Texas short-term rental taxes — Hotel Occupancy Tax, city add-ons, and no income tax

State-level registration and permitting — no statewide license, but city rules vary widely

Texas does not have a statewide short-term rental permit or license program. No Texas state agency issues an "STR license" — that function belongs entirely to individual cities. What the state does require is registration with the Texas Comptroller's office to collect and remit the 6% state Hotel Occupancy Tax. You register online at comptroller.texas.gov, receive a taxpayer ID and HOT permit number, and are responsible for filing and remitting state HOT returns. Each rental property requires its own HOT permit registration — adding a second property means registering it separately.

At the city level, requirements diverge significantly. Austin requires an STR license through the Development Services Department, with two categories: Type 1 (owner-occupied primary residence) and Type 2 (non-owner-occupied). Austin caps the number of Type 2 licenses in certain neighborhoods, creating a waitlist system that has left many non-primary investors unable to list legally. Dallas requires STR registration with primary-residency requirements in some zones. San Antonio requires an STR permit with a primary-residence preference. Galveston — one of Texas's most active beach STR markets — requires local registration and HOT compliance. Houston notably has not enacted a citywide STR permit requirement as of 2025, though neighborhood deed restrictions can effectively prohibit STRs in many Houston-area communities — always check your HOA and deed before listing.

Texas has not enacted a statewide STR preemption law (unlike Florida or Arizona), so cities retain broad authority to regulate, restrict, or in some cases effectively prohibit STRs within their jurisdictions through zoning and licensing decisions. This means the regulatory landscape varies dramatically from one Texas city to the next.

State-level taxes — Hotel Occupancy Tax and no state income tax

Texas Hotel Occupancy Tax (HOT) is a 6% tax on all gross short-term rental receipts for stays of 30 days or fewer. It applies to the room rate — Texas Comptroller guidance generally does not apply HOT to separately-stated charges like cleaning fees, but you should verify current guidance with the Comptroller for your specific situation. State HOT is remitted to the Texas Comptroller using Form 12-100 (Hotel Occupancy Tax Return). Texas sales tax (6.25% state + up to 2% local = max 8.25%) does not apply to the accommodation itself — HOT is a separate tax system from sales tax, and the two do not stack on the same base.

Texas has no state income tax. This is one of the most significant advantages for Texas STR operators: your entire rental profit — net of deductions — is taxed only at the federal level (reported on Schedule E of Form 1040). There is no Texas return to file, no state capital gains tax, and no state-level tax on passive rental income regardless of how much you earn. One nuance for operators using an LLC: Texas imposes a franchise tax on businesses with annual revenue exceeding approximately $2.47 million (2024 threshold). Most individual STR operators will be well below this level, but LLCs holding STR properties must still file annual franchise tax reports — including a "no-tax-due" return if below the threshold. The filing obligation exists even when no tax is owed.

Common city and county taxes — HOT stacks by major Texas market

Texas HOT operates in layers: a 6% state base, a city HOT of up to 7%, a county HOT of up to 2%, and special-purpose district levies (sports venue funds, convention center fees, tourism promotion districts) on top of that. The combined rate depends on exactly where your property sits. In Houston, Dallas, and San Antonio, the stack typically reaches 15–17%. In smaller markets the combined rate is lower, but each jurisdiction requires its own separate registration — the state permit does not cover city or county HOT.

Register for city HOT separately from your state HOT registration — most Texas cities manage their own HOT accounts through their city revenue or finance department, not through the Comptroller. You may end up with three or more separate accounts: one with the Texas Comptroller for state HOT, one with your city, and potentially a county account depending on your jurisdiction.

What Airbnb and Vrbo collect automatically in Texas

Airbnb has comprehensive HOT collection agreements with Texas — this is one of the stronger state-level coverage situations in the country. Airbnb collects and remits the state 6% HOT directly to the Texas Comptroller, and also collects and remits city/county HOT in Austin, Dallas, Houston, San Antonio, and most other major Texas markets. For Austin specifically, Airbnb requires hosts to post their STR license number in all listings — listings without a valid Austin license number are flagged or removed. Vrbo also collects Texas state HOT and city HOT in most major Texas markets; verify current coverage on Vrbo's tax collection help page.

