Educational information only, not tax advice. Rules and figures change — confirm your situation with a qualified Maryland tax professional before filing.
Maryland · USA · Short-term rental taxes
Short-Term Rental Taxes in Maryland
Short-term rental taxes in Maryland stack a 6% state sales tax, a county hotel tax of up to 9.5%, and state plus county income tax — with new top brackets and a July 2027 change to how platforms remit county tax.
The 30-Second Answer
- Short term rental tax in Maryland has two lodging layers: the 6% state sales and use tax on the booking, plus a county or city hotel rental tax — for example 7% in Montgomery County, 9.5% in Baltimore City and 6% in Worcester County (Ocean City) from January 1, 2026.
- Airbnb collects the 6% state tax on every Maryland reservation and, per its help page, the hotel tax in Anne Arundel, Baltimore, Montgomery, Prince George's and Worcester counties plus Annapolis and Baltimore City. Elsewhere, or for direct bookings, you register and remit yourself.
- Income tax is state + county: Maryland's rates run from 2% to 6.5% (new 6.25% and 6.5% brackets above $500,000 and $1 million since 2025), plus a county income tax of 2.25% to 3.30% in 2026. Form 502 is due April 15, 2027 for tax year 2026.
- Maryland does not allow federal bonus depreciation: you add the §168(k) allowance back and subtract it over the asset's normal recovery period (Form 500DM), so keep separate state depreciation records.
Deductions
What Maryland STR Hosts Can Deduct
Rental expenses reduce federal taxable income and, through federal AGI, your Maryland and county income tax — with an adjustment for bonus depreciation.
Sales tax and county hotel tax collected from guests are not your income or expense when you pass them through. Split costs between rental and personal days if you use the property yourself (IRC §280A).
Filing Calendar
Key Dates & Filing Calendar
State sales tax, county hotel tax and income tax each run on their own calendar in Maryland.
Worcester County (including Ocean City) raised its room tax from 5% to 6% on January 1, 2026 — update direct-booking rates and check that platform charges reflect the new rate.
Comptroller of Maryland — Business Tax Tip #22 and 2025 resident tax booklet (marylandcomptroller.gov)
Federal & State Tax Treatment
Passive Rental vs. Active Business: Which Applies to Your Maryland STR?
The federal Schedule E vs. Schedule C decision carries through to your Maryland Form 502, where state and county income tax both apply.
Passive Rental — Schedule E
The default for most vacation rental owners
- Report rents and expenses on Schedule E (Form 1040) when your average stay is over 7 days, or you provide no substantial services.
- Net losses are passive; the $25,000 active-participation allowance phases out between $100,000 and $150,000 of modified AGI.
- Building depreciated over 27.5 years; no self-employment tax on net rent.
- Maryland taxes the net rent at 2%–6.5% plus your county rate.
No income ceiling; passive-loss limits apply
Active Business — Schedule C
Only when you provide substantial services
- Use Schedule C when the average stay is 7 days or less and you provide substantial services (daily housekeeping, meals, concierge).
- Net profit carries 15.3% self-employment tax on earnings up to the 2026 Social Security wage base of $184,500 (2.9% Medicare above it).
- Losses can offset other income if you materially participate; the QBI deduction (up to 20%) may apply.
- Maryland and county income tax apply to the same net profit; bonus depreciation is added back on Form 500DM.
No ceiling; self-employment tax applies to net profit
Depreciation
Depreciation for Maryland STR Properties
Maryland has decoupled from federal bonus depreciation for non-manufacturers, so a big first-year write-off federally is spread out on your state return.
| Asset | Typical write-off period | Notes |
|---|---|---|
| Residential rental building | 27.5 years (straight-line) | Same federally and in Maryland; land is not depreciable. |
| Furniture, appliances, hot tubs | 5 years (MACRS) | Federal 100% bonus depreciation is permanent for property acquired after January 19, 2025. |
| Maryland bonus-depreciation add-back | Recovered over asset life | Add back the §168(k) allowance in the year claimed, then subtract it ratably over the recovery period (Form 500DM). |
| Decks, patios, fencing | 15 years (MACRS) | Land improvements; identifiable through cost segregation. |
A cost segregation study still helps federally, but in Maryland the accelerated portion comes back as an addition and is recovered over later years.
On sale, depreciation is recaptured federally at up to 25%; Maryland taxes the gain as income and, from 2025, adds a 2% capital-gains tax when federal AGI exceeds $350,000 (exceptions apply).
Occupancy Tax
Maryland Lodging Tax: State Sales Tax + County Hotel Tax
A Maryland vacation rental booking carries the 6% state sales tax plus the hotel, room or transient occupancy tax of the county or city where the property sits.
Each county sets its own lodging tax rate and night threshold — Montgomery taxes stays of 30 days or fewer, Worcester stays of 4 months or less. Separately stated local hotel taxes are not part of the price subject to sales tax.
