Does Texas have a state income tax on STR revenue?

No. Texas has no state income tax on individuals or pass-through business income. Texas STR hosts only owe federal income tax and self-employment tax on their net rental profits, making Texas one of the most tax-favorable states for short-term rental operators.

What is the Texas state hotel occupancy tax rate?

Texas levies a state hotel occupancy tax of 6% on the price paid for short-term lodging. Local jurisdictions (cities and counties) can add up to 7% on top of this, bringing the combined maximum total to 13% in some locations.

Does Airbnb collect and remit hotel occupancy tax for Texas hosts?

Yes. Airbnb has an agreement with the Texas Comptroller to collect and remit state hotel occupancy tax on behalf of hosts. Airbnb also collects local HOT for many Texas cities. However, hosts who accept direct bookings remain responsible for collecting and remitting HOT themselves.

April 6, 2026 · 9 min read

Texas STR Tax Guide: What Airbnb Hosts Need to Know in 2026

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Texas is one of the most STR-friendly states in the country: no state income tax, a relatively straightforward hotel occupancy tax system, and major markets ranging from Austin's live music scene to Fredericksburg's wine country and Galveston's Gulf Coast. This guide covers every Texas-specific tax obligation, major market nuances, and the key deductions that reduce your federal tax bill.

Texas Hotel Occupancy Tax (HOT)

Texas calls its lodging tax the Hotel Occupancy Tax (HOT). It applies to any rental of a dwelling for less than 30 consecutive days. The state rate is 6%, collected on the total price paid for the accommodation.

Local jurisdictions — cities, counties, and special districts — can impose additional HOT up to a combined cap. In most Texas cities, the combined state + local rate falls between 9–13%.

Jurisdiction	State HOT	Local HOT	Combined
Austin	6%	9%	~15%
San Antonio	6%	9%	~15%
Galveston	6%	7%	~13%
Fredericksburg	6%	7%	~13%
Other TX cities	6%	0–7%	6–13%

Platform Collection

Airbnb collects and remits both state and most local HOT for bookings on its platform. VRBO/Vrbo has similar agreements in major Texas markets. If you accept direct bookings, you must register with the Texas Comptroller and remit HOT yourself through the eSystems portal.

No Texas State Income Tax: A Major Advantage

Texas has no individual state income tax. This is one of the state's most significant financial advantages for STR operators. Your net rental income — after all deductions — is subject to federal income tax and self-employment tax only. There is no state-level Form 1040 equivalent to file in Texas.

However, Texas does impose a franchise tax on certain business entities (LLCs, S-corps, C-corps). If you operate your STR through an LLC or other entity, you may have a Texas franchise tax obligation. Most single-property STR LLCs in Texas fall under the no-tax-due threshold ($2.47 million in gross revenue for 2026), but you should still file the annual public information report to maintain your LLC's good standing.

Texas STR Regulations by Market

Austin

Austin is one of Texas's most STR-regulated markets. The city requires an STR license for all short-term rentals. Austin differentiates between Type 1 (owner-occupied) and Type 2 (non-owner-occupied) licenses. Type 2 licenses are limited in number and subject to neighborhood caps — some areas have effectively closed to new Type 2 licenses. Austin's combined HOT rate of approximately 15% is among the highest in Texas. Despite regulation, Austin remains a top STR market driven by SXSW, Formula 1 (COTA), UT football, and year-round corporate travel.

San Antonio

San Antonio requires STR operators to obtain a Short-Term Rental License from the Development Services Department. The city distinguishes between hosted (owner-present) and non-hosted STRs. The River Walk, Alamo area, and the Pearl District command the highest ADRs. San Antonio's tourism economy is strong and year-round, with major events including the San Antonio Stock Show & Rodeo and Fiesta.

Galveston

Galveston is a beach market on the Gulf Coast, approximately an hour from Houston. STR regulations are lighter than in Austin or San Antonio. The city requires a basic business license and HOT registration. Hurricane insurance is a significant and non-negotiable expense for Galveston hosts — see our Galveston STR guide for market-specific details.

Fredericksburg (Texas Hill Country)

Fredericksburg and the surrounding Hill Country have seen explosive STR growth, driven by wine tourism, bluebonnet season, and escape-from-city-heat demand. Fredericksburg has implemented STR regulations requiring permits and limiting the number of non-owner-occupied licenses in some areas. See our Wimberley Hill Country guide for a related market overview.

Key Federal Deductions for Texas STR Hosts

Business Personal Property Tax

Texas has no state income tax, but it does tax business personal property. STR furniture, appliances, electronics, and other tangible personal property used in your rental may be subject to annual county appraisal district reporting and property tax assessment. This is a unique Texas consideration that most other states don't impose in the same way. The property tax you pay on business personal property is itself deductible as a business expense on your federal return.

Property Tax

Texas has some of the highest property tax rates in the nation — often 2–3% of appraised value annually. For STR properties, property taxes are fully deductible. Homestead exemptions do not apply to non-primary-residence STR properties, so expect the full assessed tax rate on investment STRs.

Air Conditioning and Heat

Texas summers are brutal. HVAC costs — including electricity bills, maintenance, and system repairs — are significant and fully deductible. Properties in South Texas or the Gulf Coast also face elevated humidity management costs (dehumidifiers, moisture-barrier materials).

Cleaning and Turnover

Cleaning fees run $100–$250+ per turnover depending on property size and market. These are fully deductible. Hill Country cabin properties often require more intensive cleaning due to outdoor activities, fire pits, and hot tubs.

Flood and Wind Insurance

Coastal Texas properties require flood and windstorm insurance in addition to standard homeowner's coverage. All insurance premiums are deductible operating expenses.

Real Dollar Impact

A Texas STR host earning $60,000 in net profit pays zero state income tax on that amount. At California's top rate, the same income would cost an additional $7,980 in state taxes. Over 10 years of active STR operation, Texas's no-income-tax status represents tens of thousands of dollars in savings.

Texas STR Filing and Compliance Checklist

Register with Texas Comptroller for HOT (if accepting direct bookings)
Obtain city STR license/permit for your specific market
File annual Texas franchise tax public information report (if operating as LLC)
Report business personal property to county appraisal district annually
File federal Schedule C with Form 1040 by April 15
Pay quarterly estimated federal taxes (if net profit exceeds $1,000)

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Disclaimer

This article is for informational purposes and does not constitute tax, legal, or financial advice. Tax rules vary based on your specific situation, filing status, entity structure, and jurisdiction. Always consult a qualified CPA or tax professional for guidance on your specific tax situation. IRS rules and thresholds are subject to change — verify current requirements at irs.gov before filing.