Airbnb Host Taxes in Colorado - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Airbnb Host income taxable in Colorado?

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

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. This schedule 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.

Colorado Specific Rules: Colorado has a flat income tax rate (currently 4.40% for 2024, but always verify the current rate with the Colorado Department of Revenue). Your net profit from Schedule C will be added to your other income and taxed at this flat rate. Colorado also requires you to file an annual income tax return (Form DR 0104) even if you don't owe any tax.

Top Tax Write-offs for Airbnb Hosts

As an Airbnb host, you can significantly reduce your tax liability by taking advantage of available deductions. Here are some key write-offs:

• Mortgage Interest & Property Taxes: If you own your 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 a room in your primary residence, 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 trash removal are deductible. Again, allocate these expenses if you rent out a portion of your home.
• Cleaning & Maintenance: Costs associated with cleaning services, repairs, and general maintenance of the rental property are deductible. This includes things like laundry, supplies, and handyman services.
• Mileage: The IRS allows you to deduct mileage for trips directly related to your Airbnb business. For 2024, the standard mileage rate is approximately 67 cents per mile (verify the official rate on the IRS website: https://www.irs.gov/newsroom/standard-mileage-rates-for-2024). Keep a detailed mileage log!
• Software & Fees: Airbnb host fees, property management software subscriptions, and other related software costs 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 from Schedule C that exceed $400.

You’ll calculate this tax on Schedule SE (Self-Employment Tax) and file it with your Form 1040. The good news is that you can deduct one-half of your self-employment tax from your adjusted gross income.

Closing Tip for Colorado Residents

Navigating Airbnb taxes can be complex. It’s highly recommended to keep detailed records of all income and expenses throughout the year. Consider using accounting software designed for self-employed individuals. As a Colorado resident, remember to file your state income tax return (Form DR 0104) in addition to your federal return. If you have questions or your situation is particularly complex, consulting with a qualified tax professional in Colorado is always a wise investment.