Airbnb Host Taxes in Indiana - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Airbnb Host income taxable in Indiana?

Yes, income earned as an Airbnb host is absolutely taxable, both at the federal and Indiana 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.

Indiana Specific Rules: Indiana has a flat income tax rate of 3.85% for 2024. Your net profit from Schedule C will be added to your other income and taxed at this flat rate. Indiana also requires you to file a state income tax return (Form IT-1040) to report this income. Because Indiana’s tax is flat, there are no income brackets to worry about – the same rate applies to all levels of taxable income.

Top Tax Write-offs for Airbnb Hosts

As an Airbnb host, you’re entitled to deduct many expenses that directly relate to your rental activity. Here are some key deductions:

• 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 rented. If you rent out only a portion of your home, 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. Similar to mortgage interest, allocate these costs if you rent out a portion of your home.
• Cleaning & Maintenance: Costs for cleaning services, repairs, and general maintenance (e.g., fixing a leaky faucet, painting) are fully deductible.
• Mileage & Vehicle Expenses: When you drive for Airbnb-related activities (e.g., delivering linens, meeting guests), you can deduct mileage. For 2024, the standard mileage rate is 67 cents per mile (verify the final official rate from the IRS at IRS.gov). Alternatively, you can deduct actual vehicle expenses (gas, oil, repairs, insurance, depreciation), but mileage is often simpler.
• Airbnb Fees: The fees Airbnb charges you are a deductible business expense.
• Software & Subscriptions: Costs for property management software, smart home devices (locks, thermostats), or subscriptions to services 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 from Schedule C.

You’ll calculate this tax on Schedule SE (Self-Employment Tax). However, you only pay self-employment tax on earnings over $400. You can deduct one-half of your self-employment tax from your gross income on Form 1040, which helps reduce your overall tax liability.

Closing Tip for Indiana Residents

Running an Airbnb in Indiana can be a rewarding experience, but staying organized with your finances is crucial for a smooth tax season. Keep detailed records of all income and expenses throughout the year. Consider using accounting software designed for self-employed individuals. If you find the tax rules overwhelming, 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 Indiana state tax laws.