Short-Term Rental Taxes by State: The Complete 50-State Guide for STR Investors
Short-term rental investing is federal by default — the IRS rules are the same whether you're in Florida or New York. But state taxes can dramatically affect your after-tax returns. A $120,000 federal cost segregation deduction is worth $44,400 in a state with no income tax. In California, that same deduction is worth significantly less on the state return because California doesn't allow bonus depreciation. This guide breaks down every state's STR tax environment so you know exactly what you're working with.
The 9 No-Income-Tax States: Maximum Cost Segregation Benefit
In states with no personal income tax, federal cost segregation deductions flow through entirely without any state-level offset. There's no state return to file, no bonus depreciation add-back, no conformity adjustment. Your federal deduction is your full deduction.
| State | Income Tax | Bonus Dep. Conformity | Top STR Markets | State Guide |
|---|---|---|---|---|
| Florida | None | N/A (no income tax) | Destin, Orlando, Miami Beach, Keys | Florida STR Tax Guide → |
| Texas | None | N/A (no income tax) | Austin, Hill Country, San Antonio | Texas STR Tax Guide → |
| Tennessee | None | N/A (no income tax) | Gatlinburg, Nashville, Pigeon Forge | Tennessee STR Tax Guide → |
| Nevada | None | N/A (no income tax) | Las Vegas area, Lake Tahoe NV | Nevada STR Tax Guide → |
| Washington | None | N/A (no income tax) | Leavenworth, San Juan Islands, Chelan | Washington STR Tax Guide → |
| Wyoming | None | N/A (no income tax) | Jackson Hole, Cody/Yellowstone | Wyoming STR Tax Guide → |
| South Dakota | None | N/A (no income tax) | Black Hills, Deadwood, Badlands | South Dakota STR Tax Guide → |
| Alaska | None | N/A (no income tax) | Anchorage, Kenai Peninsula, Juneau | Alaska STR Tax Guide → |
| New Hampshire | None (phasing out) | N/A | White Mountains, Lake Winnipesaukee | New Hampshire STR Tax Guide → |
States That Fully Conform to Federal Bonus Depreciation
These states allow the full federal bonus depreciation deduction on the state return. When you claim 100% bonus depreciation federally, it flows through to your state return with no adjustment.
| State | Income Tax Rate | Top STR Markets | State Guide |
|---|---|---|---|
| Colorado | 4.4% flat | Breckenridge, Vail, Steamboat Springs, Aspen | Colorado → |
| Arizona | 2.5% flat | Scottsdale, Sedona, Flagstaff | Arizona → |
| Utah | 4.65% flat | Park City, Moab, St. George | Utah → |
| Montana | 5.9% flat | Whitefish/Glacier, Big Sky, Bozeman | Montana → |
| Idaho | 5.8% flat | Coeur d'Alene, Sun Valley, McCall | Idaho → |
| Missouri | Up to 4.95% | Branson, Lake of the Ozarks | Missouri → |
| Alabama | Up to 5% | Gulf Shores, Orange Beach | Alabama → |
| Mississippi | 5% flat | Gulf Coast, Oxford | Mississippi → |
| Arkansas | Up to 4.9% | Hot Springs, Eureka Springs, Broken Bow (OK border) | Arkansas → |
| Oklahoma | Up to 4.75% | Broken Bow/Hochatown, Grand Lake | Oklahoma → |
| Kentucky | 4% flat | Red River Gorge, Lake Cumberland | Kentucky → |
| Indiana | 3.23% flat | Brown County, Indiana Dunes | Indiana → |
| Ohio | Up to 3.75% | Hocking Hills, Put-in-Bay, Lake Erie | Ohio → |
| Michigan | 4.25% flat | Traverse City, Mackinac Island | Michigan → |
| Delaware | Up to 6.6% | Rehoboth Beach, Dewey Beach | Delaware → |
| New Mexico | Up to 5.9% | Taos, Santa Fe, Ruidoso | New Mexico → |
| Iowa | Up to 6% | Iowa Great Lakes, Okoboji | Iowa → |
| Kansas | Up to 5.7% | Limited STR markets | Kansas → |
| Nebraska | Up to 6.64% | Lake McConaughy, Omaha area | Nebraska → |
| North Dakota | Up to 2.9% | Medora, Theodore Roosevelt NP area | North Dakota → |
| West Virginia | Up to 6.5% | Snowshoe, New River Gorge, Canaan Valley | West Virginia → |
| Louisiana | Up to 4.25% | New Orleans, Lafayette | Louisiana → |
States That Do NOT Conform to Federal Bonus Depreciation
Important: Non-Conformity Doesn't Eliminate the Benefit
In non-conforming states, you still get 100% of the federal bonus depreciation deduction. You just don't get it on your state return — you use straight-line or MACRS there instead. The federal savings alone typically deliver a 5–15× return on study cost.
