Airbnb Host Taxes in Michigan - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Airbnb Host income taxable in Michigan?

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

Michigan Specific Rules: Michigan has a flat income tax rate of 4.05% 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. Michigan also requires you to file a state income tax return (Form MI-1040) to report this 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 correspond to the percentage of time the property is used for Airbnb rental. (e.g., if rented 50% of the time, deduct 50% of these expenses).
• 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 services, repairs, and general maintenance (e.g., plumbing, landscaping) are fully deductible.
• Mileage & Vehicle Expenses: When you use your vehicle for Airbnb-related activities (guest pick-up/drop-off, grocery shopping for guest amenities, etc.), you can deduct either the actual expenses (gas, oil, repairs, depreciation) 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.
• Supplies: Costs for items provided to guests (toiletries, linens, paper products) are deductible.

The 15.3% Self-Employment Tax Surprise

Because Airbnb hosting is considered self-employment, you’re responsible for paying both the employer and employee portions of Social Security and Medicare taxes. This combined tax is known as Self-Employment Tax and is currently 15.3% (12.4% for Social Security and 2.9% for Medicare) on earnings over $400.

You’ll calculate this tax on Schedule SE (Self-Employment Tax), which is filed along with your Form 1040. Don't be alarmed by this tax – it’s a normal part of being self-employed. You can deduct one-half of your self-employment tax from your adjusted gross income on Form 1040, which helps reduce your overall tax liability.

Closing Tip for Michigan Residents

Running an Airbnb in Michigan can be a rewarding experience, but staying organized with your finances is crucial for a smooth tax season. I strongly recommend using accounting software designed for self-employed individuals or working with a qualified tax professional (like myself!) to ensure you’re taking all eligible deductions and complying with both federal and Michigan tax laws. Don't hesitate to reach out if you have specific questions about your Airbnb tax situation.