BNB Hot / Tax planning
Tax planning
Short-term rental taxes in Hot Springs
The local lodging taxes your guests pay, who collects them, and the federal income tax rules that matter most for STR owners. This is general information; have a CPA review your situation.
Lodging taxes inside Hot Springs
Stays of 29 nights or fewer in the city of Hot Springs carry five taxes on the rent, including any cleaning fee.
| Tax | Rate | Charged by |
|---|---|---|
| Arkansas gross receipts (sales) tax | 6.5% | State of Arkansas |
| Arkansas tourism tax | 2% | State of Arkansas |
| Garland County sales tax | 1.5% | Garland County |
| Hot Springs city sales tax | 1.5% | City of Hot Springs |
| Advertising and Promotion (A&P) tax | 3% | Hot Springs A&P Commission |
| Total | 14.5% |
Outside city limits the city sales tax and A&P tax do not apply, but the state and county taxes do.
Who collects them
- Airbnb collects the state gross receipts tax, state tourism tax, local sales tax and the Hot Springs A&P tax on reservations of 29 nights or shorter.
- Vrbo collects the state gross receipts, local sales and use, and state tourism taxes on Arkansas stays under 30 nights, plus the Hot Springs A&P tax (stays of 30 days or more are exempt).
- Direct bookings (your own website, repeat guests, phone bookings) are your responsibility. You collect the taxes from the guest and file them yourself.
The city's STR page lists a tax contact at (501) 620-5042 for questions about local filing.
Federal income tax basics
Report the income
Rental income, including cleaning fees, goes on your return. Since the 2025 tax law change, platforms only have to send a Form 1099-K when payments top $20,000 and 200 transactions in a year, but income is taxable whether or not you get a form.
The 14-day rule
If you also use the home as a residence and rent it for fewer than 15 days in a year, you do not report that rental income (and you cannot deduct the rental expenses).
Deductible expenses
Ordinary and necessary rental costs are deductible: mortgage interest, property tax, insurance, repairs, cleaning, supplies, utilities, platform and management fees. Expenses must be split if you also use the property personally.
Depreciation
The building (not the land) is depreciated over years. Residential rental property uses 27.5 years; some very short-stay rentals may be treated differently, so ask your CPA which schedule applies.
Bonus depreciation
The 2025 tax law restored 100% bonus depreciation for qualifying property acquired after January 19, 2025. Furniture and some improvements may qualify. A cost segregation study can identify them.
Short average stays
If the average guest stay is 7 days or less, the IRS does not treat the activity as a rental activity under the passive loss rules. That can change how losses are treated, depending on your participation.
Self-employment tax
If you provide substantial services for guests' convenience (such as regular cleaning during stays, meals or concierge service), the income is reported on Schedule C and may be subject to self-employment tax of 15.3%.
Hire someone who knows STRs
These rules interact. Ask a prospective CPA how many short-term rental clients they have and how they handle the 7-day rule and material participation.
Common questions
What is the total tax on a Hot Springs Airbnb stay?
About 14.5% inside city limits for stays of 29 nights or fewer: 6.5% state gross receipts, 2% state tourism, 1.5% county, 1.5% city and 3% A&P.
Do I need to file local taxes if I only use Airbnb or Vrbo?
Both platforms collect and remit the state and local taxes, including Hot Springs A&P, on bookings made through them. Confirm with the city whether you need any registration of your own, and handle direct bookings yourself.
Will I get a 1099-K?
Only if your payments exceed $20,000 and 200 transactions in the year. You still report all rental income.
Can I rent my home during a big weekend tax-free?
If you also live in the home and rent it for 14 days or fewer in the year, that rental income is not reported. Rent it 15 days or more and the normal rules apply.
Questions about STR taxes?
Send us your question about staying or hosting in Hot Springs and we will point you to the right local resource.
Sources
- Airbnb Help: Occupancy tax collection and remittance by Airbnb in the US
- Vrbo Help: Where Vrbo collects and remits lodging taxes (US A-E)
- Garland County: Sales and use tax rates
- City of Hot Springs: Autonomous Commissions (Advertising & Promotion Commission)
- City of Hot Springs: Short-term Residential Rentals
- IRS Topic 415: Renting residential and vacation property
- IRS Publication 527: Residential Rental Property
- IRS Publication 925: Passive Activity and At-Risk Rules
- IRS: Self-employment tax
- RSM: IRS updates Form 1099-K FAQs for OBBBA thresholds
- RSM: The OBBBA restores and expands bonus depreciation
Questions about short-term rentals in Hot Springs?
Call or text 501.365.1001, or send a note and we will get back to you.