Educational information only, not tax advice. Rules and figures change — confirm your situation with a qualified Iowa tax professional before filing.
Iowa · USA · Short-term rental taxes
Short-Term Rental Taxes in Iowa
Short term rental taxes in Iowa: a 5% state hotel and motel tax plus up to 7% local hotel/motel tax on stays of 31 days or less, no sales tax on the room itself, and a flat 3.8% Iowa income tax on profit.
The 30-Second Answer
- Short term rental tax in Iowa is a hotel and motel tax, not a sales tax. Renting a home, cabin or apartment for 31 consecutive days or less owes the 5% state hotel and motel tax on the full price, including cleaning and other fees.
- Cities and counties can add a local hotel/motel tax of up to 7%, in whole-percent steps, so the lodging tax on a stay tops out at 12%. Room rent is not subject to Iowa's 6% sales tax or the local option sales tax.
- Airbnb and Vrbo must collect and remit the state and local hotel/motel tax on bookings they facilitate. For direct bookings you register with the Iowa Department of Revenue, collect the tax and file monthly (or annually if your liability is small).
- Iowa taxes net rental profit at a flat 3.8% for 2026, on top of federal tax. Iowa returns are due April 30, 2027 — two weeks after the federal April 15 deadline.
Deductions
What Iowa STR Hosts Can Deduct
Ordinary and necessary rental expenses reduce your federal profit, and Iowa starts from that federal figure.
Hotel/motel tax you collect from guests and remit is not your income or your expense — keep it out of both lines. If you also use the property yourself, split costs between rental and personal days under IRC §280A.
Filing Calendar
Key Dates & Filing Calendar
Iowa hotel/motel tax runs on a monthly Department of Revenue calendar. Iowa's income tax return comes two weeks after the federal deadline.
Stays longer than 31 consecutive days by the same guest are exempt from Iowa hotel and motel tax, so a month-plus booking comes out of the lodging tax entirely.
Iowa Department of Revenue — Tax/Fee Descriptions and Rates; Iowa Legislative Services Agency — State Tax Due Date Summary (Sept 2025)
Federal & Iowa Income Tax Treatment
Passive Rental vs. Active Business: Which Applies to Your Iowa STR?
Your federal Schedule E or Schedule C choice sets the profit figure. Iowa then taxes that income at a single flat 3.8% rate for 2026.
Passive Rental — Schedule E
The usual route for Iowa lake cabins and city homes
- Report rents and expenses on Schedule E; the net figure carries into your Iowa return and is taxed at 3.8%.
- No self-employment tax on net rental income.
- Passive-loss limits apply; the $25,000 allowance phases out between $100,000 and $150,000 of modified AGI.
- Depreciate the building over 27.5 years; contents bought after January 19, 2025 can take permanent 100% federal bonus depreciation.
No ceiling; Iowa's single rate is 3.8% for 2026
Active Business — Schedule C
When you run it like a small inn
- Applies when the average stay is 7 days or less and you provide substantial services such as daily housekeeping or meals.
- Net profit owes 15.3% self-employment tax; the Social Security part stops at the $184,500 2026 wage base.
- Losses may offset other income if you materially participate.
- May qualify for the federal §199A QBI deduction; Iowa still taxes the resulting income at 3.8%.
No ceiling; SE tax applies on top of federal and Iowa income tax
Depreciation
Depreciation for Iowa STR Properties
Depreciation spreads the cost of the building and contents over their tax lives and is often the largest deduction an Iowa host has.
| Asset | Typical write-off period | Notes |
|---|---|---|
| Residential rental building | 27.5 years (straight-line) | Land is not depreciable; split the purchase price between land and building. |
| Furniture, appliances & linens | 5 years (MACRS) or 100% bonus | Permanent 100% federal bonus depreciation for property acquired after January 19, 2025. |
| Docks, decks, driveways & landscaping | 15 years (MACRS) | Land improvements; a cost segregation study can identify them. |
| Roof, HVAC & structural improvements | 27.5 years | Capital improvements to the building follow the building's life. |
Iowa automatically conforms to the Internal Revenue Code except where Iowa law says otherwise, so most federal depreciation carries through — confirm any Iowa-specific adjustment with your preparer before filing.
On sale, depreciation you claimed (or could have claimed) is recaptured federally at up to 25% as unrecaptured §1250 gain, and the gain is also part of your Iowa taxable income.
Hotel & Motel Tax
Iowa Hotel and Motel Tax on Vacation Rentals
The lodging tax in Iowa is a state hotel and motel tax plus an optional local hotel/motel tax — both charged on the full price of stays of 31 days or less.
The Iowa Department of Revenue administers both the state tax and every local hotel/motel tax, so there is one return, not separate city filings. Local rates are set by city or county vote.
5%–12% combined, depending on the city or county
Iowa Code chapter 423A; Iowa Department of Revenue — Changes to Hotel/Motel Excise Tax
| Booking type | Who collects & remits | What it means for your books |
|---|---|---|
| Airbnb booking | Airbnb collects the 5% state and the local hotel/motel tax on the listing price including cleaning and guest fees | Keep Airbnb's tax reports; do not remit the same tax again |
| Vrbo booking | Iowa guidance makes the marketplace (it names VRBO) responsible for collecting and remitting hotel and motel taxes | Confirm the tax line on each booking and your payout statement |
| Direct or Booking.com booking | You collect from the guest and remit to the Iowa Department of Revenue; an online travel company that collects tax must pass it to you to remit | Register with the Department of Revenue before your first direct stay and file every period |
The tax base is the entire price the guest pays, including cleaning fees, linen charges, nonrefundable deposits and facilitation fees. A commission you pay a platform out of your payout is not added to the base. Check the Department of Revenue's jurisdiction-and-rate list for your address.
