Airbnb Host Taxes in Delaware - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Airbnb Host income taxable in Delaware?

Yes, income earned as an Airbnb host is absolutely taxable, both at the federal and Delaware 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. Even if you only host occasionally, the IRS generally considers it a business if you’re trying to make a profit.

Delaware Specific Rules: Delaware has a graduated income tax system. This means the tax rate you pay depends on your total taxable income for the year. 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 Delaware taxable income. You’ll then use the Delaware tax brackets to calculate your state income tax liability. Delaware also requires you to file a state income tax return (Form 1040-D) to report this income. Be sure to check the Delaware Division of Revenue website for the most up-to-date tax brackets and forms: https://revenue.delaware.gov/

Top Tax Write-offs for Airbnb Hosts

• 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 Airbnb. This requires calculating the percentage of the year the property was rented.
• Utilities: Expenses like electricity, gas, water, and internet are deductible, again based on the percentage of time the property is rented. Keep detailed records!
• 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 business expenses.
• Mileage & Vehicle Expenses: When you drive for Airbnb-related activities (e.g., delivering keys, 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: https://www.irs.gov/newsroom/standard-mileage-rates-for-2024). Alternatively, you can deduct actual vehicle expenses (gas, oil, repairs, insurance, depreciation) if it results in a larger deduction.
• Airbnb Fees & Software: The fees Airbnb charges you, as well as the cost of any software you use to manage your listings (e.g., Smartbnb, Hostaway) 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 earnings over $400.

You’ll calculate this on Schedule SE (Self-Employment Tax), which is also filed with your Form 1040. The good news is that you can deduct one-half of your self-employment tax from your adjusted gross income, which can help lower your overall tax liability.

Closing Tip for Delaware Residents

Managing Airbnb income and taxes can be complex. I strongly recommend keeping meticulous records of all your income and expenses throughout the year. Consider using accounting software designed for self-employed individuals. As a Delaware resident, understanding the graduated income tax system is crucial for accurate tax planning. Don't hesitate to consult with a qualified tax professional (like myself!) to ensure you're maximizing your deductions and complying with all federal and Delaware tax laws.