Airbnb Host Taxes in Arizona - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Airbnb Host income taxable in Arizona?

Yes, income earned as an Airbnb host is absolutely taxable, both at the federal and Arizona state levels. The IRS considers Airbnb hosting a business activity, meaning you’re responsible for reporting your earnings and paying taxes on any profit.

Federal Requirements: You’ll report your Airbnb income and expenses on Schedule C (Profit or Loss From Business), which is filed with your Form 1040. Schedule C allows you to deduct all ordinary and necessary business expenses, ultimately determining your net profit (or loss). It’s crucial to keep detailed records of all income and expenses.

Arizona Specific Rules: Arizona has a flat income tax rate. As of 2024, the rate is 2.5%. Your net profit from Schedule C will be added to your other income and taxed at this flat rate. Arizona also requires you to report your federal Schedule C income on Form 140, Arizona Individual Income Tax Return.

Top Tax Write-offs for Airbnb Hosts

Maximizing your deductions is key to minimizing your tax liability. Here are some common write-offs for Arizona 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 it's a mixed-use property (you live there part-time), you'll need to allocate these expenses based on the percentage of time it's rented.
• Utilities: Expenses like electricity, gas, water, internet, and cable are deductible, again allocating for personal use if applicable.
• Cleaning & Maintenance: Costs associated with cleaning services, repairs, and general maintenance (e.g., plumbing, landscaping) are fully deductible.
• Mileage & Vehicle Expenses: When you use your vehicle for Airbnb-related activities (guest pick-ups, grocery shopping for welcome baskets, trips to the hardware store for repairs), you can deduct either the actual expenses (gas, oil, repairs, depreciation) or the standard mileage rate. For 2024, the standard mileage rate is approximately 67 cents per mile. Keep a detailed mileage log!
• Airbnb Fees: The fees Airbnb charges you are a deductible business expense.
• Software & Subscriptions: Costs for property management software, smart home devices (locks, thermostats), and other subscriptions used for your Airbnb business are deductible.

The 15.3% Self-Employment Tax Surprise

Many Airbnb hosts are surprised to learn about self-employment tax. When you work for an employer, they pay half of your Social Security and Medicare taxes. As a self-employed individual, you’re responsible for both the employer and employee portions. This combined tax is 15.3% (12.4% for Social Security and 2.9% for Medicare) on your net earnings.

You’ll calculate this tax on Schedule SE (Self-Employment Tax) and file it with your Form 1040. The good news is you can deduct one-half of your self-employment tax from your adjusted gross income, which can help lower your overall tax bill. The $400 threshold applies – you only pay self-employment tax on net earnings over $400.

Closing Tip for Arizona Residents

Running an Airbnb in Arizona can be a rewarding experience, but staying organized with your finances is crucial for a smooth tax season. I strongly recommend keeping meticulous records of all income and expenses throughout the year. Consider using accounting software designed for self-employed individuals. Don't hesitate to consult with a qualified tax professional (like myself!) to ensure you're taking advantage of all available deductions and complying with all federal and Arizona tax laws.