What short-term rental operators need to know about lodging taxes in 2025

Lodging taxes are an essential part of doing business for short-term rentals (STRs). To help lodging businesses stay up to date, Avalara has published its tax changes report for 2025, highlighting the lodging tax developments and trends that affect accommodations providers going forward. The report covers topics that are especially relevant to STR operators, including:

According to a McKinsey study, 66% of 5,000 people surveyed said they’re more interested in travel now than before the COVID-19 pandemic. The short-term rental market will continue to grow and is expected to reach nearly $478 billion by 2037.

Lodging tax laws are different in every state — and each has its own definition and requirements for platforms that facilitate sales of accommodations. For STR operators, it’s crucial to understand how these definitions apply to you so that you can follow the right rules.

Lodging tax rules are constantly changing both at the state and local level. Examples include:

• Accommodations intermediaries in Alabama must now collect and remit state and local transient occupancy taxes
• Rhode Island requires STR marketplaces to ensure all properties on STR platforms are registered with the state
• According to a new law in Colorado, no local jurisdiction that has a local lodging tax can apply additional reporting requirements or standards to an accommodation’s intermediary that aren’t similarly applied to all marketplace facilitators
• In Delaware, a new law imposes a tax at the rate of 4.5% of the rent on every STR stay in the state

Many local communities are getting stricter with STRs, taking measures such as only allowing owner-occupied STRs, capping the number of STRs, and/or doubling down on enforcement. Property owners and STR marketplaces have challenged the more restrictive local ordinances with mixed results.

The global extended stay hotel market is expanding. While state and local lodging taxes generally don’t apply to extended stays, the rules can vary among jurisdictions. For example:

• Stays of less than 90 days are subject to lodging tax in New York and Virginia
• Stays of less than 180 days are subject to lodging tax in Alabama
• Stays of six months or less are subject to lodging tax in Florida

Long-term stays booked up front typically present less of an issue because the provider can account for an exemption from the outset. Compliance can be more challenging when a guest extends a stay. STR operators need to be aware of the local length-of-stay thresholds that apply to their properties.

For more insights, see the Avalara Tax Changes 2025 report.

No matter how lodging taxes change, Avalara MyLodgeTax can help STR hosts automate and simplify lodging tax compliance. For more on state-specific STR lodging tax requirements, see our vacation rental tax guides. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.