Airbnb Host Taxes in Minnesota - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Airbnb Host income taxable in Minnesota?

Yes, income earned as an Airbnb host is absolutely taxable, both at the federal and Minnesota state levels. The IRS considers Airbnb hosting a business activity, meaning you’re generally 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.

Minnesota Specific Rules: Minnesota has a graduated income tax system, meaning the tax rate you pay increases as your income increases. Your Airbnb net profit (after Schedule C deductions) will be added to your other income (wages, investments, etc.) and taxed according to the applicable Minnesota tax brackets for the 2024 tax year (filing in 2025). Minnesota also requires you to report your federal Schedule C income on their state income tax return (Form M1).

Top Tax Write-offs for Airbnb Hosts

Maximizing your deductions is key to minimizing your tax liability. Here are some common deductions for Minnesota 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 (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 approximately 67 cents per mile (always verify the official IRS rate at IRS.gov). Keep a detailed mileage log!
• Airbnb Fees: The fees Airbnb charges you are a deductible business expense.

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 you can deduct one-half of your self-employment tax from your adjusted gross income on Form 1040.

Closing Tip for Minnesota Residents

Navigating Airbnb taxes can be complex. I strongly recommend keeping meticulous records of all income and expenses throughout the year. Consider using accounting software designed for self-employed individuals. As a Minnesota resident, remember to factor in your state income tax obligations and the graduated tax rates. Don't hesitate to consult with a qualified tax professional (like myself!) to ensure you're maximizing your deductions and complying with all applicable tax laws.