Even when Airbnb remits all HOT layers on your behalf, you must still maintain an active state HOT permit with the Texas Comptroller. You may be required to file zero-liability returns for periods when Airbnb collected on your behalf — check current Comptroller guidance for your filing frequency. Direct bookings are entirely your responsibility: collect both state and city HOT from your guests, register with every applicable authority, and remit on schedule. Texas Comptroller HOT registrations are tied to your specific property address — if you add a new property, register it separately.

Filing schedule and where to file

State HOT: file monthly if your annual HOT liability is $500 or more, quarterly if it's under $500. Use Form 12-100 (Hotel Occupancy Tax Return) and file through the Texas Comptroller's eSystems portal at comptroller.texas.gov. Returns are due on the 20th of the month following the close of the reporting period. City HOT is filed separately with each Texas city — Austin, Dallas, Houston, and San Antonio all have online portals; smaller cities may require paper forms. Filing frequency is typically monthly or quarterly depending on your revenue volume. Keep track of both sets of deadlines independently — the state and city filing calendars don't align.

For the Texas franchise tax, the annual report is due May 15. Most small STR operators will qualify to file either the EZ Computation return or the "No Tax Due" report through the Comptroller's webfile system. Federal income tax is annual — report rental income on Schedule E of Form 1040. No Texas state income tax return is required. If you operate your STR through an LLC, note that the franchise tax report filing obligation exists even if no tax is due — a no-tax-due return must still be submitted to maintain good standing with the Texas Comptroller.

Penalties for non-compliance

The Texas Comptroller imposes a 5% penalty on unpaid HOT if filed within 30 days of the due date, and 10% if more than 30 days late. Interest accrues at the Comptroller's current annual rate (verify the current rate at comptroller.texas.gov — it changes). Continued non-compliance can escalate to additional penalties and potential criminal charges for intentional tax fraud. The Comptroller actively audits STR operators using data from platform compliance agreements — as Airbnb's collection agreements have expanded, more host-level data has become available to the Comptroller for cross-referencing.

On the local side, operating without an Austin STR license can result in civil fines and cease-and-desist orders. Austin's Development Services Department has actively enforced its STR ordinance and has worked with Airbnb to remove listings flagged for missing or invalid license numbers from the platform. City HOT non-remittance penalties vary by city but typically follow a structure similar to the state: 10% penalty plus interest. If you're listing in any Texas city that requires a local permit or registration, treat that obligation as equally important as your state HOT compliance — the enforcement mechanisms are real.

Recent rule changes — 2024–2026

Austin STR permit cap enforcement (2023–2025): Austin continued restricting Type 2 (non-primary-residence) STR permits in certain neighborhoods. The permit cap and waitlist system has effectively frozen new non-primary STR operations in parts of the city. Hosts who purchased investment properties expecting to list them as STRs have found themselves unable to obtain permits. Before purchasing any Austin property for STR investment purposes, verify current Type 2 permit availability — it is not guaranteed. Texas legislative activity: Several bills related to STR preemption and local authority were introduced in the 2023 and 2025 legislative sessions. As of 2025, Texas has not enacted a statewide STR preemption law, but the topic remains active — monitor the Texas Legislature's website for current bill status.

Airbnb Austin enforcement agreement (2023–2024): Airbnb strengthened its agreement with Austin, requiring listing-level permit numbers and actively flagging or removing non-compliant listings — making Austin one of the more stringently platform-enforced markets in the state. Smaller Texas markets: Hill Country destinations like Fredericksburg and Marfa have implemented or tightened STR regulations as short-term rental activity surged in those communities. If you're operating outside a major metro, don't assume no rules apply — research your specific municipality before listing.

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