Idaho Vacation Rental Tax Rules

As Idaho grapples with the complexities of this modern facet of accommodation, it is crucial that policymakers strike a balance of economic foresight and social consideration. One of the most pressing aspects of this is lodging tax, which obligates short-term rental hosts to collect and remit state sales and occupancy taxes. Failure to do so can result in fines and penalties.

To avoid these consequences, it’s essential for Airbnb hosts to understand the nuances of lodging tax in Idaho. This includes understanding what fees or amounts are taxable and where they must be reported. Generally speaking, fees or amounts that are added to the cost of lodging, such as cleaning fees, pet fees, rollaway bed fees, and no-show or reservation fees, are taxable. Other items, such as security deposits and refundable damage deposits, are not taxable.

In addition to lodging taxes, short-term rental hosts must also abide by local ordinances and regulations pertaining to licensing, insurance requirements, safety equipment (such as smoke and carbon monoxide detectors), and more. Failure to do so can lead to penalties, including fines and even the inability to legally operate a short-term rental. In some cases, homeowners may be able to reduce or eliminate their penalty by entering into a voluntary disclosure agreement with the Idaho Tax Commission. This involves proactively disclosing past-period lodging tax liabilities in exchange for an abatement or waiver of penalty and interest.

What is the Travel Tax in Idaho?

As more people rent rooms in their homes for short stays, the Idaho State Tax Commission reminds homeowners of their sales and lodging tax responsibilities. The law forbids local governments from banning such rentals but requires they to recognize them as residential uses, impose zoning regulations that ensure health, safety, and welfare, and collect state sales, use, and lodging taxes. Idaho’s 6% state sales tax and 2% statewide lodging tax apply to any sleeping accommodations rented for 30 days or less, including private home bedrooms, cabins, and motel rooms. Some counties and cities levy additional local transient room taxes; for example, Ketchum imposes a 7% bed tax in addition to the state sales and lodging tax.

Homeowner associations, co-ops, and condo boards may have rules about short-term rentals that owners must abide by. And landlords must abide by the terms of their lease agreement with tenants. Those who rent their property to others are responsible for collecting the appropriate taxes and forwarding them to the Idaho State Tax Commission.

Marketplaces such as Airbnb and Vrbo collect state and local taxes on behalf of property owners. They are also required to file quarterly reports with the tax commission. Owners who arrange their own rental lodging with guests are required to register for a permit. They must collect the state sales tax and the Idaho travel and convention tax and may also be subject to city or auditorium district taxes.

Idaho law prevents cities and counties from banning short-term rentals, but the state can regulate health, safety, and welfare concerns. The law, enacted by the Legislature during its session last winter, takes effect Jan. 1. In southwestern Ketchum, where many short-term rentals are concentrated, the number of lodging units has risen 130% in 2022 compared with 2019, reflecting a surge in visitors after the COVID-19 pandemic and record visitation to Yellowstone National Park.