Airbnb Host Taxes in Illinois - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Airbnb Host income taxable in Illinois?

Yes, income earned as an Airbnb host is absolutely taxable, both at the federal and Illinois state levels. The IRS considers Airbnb hosting a business activity, meaning you’re required to report your earnings and pay taxes on any profits.

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).

Illinois Specific Rules: Illinois has a flat income tax rate of 4.95% for the 2024 tax year (filing in 2025). Your net profit from Schedule C will be added to your other income, and this total taxable income will be subject to the 4.95% Illinois income tax rate. Illinois also requires you to file an Illinois Form IL-1040 to report your income and calculate your state tax liability.

Top Tax Write-offs for Airbnb Hosts

Maximizing your deductions is key to minimizing your tax bill. Here are some common deductions for Illinois 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 rental. You'll need to calculate this percentage based on the number of days rented versus total days of the year.
• Utilities: Expenses like electricity, gas, water, internet, and cable are deductible, again based on the percentage of time the property is rented.
• 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.
• Mileage & Vehicle Expenses: When you use your vehicle for Airbnb-related activities (e.g., picking up guests, going to the store for supplies), you can deduct either the actual expenses (gas, oil, repairs, etc.) or the standard mileage rate. For 2024, the standard mileage rate is 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 software used to manage your Airbnb business (e.g., smart home devices, scheduling tools) 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). However, 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 gross income on Form 1040.

Closing Tip for Illinois Residents

Running an Airbnb can be a rewarding experience, but staying organized with your income and expenses is crucial for tax time. Consider using accounting software designed for self-employed individuals, and keep meticulous records of all your income and expenses. 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 Illinois tax laws. Good luck, and happy hosting!