Airbnb Host Taxes in Arkansas - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Airbnb Host income taxable in Arkansas?

Yes, income earned as an Airbnb host is absolutely taxable, both at the federal and Arkansas state levels. The IRS considers Airbnb hosting a business activity, and Arkansas follows suit. You are essentially running a small business, even if it's part-time.

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. Keep meticulous records of all income and expenses – this is crucial!

Arkansas Specific Rules: Arkansas has a graduated income tax system. This means the tax rate you pay increases as your taxable income rises. Your net profit from your Airbnb (after deducting expenses on Schedule C) will be added to your other income (wages, investments, etc.) to determine your total taxable income for Arkansas. Arkansas will then apply the appropriate tax rate based on your income bracket. You'll file this information using Form AR1000. The Arkansas Department of Finance and Administration website (www.arkansas.gov/departments/finance-administration) has the latest tax brackets and forms.

Top Tax Write-offs for Airbnb Hosts

Maximizing your deductions is key to minimizing your tax liability. Here are some common deductions for Arkansas 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 Airbnb. If it's a mixed-use property (you live there too), you'll need to calculate the percentage of time it's rented versus personal use.
• Utilities: Similar to mortgage interest, you can deduct the portion of utilities (electricity, gas, water, internet, cable) attributable to the rental period.
• Cleaning & Maintenance: Expenses for cleaning services, repairs, and general maintenance are deductible. This includes things like laundry, supplies, and handyman services.
• Mileage & Vehicle Expenses: When you drive for Airbnb-related activities (picking up guests, going to the property for cleaning/maintenance, shopping for supplies), you can deduct mileage. For 2024, the standard mileage rate is 67 cents per mile (verify the final official rate from the IRS at www.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. The combined rate is 15.3% (12.4% for Social Security and 2.9% for Medicare) on your net earnings from Schedule C that exceed $400.

You'll calculate this on Schedule SE (Self-Employment Tax) and file it with your Form 1040. Don't be alarmed when you see this tax – it's a normal part of being self-employed. You can deduct one-half of your self-employment tax from your adjusted gross income on Form 1040, which helps reduce your overall tax liability.

Closing Tip for Arkansas Residents

Running an Airbnb in Arkansas can be a rewarding experience, but staying on top of your taxes is crucial. I strongly recommend keeping a separate bank account for your Airbnb income and expenses, and using accounting software or a spreadsheet to track everything diligently. Tax laws can be complex, and this guide provides general information. For personalized advice tailored to your specific situation, consider consulting with a qualified tax professional in Arkansas.