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

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

Hot Springs, Arkansas occupies a unique position in American tourism: it's home to Bathhouse Row, a collection of magnificent Gilded Age bathhouses that became Hot Springs National Park — the only national park located entirely within a city. Combined with Oaklawn Racing Casino Resort, Lake Hamilton water sports, and a growing arts and culinary scene, Hot Springs draws visitors year-round in a way most small Arkansas cities can't match.

For short-term rental hosts, this year-round appeal translates to more stable income than purely seasonal markets. ADRs typically run $120–$200/night, with peaks during the horse racing season (January–May at Oaklawn), summer lake season, and fall foliage months. Understanding the tax structure is essential to running a profitable operation.

Hot Springs STR Tax Rates

Short-term rental stays in Hot Springs are subject to Arkansas state sales tax, Garland County sales tax, and Hot Springs city sales taxes. Combined, these rates bring the effective lodging tax rate to approximately 10–12%.

Arkansas State Sales Tax

Arkansas's 6.5% state sales tax applies to short-term lodging rentals (rentals under 30 days). As an Arkansas marketplace facilitator, Airbnb collects and remits this tax on behalf of qualifying hosts. For hosts who receive income outside of Airbnb's platform, registration with the Arkansas Department of Finance and Administration is required through the ATAP (Arkansas Taxpayer Access Point) portal at atap.arkansas.gov.

Arkansas State Income Tax

Net rental income from your Hot Springs STR is taxable as Arkansas income. Arkansas has been progressively lowering its income tax rates; the top rate for 2024 is 4.7% for individuals (flat rate above a threshold). This is substantially lower than many competitor states and represents a meaningful advantage for Arkansas landlords.

File Arkansas Form AR1000F (or AR1000NR for non-residents). Rental income is reported consistent with federal treatment — Schedule E income flows to your AR1000 return.

STR Licensing in Hot Springs

Hot Springs requires short-term rental operators to comply with city regulations:

• City Business License: Required for all STR operators; apply through Hot Springs City Hall
• STR Registration: The city maintains a registry of short-term rental properties; registration may be required even if operating through a major platform
• Safety Standards: Properties must meet minimum safety requirements including smoke detectors, CO detectors, fire extinguishers, and adequate egress
• State Tax Registration: Register with Arkansas DFA to collect/remit sales taxes for any bookings outside Airbnb

The Hot Springs STR Market

Hot Springs has one of the most diversified tourism economies among small Arkansas cities. The multiple demand drivers create year-round occupancy that's rare in leisure markets of this size.

Demand Drivers by Season

• Winter/Spring (January–May): Oaklawn Racing Casino Resort horse racing season; ADR $150–$210/night; occupancy 65–75%
• Summer (June–August): Lake Hamilton and Lake Catherine water sports; family vacations; ADR $130–$190/night; occupancy 70–80%
• Fall (September–November): Foliage, outdoor recreation; ADR $140–$200/night; occupancy 60–70%
• December: Holiday tourism; variable occupancy

Best Performing Property Types

Lakefront properties on Lake Hamilton or Lake Catherine command the highest premiums — up to 40–50% over comparable inland properties. Downtown properties within walking distance of Bathhouse Row appeal to history and wellness tourists. Mountain-view cabins in the surrounding Ouachita National Forest attract outdoor recreation guests seeking hiking, mountain biking, and fishing.

Tax Deductions for Hot Springs STR Hosts

Lakefront Property Deductions

Properties on Lake Hamilton or Lake Catherine have unique deductible expenses:

• Dock and boat slip maintenance: Annual inspection, repair, and upkeep of any water structures
• Watercraft provided for guests: Pontoon boats, kayaks, jet skis used by guests depreciate as rental property equipment
• Shoreline maintenance: Riparian vegetation, erosion control, swimming area maintenance
• Flood/water damage insurance: Higher premiums near the lakes are fully deductible

Historic Property Deductions

Downtown Hot Springs properties built in the early 20th century may qualify for historic preservation deductions and credits similar to Eureka Springs properties:

• Restoration and rehabilitation of historic structural elements
• Period-appropriate furnishings and decor (5-year depreciation)
• Potential qualification for Federal Historic Tax Credit on major rehabilitations

Standard Rental Deductions

• Depreciation: 27.5-year residential schedule (proportional to rental use percentage)
• Property management fees and platform service fees
• Cleaning, turnover, and housekeeping services
• Guest supplies (bath products, coffee, welcome basket items)
• Utilities (water, gas, electric, internet, cable) proportional to rental use
• Insurance (homeowner, liability, flood)
• Property taxes and mortgage interest (proportional to rental use)
• Advertising and marketing costs

Federal Tax Considerations

Most Hot Springs STR hosts will file using Schedule E (supplemental rental income). Key federal considerations:

• Passive activity rules: If your adjusted gross income is under $100,000 and you actively participate in managing the rental, up to $25,000 of rental losses can offset ordinary income (phases out between $100,000–$150,000 AGI)
• Short-term rental active participation exception: If you provide hotel-like services and/or materially participate in a rental business treating it as a non-passive activity, losses may be fully deductible
• Vacation home rules: If you use the property personally, apply the mixed-use allocation rules carefully

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