Airbnb Host Taxes in Alabama - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Airbnb Host income taxable in Alabama?

Yes, income earned as an Airbnb host is absolutely taxable, both at the federal and Alabama state levels. The IRS considers Airbnb hosting a business activity, meaning you’ll need to report your earnings and expenses.

Federal Taxes: You’ll report your Airbnb income and expenses on Schedule C (Profit or Loss From Business), which is filed with your Form 1040. This schedule allows you to deduct all ordinary and necessary business expenses, ultimately determining your net profit or loss.

Alabama State Taxes: Alabama has a graduated income tax system. This means the tax rate you pay increases as your income increases. Your net profit from your Airbnb (after deducting expenses on Schedule C) will be added to your other income and taxed according to the Alabama income tax brackets for the 2024 tax year (filing in 2025). You'll report this income on Form A-4, Alabama Resident Income Tax Return. Current Alabama tax brackets can be found on the Alabama Department of Revenue website (revenue.alabama.gov).

Top Tax Write-offs for Airbnb Hosts

Maximizing your deductions is key to minimizing your tax liability. Here are some common deductions for Alabama Airbnb hosts:

• Mortgage Interest & Property Taxes: If you own the property, you can deduct the portion of your mortgage interest and property taxes that relate to the time the property is used for rental. If you rent out only a portion of your home, you'll need to allocate these expenses based on the percentage of your home used for rental.
• Utilities: Expenses like electricity, gas, water, internet, and cable are deductible, again allocating the portion used for rental purposes if it's not exclusively a rental property.
• Cleaning & Maintenance: Costs associated with cleaning the property between guests, as well as repairs and maintenance (e.g., fixing a leaky faucet, painting) are deductible. Major improvements that increase the property's value are generally capitalized and depreciated over time.
• Mileage & Vehicle Expenses: When you drive for Airbnb-related activities (e.g., delivering linens, meeting guests), you can deduct mileage. For 2024, the standard mileage rate is approximately 67 cents per mile (verify the official IRS rate at irs.gov). Alternatively, you can deduct actual vehicle expenses (gas, oil, repairs, insurance, depreciation) if it results in a larger deduction.
• Airbnb Fees: The fees Airbnb charges you are a deductible business expense.
• Software & Subscriptions: Costs for software used to manage your Airbnb (e.g., Smartbnb, Hostaway) or subscriptions to services that help with your hosting business are deductible.

The 15.3% Self-Employment Tax Surprise

Because you're considered self-employed as an Airbnb host, you're responsible for paying both the employer and employee portions of Social Security and Medicare taxes. This is known as self-employment tax.

You’ll calculate this on Schedule SE (Self-Employment Tax). The combined rate is 15.3% (12.4% for Social Security up to the annual wage base, and 2.9% for Medicare). You only pay self-employment tax on profits exceeding $400. The good news is you can deduct one-half of your self-employment tax from your adjusted gross income on Form 1040.

Closing Tip for Alabama Residents

Keeping accurate records is crucial! Track all your income and expenses throughout the year. Consider using accounting software or a spreadsheet to stay organized. Don't hesitate to consult with a qualified tax professional, like myself, to ensure you're taking all the deductions you're entitled to and complying with both federal and Alabama tax laws. Tax laws can be complex, and professional guidance can save you money and potential headaches.