Airbnb Host Taxes in South Dakota - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Airbnb Host income taxable in South Dakota?

Yes, even though South Dakota doesn't have a state income tax, your Airbnb income is still subject to federal income tax. The IRS considers Airbnb hosting a business, and you'll report your earnings and expenses on Schedule C (Profit or Loss From Business) as part of your Form 1040. This means you'll calculate your net profit (income minus expenses) and that profit will be added to your other income when determining your overall federal tax liability.

Because South Dakota has no state income tax, you won’t file a state return, and your Airbnb income won’t be subject to state-level taxation. However, you are still responsible for fulfilling all federal tax obligations.

Top Tax Write-offs for Airbnb Hosts

As an Airbnb host, you can significantly reduce your tax burden by claiming eligible business expenses. Here are some common deductions:

• Mortgage Interest or Rent: If you own your property, you can deduct the portion of your mortgage interest that corresponds to the time the property is used for rental. If you rent your property, a portion of your rent may be deductible.
• Utilities: Deduct the portion of your utilities (electricity, gas, water, internet, etc.) that are attributable to the rental portion of your property. If a utility serves both your personal space and the rental, you'll need to allocate the cost based on square footage or usage.
• Cleaning & Maintenance: Expenses for cleaning services, repairs, and general maintenance of the rental property are deductible. This includes things like lawn care, plumbing repairs, and painting.
• Mileage: Keep a detailed log of all miles driven for Airbnb-related activities (e.g., trips to the property, grocery shopping for guest supplies, taking guests to/from the airport). For 2024, the standard mileage rate is approximately 67 cents per mile (verify the official IRS rate at IRS.gov).
• Airbnb Fees: The fees you pay to Airbnb itself are deductible as a business expense.
• Supplies: Costs for items provided to guests, such as toiletries, linens, and kitchen supplies, 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 and 2.9% for Medicare) on your net earnings from self-employment. 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 South Dakota Residents

While the lack of state income tax in South Dakota simplifies things, diligent record-keeping is crucial for maximizing your federal tax deductions as an Airbnb host. Keep detailed records of all income and expenses, including receipts and mileage logs. Consider using accounting software designed for self-employed individuals. If you're unsure about any aspect of your tax obligations, consulting with a qualified tax professional is always a wise investment.