investment property deductions available

Disclaimer