Platforms
Airbnb Tax in Iowa: What the Platforms Collect
Iowa puts hotel/motel tax collection on the marketplace for facilitated bookings. IRS income reporting follows federal thresholds.
| Platform | Reports your income | Collects the local lodging tax | Annual earnings summary |
|---|---|---|---|
| Airbnb | Form 1099-K above $20,000 and 200 transactions; 1099-MISC for other payments of $2,000+ | Yes — 5% Iowa hotel and motel tax plus local hotel/motel tax (typically 2%–7%) on the listing price incl. cleaning and guest fees | Earnings and tax reports in the host dashboard |
| Vrbo | Form 1099-K at the same federal thresholds | Required as a marketplace under Iowa guidance — confirm the lodging-tax line on each booking | Annual payout summary in the owner dashboard |
| Booking.com | Varies by payment model | Not confirmed at a primary source — if it collects tax as an online travel company, it must pass it to you to remit | Invoices and payout statements in the extranet |
| Direct bookings | No third-party reporting; you report all income | No — you collect and remit state and local hotel/motel tax to the Department of Revenue | Your own ledger |
Using More Than One Platform?
Each platform remits hotel/motel tax only on its own bookings and reports only its own payouts. Your Iowa return and your federal return need the total across Airbnb, Vrbo, Booking.com and direct stays, so keep one ledger for every channel.
US Reporting — 1099-K, Not DAC7
DAC7 is an EU directive and does not apply to Iowa rentals. US platforms report host payouts on Form 1099-K once gross payments exceed $20,000 and 200 transactions in the year. All rental income is taxable whether or not a form arrives.
Airbnb Help Center — Occupancy tax collection and remittance by Airbnb in Iowa (airbnb.com/help/article/2304); Iowa Department of Revenue; IRS — Form 1099-K
Illustrative P&L: An Iowa Lake Cabin
Example: a cabin earning $38,000 in rents (excluding hotel/motel tax paid by guests). For illustration only — not tax advice.
Record-Keeping
Stay Audit-Ready: What Iowa STR Hosts Should Keep
Good records protect you if the IRS or the Iowa Department of Revenue questions a return, and they prove which stays were exempt from hotel/motel tax.
| Keep | How long | Why |
|---|---|---|
| Booking records (dates, nights, price, fees, channel) | At least 3 years after filing | Shows which stays were 31 days or less and supports gross rents |
| Hotel/motel tax returns and payment confirmations | At least 3 years | Proves direct-booking tax was collected and remitted each period |
| Platform tax reports and 1099-K / 1099-MISC | At least 3 years | Shows which bookings the marketplace already taxed and what the IRS was told |
| Expense receipts and mileage logs | At least 3 years (6 if income is understated by 25%+) | Supports every deduction on Schedule E or C |
| Purchase documents and depreciation schedules | Until 3 years after you sell | Needed for basis, depreciation recapture and gain on sale |
Keep guest-paid hotel/motel tax in a separate account from rent. It is the state's and city's money, and mixing it with income is the most common reconciliation error on audit.
Estimator
Short-Term Rental Tax Estimator
Plug in your bookings and costs to see your likely taxable position.
Your Numbers
Total short-term-rental income, before costs.
Allowable running costs, mortgage interest, depreciation and platform fees.
Your top income-tax band, as a percentage.
Estimated tax owed
Income tax on your net rental profit at your marginal rate.
Illustrative estimate. A simplified model to orient you — it is not tax advice. Confirm your situation with a qualified local professional.
Sources & notes
This page is for education only and is not tax or legal advice. Local hotel/motel tax rates change by local vote; confirm your rate with the Iowa Department of Revenue and a qualified tax professional before filing.
- Iowa Code chapter 423A — State and Local Hotel and Motel Tax — 5% state tax, local tax up to 7%, 31-day and 90-day exemptions, lodging platforms. https://www.legis.iowa.gov/docs/code/423A.pdf
- Iowa Department of Revenue — Changes to Hotel/Motel Excise Tax — Tax base includes all fees; marketplaces such as Airbnb or VRBO collect and remit. https://tax.iowa.gov/hotel-motel-excise-tax
- Iowa Department of Revenue — Tax/Fee Descriptions and Rates — 5% on rooms rented 31 consecutive days or less; local up to 7%; due last day of following month. https://revenue.iowa.gov/taxes/tax-guidance/general/iowa-taxfee-descriptions-and-rates
- Iowa Department of Revenue — Hotel and Motel Tax Questions and Answers — Room rental not subject to local option tax; other sales taxed at 6%. https://www.185arw.ang.af.mil/Portals/75/Iowa%20Dept%20Revenue%20Hotel%20Taxes%20FAQs.pdf
- Iowa Legislative Services Agency — State Tax Due Date Summary (Sept 2025) — Hotel/motel monthly and annual (January 31) due dates; estimate dates. https://www.legis.iowa.gov/docs/publications/FTNO/1540861.pdf
- Iowa Department of Revenue — 2026 Individual Income Tax Rate — Flat 3.8% for all 2026 taxable income (SF 2442). https://revenue.iowa.gov/press-release/2025-10-21/idr-announces-2026-individual-income-tax-and-interest-rates
- Iowa Department of Revenue — Individual Taxes — Iowa tax returns are due April 30. https://revenue.iowa.gov/taxes/file-my-taxes/individual-taxes
- Airbnb Help Center — Occupancy tax collection and remittance by Airbnb in Iowa — 5% state and local hotel/motel tax collected. https://www.airbnb.com/help/article/2304
- IRS — Understanding your Form 1099-K — Federal reporting for payment platforms. https://www.irs.gov/businesses/understanding-your-form-1099-k
Questions
Frequently Asked Questions — Iowa STR Taxes
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