Airbnb Host Taxes in Vermont - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Airbnb Host income taxable in Vermont?

Yes, income earned as an Airbnb host is absolutely taxable, both at the federal and Vermont 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 ordinary and necessary business expenses, reducing your taxable income. Keep meticulous records of all income and expenses.

Vermont Specific Rules: Vermont has a graduated income tax system. This means the tax rate you pay increases as your income increases. Your Airbnb profits, after federal adjustments and deductions, will be added to your other income (wages, investments, etc.) to determine your Vermont taxable income. Vermont also requires you to file a Vermont income tax return (Form INC) to report this income. Vermont generally conforms to federal adjusted gross income (AGI), but there can be specific state adjustments, so staying updated on Vermont Department of Taxes guidance is crucial.

Top Tax Write-offs for Airbnb Hosts

As an Airbnb host, you can significantly reduce your tax liability by claiming eligible deductions. Here are some key write-offs:

• 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. This is typically calculated based on the percentage of the year the property is rented.
• Utilities: Expenses like electricity, gas, water, internet, and cable are deductible, again based on the percentage of time the property is rented.
• Supplies & Consumables: Items provided for guests, such as toiletries (soap, shampoo), cleaning supplies, paper towels, linens, and even a welcome basket, are deductible.
• Mileage & Vehicle Expenses: When you use your vehicle for Airbnb-related activities (guest pick-ups, grocery shopping for supplies, cleaning supply runs), you can deduct mileage. For 2024, the 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, insurance, depreciation) if it results in a larger deduction.
• Airbnb Fees: The fees Airbnb charges you for using their platform are a deductible business expense.

The 15.3% Self-Employment Tax Surprise

Many Airbnb hosts are surprised to learn about self-employment tax. When you work as an independent contractor (which you are as an Airbnb host), you're responsible for paying both the employer and employee portions of Social Security and Medicare taxes. This combined tax is 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 and Schedule C. The good news is that you can deduct one-half of your self-employment tax from your adjusted gross income, which can help lower your overall tax bill.

Closing Tip for Vermont Residents

Navigating Airbnb taxes can be complex. As a Vermont resident, remember to keep detailed records of all income and expenses, and be aware of the state’s graduated income tax system. Consider consulting with a qualified tax professional, like myself, to ensure you’re maximizing your deductions and complying with all federal and Vermont tax laws. Proactive tax planning can save you significant money and stress during tax season.