| State | Income Tax Rate | Bonus Dep. Treatment | Top STR Markets | State Guide |
|---|---|---|---|---|
| California | Up to 13.3% | No bonus dep on state return | Palm Springs, Big Sur, Lake Tahoe CA, Joshua Tree | California → |
| New York | Up to 10.9% | No bonus dep on state return | Catskills, Hamptons, Finger Lakes, Adirondacks | New York → |
| New Jersey | Up to 10.75% | No bonus dep on state return | Jersey Shore, Delaware Water Gap | New Jersey → |
| Massachusetts | 5% flat | No bonus dep on state return | Cape Cod, Martha's Vineyard, Nantucket, Berkshires | Massachusetts → |
| Pennsylvania | 3.07% flat | No bonus dep on state return | Pocono Mountains, Philadelphia area | Pennsylvania → |
| Illinois | 4.95% flat | No bonus dep on state return | Chicago (regulated), Galena | Illinois → |
| Minnesota | Up to 9.85% | No bonus dep on state return | Boundary Waters, Brainerd Lakes, North Shore | Minnesota → |
| Wisconsin | Up to 7.65% | Limited conformity | Door County, Lake Geneva, Wisconsin Dells | Wisconsin → |
| Oregon | Up to 9.9% | No bonus dep on state return | Bend, Hood River, Oregon Coast | Oregon → |
| Vermont | Up to 8.75% | No bonus dep on state return | Stowe, Killington, Manchester | Vermont → |
| Connecticut | Up to 6.99% | No bonus dep on state return | Mystic, Litchfield Hills | Connecticut → |
| Maine | Up to 7.15% | No bonus dep on state return | Bar Harbor, Kennebunkport, Boothbay | Maine → |
| Maryland | Up to 5.75% + county | Partial conformity | Ocean City, Deep Creek Lake, Eastern Shore | Maryland → |
| Georgia | 5.75% flat | No bonus dep on state return | Blue Ridge, Savannah, Tybee Island, Helen | Georgia → |
| Virginia | Up to 5.75% | 20% in year 1, rest over 5 years | Virginia Beach, Shenandoah Valley | Virginia → |
| Hawaii | Up to 11% | No bonus dep on state return | Maui, Oahu, Big Island, Kauai | Hawaii → |
| Rhode Island | Up to 5.99% | 50% first-year limit | Newport, Block Island | Rhode Island → |
| North Carolina | 4.5% flat | Limited conformity | Asheville, OBX, Blue Ridge, Boone | North Carolina → |
| South Carolina | Up to 6.4% | Limited conformity | Hilton Head, Myrtle Beach, Charleston | South Carolina → |
How to Use This Guide
- Find your state — Identify your income tax rate and bonus depreciation conformity status from the tables above.
- Read your state guide — Each linked state guide covers local lodging taxes, top STR markets, licensing requirements, and cost segregation specifics for that state.
- Calculate your federal deduction — Use our free estimator to see your year-1 bonus depreciation deduction regardless of state.
- Work with your CPA — For non-conforming states, your CPA will maintain two depreciation schedules (federal and state). This is routine for any CPA experienced with rental properties.
- Don't skip cost seg in non-conforming states — Federal savings alone are substantial. A $150K federal deduction at 37% is $55,500 saved — the state adjustment is a separate (and smaller) consideration.
Transient Lodging Taxes: What STR Operators Collect
In addition to income taxes, STR operators collect and remit transient lodging taxes (also called hotel taxes, tourist taxes, or short-term rental taxes) on each booking. These are separate from income taxes — they're sales-type taxes passed through to guests. Airbnb and VRBO collect and remit these automatically in most U.S. jurisdictions.
| State/Market | Approximate Total Lodging Tax | Notes |
|---|---|---|
| Chicago, IL | ~17.4% | One of the highest in the US |
| New York City, NY | ~14.75% | NYC hotel room occupancy tax |
| New Orleans, LA | ~15.75% | State + city + tourism levy |
| Hawaii (statewide) | ~13.96% | TAT + GET |
| Florida (Miami-Dade / Orange) | ~12% | 6% state + 6% county |
| Colorado (mountain resorts) | ~10–14% | Varies significantly by resort town |
| Tennessee (Nashville) | ~13% | 7% state + 6% Nashville city |
| Texas (Austin) | ~15% | 6% state + city hotel taxes |
| California (Palm Springs area) | ~13% | Varies by city |
| Typical non-major-city market | ~8–11% | State + county average |
Which states have no income tax on STR rental income?
Nine states have no state income tax: Florida, Texas, Tennessee, Nevada, Washington, Wyoming, South Dakota, Alaska, and New Hampshire (phasing out). STR investors in these states pay only federal income tax on rental income, amplifying the value of cost segregation deductions.
Which states do NOT conform to federal bonus depreciation?
Several states decouple from federal bonus depreciation, meaning you cannot claim 100% bonus depreciation on your state return even if you claim it federally. Non-conforming states include California, New York, Illinois, New Jersey, Pennsylvania, Massachusetts, Minnesota, Wisconsin, Oregon, Vermont, Connecticut, Maine, and Georgia. In these states, you may need to add back federal bonus depreciation and use straight-line or MACRS depreciation for state purposes.
Does state bonus depreciation conformity affect whether I should do a cost segregation study?
No — cost segregation is still highly valuable in non-conforming states. The federal tax savings alone typically justify the study cost. In non-conforming states, you simply track two depreciation schedules: one for your federal return (accelerated) and one for your state return (straight-line). Your CPA manages this with a state depreciation adjustment on your state return.
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