Transient Occupancy Tax (TOT)
Key Takeaways
- TOT applies to stays under 30 days and is typically calculated as a percentage of the nightly rate
- Tax rates generally range from 6% to 15%, but combined state, county, and city taxes can exceed 20%
- Hosts are legally responsible for collecting and remitting TOT even when platforms handle partial collection
- Airbnb collects TOT automatically in many jurisdictions, but coverage is not universal
- Registering for TOT is usually required when obtaining your STR permit
How Transient Occupancy Tax Works
TOT is charged as a percentage of the rental amount and added to the guest's booking total:
Formula:
TOT Amount = Nightly Rate x Number of Nights x TOT Rate
Example:
If your nightly rate is $200, the guest stays 3 nights, and your local TOT rate is 12%:
TOT = $200 x 3 x 0.12 = $72 in tax
The guest pays $672 total ($600 rent + $72 TOT), and you remit the $72 to your local tax authority.
Why TOT Matters for Airbnb Hosts
Understanding and properly managing TOT is essential for compliant STR operations:
- Legal obligation: Failing to collect and remit TOT can result in back taxes, penalties of 10-25%, and interest charges
- Pricing impact: TOT increases the total cost to guests, which can affect booking demand and your competitive positioning
- Platform compliance: Many jurisdictions require your tax registration number on listings, and platforms may delist non-compliant properties
- Audit risk: Local governments increasingly audit STR operators by cross-referencing platform data with tax records
TOT Rates by Example Markets
| Market | City TOT | County/State Tax | Combined Rate |
|---|---|---|---|
| Los Angeles, CA | 14% | -- | 14% |
| San Francisco, CA | 14% | -- | 14% |
| Nashville, TN | 6% | 2.5% state + county | ~8.5% |
| Austin, TX | 9% | 6% state | 15% |
| New York City, NY | 5.875% | 4% state + surcharges | ~14.75% |
| Denver, CO | 10.75% | -- | 10.75% |
Rates are approximate and subject to change. Always verify current rates with your local tax authority.
TOT Compliance Checklist
- Register with your local tax authority -- Usually done during the STR permit application process
- Determine collection responsibility -- Check whether Airbnb or Vrbo collects TOT in your jurisdiction or if you must collect it yourself
- Set up tax collection -- Configure your listing price to include or add TOT, and keep detailed records
- File returns on schedule -- Most jurisdictions require monthly or quarterly TOT filings
- Maintain records -- Keep booking receipts, tax filings, and remittance confirmations for at least 3-5 years
- Monitor rate changes -- TOT rates can change annually, so verify rates at the start of each year
Frequently Asked Questions
Airbnb collects and remits TOT automatically in many jurisdictions where it has voluntary collection agreements with local governments. However, not all cities are covered, and in some locations Airbnb only collects state or county taxes, leaving the city portion to the host. Always verify with your local tax authority whether Airbnb handles your specific TOT obligation.
TOT rates typically range from 6% to 15% of the nightly rental rate, though some jurisdictions charge more. The total tax burden may include multiple layers -- city TOT, county TOT, state lodging tax, and tourism assessment fees -- which can combine to 15% to 20% or more in some markets.
The guest ultimately pays the TOT as it is added to the booking total. However, the host (or the platform on behalf of the host) is legally responsible for collecting the tax from the guest and remitting it to the local government. Failure to collect and remit TOT can result in the host owing the tax out of pocket plus penalties.