Austin, Texas, requires Airbnb, Vrbo to collect short-term rental lodging tax
- Mar 11, 2025 | Jennifer Sokolowsky
Austin, Texas, will begin requiring short-term rental (STR) marketplaces such as Airbnb and Vrbo to collect the city’s lodging tax when guests pay for STR stays. Marketplaces must begin collecting the tax starting April 1, 2025. Formerly, only individual STR operators were required to collect and remit the tax to the city.
The city’s hotel occupancy tax applies to stays in “any building or buildings in which the public may obtain sleeping accommodations for a cost of 2 dollars or more each day for a consecutive duration of 30 days or less.” The tax rate is 11%, comprised of a 9% occupancy tax and an additional 2% venue project tax, and the revenues must be spent by the city on tourism promotion. Those who collect the tax must file returns and pay it to the city quarterly.
The city collects about $7 million in taxes annually from STR operators, but that number is expected to increase drastically with marketplaces taking on that responsibility. Austin requires STR operators to obtain a license from the city. Currently, there are around 2,200 STR operators licensed within city limits, but data suggests that thousands more STRs are operating in Austin without a license. Marketplaces will be required to collect the lodging tax on their transactions whether or not STRs are licensed.
Changes to STR rules could come later this year
The City Council approved the tax collection measure February 27, 2025, but postponed other proposed changes to the city’s STR rules. Starting October 1, 2025, STRs will be primarily regulated through the city’s code on business regulations and permit requirements rather than the Land Development Code. Other changes may follow later in the year. In the meantime, the city is working to find a technological solution for tracking down STRs operating without a license.
Beyond license requirements, Austin’s current STR regulations require operators to designate a local agent who can be contacted in case of issues and provide proof of insurance. The law also prohibits unlicensed STRs from advertising, restricts the density of short-term rentals in multi-family buildings within neighborhoods, and establishes limits on the number of guests and noise levels.
In 2023, a federal judge struck down part of Austin’s STR law banning unhosted STRs in residential areas. STRs are now allowed in all residential areas with a valid license.
Austin STRs also subject to state lodging tax
All STRs in Texas are also subject to state hotel occupancy tax. Operators must register with the Texas Comptroller’s Office, collect taxes, and file state occupancy tax returns. Registration and filing aren’t required if an STR marketplace collects all state hotel occupancy taxes for the property. Airbnb and Vrbo are already required to collect the state portion of the tax for bookings on their sites.
Avalara MyLodgeTax can help short-term rental hosts automate and simplify city and state lodging tax compliance, from registration to tax return filing. If you have tax questions related to Texas vacation rental properties, drop us a line and we’ll get back to you with answers. See our Texas Vacation Rental Tax Guide for more on short-term rental taxes in the state.
