Airbnb Host Taxes in Kentucky - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Airbnb Host income taxable in Kentucky?

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

Kentucky Specific Rules: Kentucky has a flat income tax rate of 4.0% for the 2024 tax year (filing in 2025). Your net profit from Schedule C will be added to your other income and taxed at this flat rate. Kentucky also requires you to report your federal Schedule C income on Form 740, Kentucky Income Tax Return.

Top Tax Write-offs for Airbnb Hosts

As an Airbnb host, you’re entitled to deduct expenses that are “ordinary and necessary” for your business. Here are some key deductions:

• 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 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 expenses if you rent out only a portion of your home.
• Supplies & Cleaning: The cost of supplies like toiletries, cleaning products, linens, and paper towels are fully deductible.
• Mileage: When you use your personal vehicle for Airbnb-related activities (e.g., cleaning supplies runs, guest meet-and-greets), you can deduct mileage. The 2024 standard mileage rate is 67 cents per mile (verify the final official rate from the IRS). Alternatively, you can deduct actual vehicle expenses (gas, oil, repairs, etc.), but the standard mileage rate is often simpler.
• Airbnb Fees: The fees Airbnb charges you for using their platform are deductible.
• Software & Subscriptions: Costs for property management software, smart home devices (locks, thermostats), or subscriptions related to your Airbnb 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.

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). You only pay self-employment tax on profits exceeding $400. The good news is that you can deduct one-half of your self-employment tax from your gross income on Form 1040.

Closing Tip for Kentucky Residents

Managing Airbnb taxes can seem complex, but diligent record-keeping is key. Consider using accounting software designed for self-employed individuals to track your income and expenses throughout the year. Don't hesitate to consult with a qualified tax professional, especially if your Airbnb business is substantial or you have questions about specific deductions. We're here to help ensure you're compliant with both federal and Kentucky tax laws and maximizing your eligible deductions.