April 6, 2026 · Michigan STR State Tax Guide

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

Michigan is one of the Midwest's most compelling states for short-term rental investment. With over 3,200 miles of Great Lakes shoreline, the largest freshwater coastline of any U.S. state, plus the historic charm of Mackinac Island and a growing wine country in the northern Lower Peninsula, Michigan offers a diverse portfolio of leisure STR markets that attract visitors from Chicago, Detroit, Cleveland, and throughout the Midwest.

Michigan's tax structure is investor-friendly by Great Lakes standards: a flat 4.05% state income tax (one of the lowest flat rates in the region), a 6% state use tax on lodging, and county/city lodging taxes that vary but typically stay in the 8–12% combined range. This guide covers the complete tax picture for Michigan Airbnb hosts in 2025.

Michigan STR Tax Overview

Michigan short-term rentals (stays under 30 days) are subject to state use tax plus county and city lodging/excise taxes. Airbnb collects most of these as a registered marketplace facilitator.

Michigan State Use Tax

Michigan imposes a 6% state use tax on short-term lodging rentals. Airbnb is registered as a marketplace facilitator in Michigan and collects and remits this tax for qualifying hosts. For VRBO, direct bookings, or other platforms, hosts must register with the Michigan Department of Treasury through the Michigan Business One Stop portal at michigan.gov/businessregistration.

Michigan State Income Tax

Michigan's flat 4.05% income tax applies to all taxable income, including net rental income. The flat rate (as opposed to a graduated structure) means every additional dollar of rental income is taxed at the same rate — there are no higher brackets that punish success. Michigan Form MI-1040 is used for state income tax filing.

Michigan generally conforms to federal depreciation rules. Bonus depreciation elections on your federal return typically carry through to your Michigan return, providing the same accelerated deductions at the state level.

Michigan STR Licensing

Michigan does not have a statewide STR licensing law. Regulation occurs at the county and township level. Key market-specific requirements:

• Traverse City / Grand Traverse County: Grand Traverse County has STR permit requirements for unincorporated areas; the City of Traverse City has its own ordinance
• Mackinac Island: The island operates under specific resort regulations; STR permits required
• Saugatuck / Allegan County: STR regulations have been enacted; permit requirements vary by township
• Many northern Michigan townships: Individual township zoning ordinances govern STR permissibility; research your specific township before purchasing

Michigan's Top STR Markets

Traverse City and Northern Lower Peninsula

Traverse City is Michigan's premier leisure STR market: the home of the National Cherry Festival (late June/early July), a growing wine country (Old Mission and Leelanau peninsulas), Crystal Mountain and Boyne ski resorts, and exceptional Lake Michigan and Grand Traverse Bay beaches. ADRs of $200–$350/night for lakefront properties; strong summer and fall occupancy.

Mackinac Island

Mackinac Island is a unique market: no motor vehicles, only accessible by ferry or small plane, and operating almost exclusively as a summer resort (June–October). The island's historic Grand Hotel, carriage rides, and Victorian architecture attract a specific demographic willing to pay premium rates. ADRs of $250–$500/night during peak summer months.

Lake Michigan Shoreline

The western Michigan lakeshore towns — Saugatuck, Holland, South Haven, Grand Haven — collectively form a massive summer STR market accessible from Chicago (3–4 hours). Fresh water beaches, art galleries, and wineries drive strong summer demand. ADRs of $200–$400/night for lakefront properties.

Torch Lake

Torch Lake in Antrim County is consistently rated one of the world's most beautiful lakes. Its turquoise Caribbean-colored water drives premium rates for lakefront properties. ADRs of $300–$500/night during peak summer months. Antrim County has STR permit requirements.

Upper Peninsula

Michigan's Upper Peninsula offers a more rustic wilderness experience — Pictured Rocks National Lakeshore, waterfalls, hunting, fishing, and a growing mountain biking scene. ADRs are lower ($150–$250/night) but operating costs are also lower, and demand has grown significantly post-COVID.

Key Deductions for Michigan STR Hosts

Seasonal Property Deductions

Michigan's strong seasonality creates specific deduction patterns:

• Winterization costs: Draining pipes, adding antifreeze, disconnecting utilities — labor and supplies are deductible
• Spring opening costs: Re-commissioning systems, cleaning, and repairs after winter are deductible
• Snow removal: Plow contracts, shoveling, salt — deductible maintenance even if guests aren't present (maintaining the property for eventual rental is sufficient)
• Ice damage repairs: Lake ice can damage docks, sea walls, and shoreline structures; repair costs are deductible

Waterfront Property Deductions

• Dock construction, maintenance, and replacement
• Boat lift maintenance, inspection, and replacement
• Sea wall and riparian protection
• Watercraft provided for guest use (5-year depreciation)
• Kayaks, paddleboards, paddleboats (5-year depreciation)

Standard Rental Deductions

• Depreciation: 27.5-year residential schedule (Michigan conforms to federal)
• Property management fees
• Cleaning and turnover services
• Guest supplies and welcome amenities
• Utilities proportional to rental use
• Michigan property taxes and mortgage interest (proportional to rental use)
• Insurance (homeowner, liability, flood for applicable properties)
• Platform fees and marketing

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