Up to 15.5% combined (Baltimore City)
Airbnb Help Center (article 2309); Montgomery County Dept. of Finance; Baltimore City Code; Worcester County Treasurer
| Booking type | Who collects & remits | What it means for your books |
|---|---|---|
| Airbnb booking | Airbnb remits 6% state sales tax everywhere and county hotel tax in the counties it lists | Report gross rent as income; keep Airbnb's tax reports to prove remittance to your county |
| Vrbo / Booking.com booking | Accommodations intermediaries must collect Maryland sales tax; county coverage varies until July 1, 2027 | Check each booking's tax lines; remit any county tax the platform did not |
| Direct booking | You register with the Comptroller and your county and remit both taxes | Charge guests both taxes separately and keep them out of your income |
Airbnb's Maryland page still shows Worcester County at 5%; the county's own notice sets 6% from January 1, 2026. When sources disagree, follow the county.
Platforms
Airbnb Tax in Maryland: What Each Platform Handles
Platforms already collect Maryland's state sales tax; county lodging tax coverage is patchy until the Comptroller centralises it in July 2027.
| 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 — 6% state sales tax, plus hotel tax in Anne Arundel, Baltimore, Montgomery, Prince George's, Worcester, Annapolis and Baltimore City | Earnings and tax reports in the host dashboard |
| Vrbo | Form 1099-K at the same federal thresholds | State sales tax as an accommodations intermediary; county tax not confirmed at a primary source — check each booking | Payout summary in the owner dashboard |
| Booking.com | Form 1099-K where Booking.com processes payments | Depends on payment model — confirm who charges the guest the tax | Invoices and payout statements in the extranet |
| Direct bookings | No third-party reporting; you report all income | No — you collect state sales tax and county hotel tax yourself | Your own booking ledger |
Using Multiple Platforms?
The 1099-K threshold is per platform, so income split across Airbnb, Vrbo and direct guests may not trigger any form — but it is all reportable on your federal return and Form 502, and county tax is owed on every eligible night.
DAC7 / OECD Reporting (EU Rule — Does Not Apply in Maryland)
DAC7 is an EU directive and does not apply to Maryland hosts. US platforms report host payouts to the IRS on Form 1099-K once 2026 payments exceed $20,000 and 200 transactions.
Airbnb Help Center — Maryland taxes (airbnb.com/help/article/2309); Chapter 638 of 2025 (SB 979)
Illustrative P&L: Schedule E vs. Schedule C
Example for a Maryland STR grossing $42,000 a year. Illustrative only — not tax advice.
Record-Keeping
Stay Audit-Ready: What to Keep and How Long
Three tax authorities can look at a Maryland STR: the IRS, the Comptroller and your county.
| Keep | How long | Why |
|---|---|---|
| Booking records with nights, rent and fees | At least 3 years after filing | Night counts decide which county threshold applies and whether a stay is taxable |
| Sales & use tax and county hotel tax returns | At least 3 years | Comptroller and county audits; proof of zero returns where required |
| Platform tax reports and 1099-Ks | At least 3 years | Shows which state and county taxes the platform remitted for you |
| County STR licence and safety inspection records | While you operate | Maryland's STR Safety Act (in force October 1, 2026) adds fire-safety equipment rules |
| Federal depreciation and Form 500DM schedules | Until 3 years after you sell | Tracks the Maryland bonus add-back and later subtractions |
Maryland's bonus-depreciation add-back reverses over many years — lose the schedule and you can lose the later subtractions.
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
Educational only, not tax or legal advice. County hotel tax rates change — verify with the Comptroller of Maryland, your county finance office and a qualified tax professional.
- Airbnb Help Center — Taxes Airbnb collects in Maryland — 6% state sales tax, 3% on service fees, county and city hotel taxes with night limits. https://www.airbnb.com/help/article/2309
- Comptroller of Maryland — Business Tax Tip #22 — Sales and use tax returns due the 20th of the month after each period; filing frequency. https://www.marylandcomptroller.gov/content/dam/mdcomp/tax/legal-publications/tips/business/bustip22.pdf
- Comptroller of Maryland — Tax Alert on 2025 legislative changes — 6.25% and 6.5% brackets; local rate cap 3.30%; 2% capital gains tax over $350,000 FAGI. https://www.marylandcomptroller.gov/content/dam/mdcomp/tax/legal-publications/alerts/tax-alert-changes-to-standard-and-itemized-deductions-and-to-state-and-local-income-tax-rates-from-the-2025-legislative-session.pdf
- Comptroller of Maryland — Withholding Tax Facts 2026 — 2026 state brackets and local rates from 2.25% (Worcester) to 3.30% (Dorchester, Kent). https://www.marylandcomptroller.gov/content/dam/mdcomp/tax/legal-publications/facts/withholding-tax-facts-2026.pdf
- Comptroller of Maryland — Administrative Release No. 38 — Decoupling from federal §168(k) bonus depreciation. https://www.marylandcomptroller.gov/legal-library/ar-38-jun-09-2022.html
- Maryland General Assembly — SB 979 (Chapter 638 of 2025) fiscal note — Comptroller collects local hotel tax from intermediaries from July 1, 2027. https://mgaleg.maryland.gov/2025RS/fnotes/bil_0009/sb0979.pdf
- Montgomery County Department of Finance — Short-Term Rentals — 7% Room Rental and Transient Tax, 30-day rule, monthly returns, STR license. https://www.montgomerycountymd.gov/about-short-term-rentals-room-rental-transient-tax
- Baltimore City Code art. 28 §21-2 — Hotel Room Tax — 9.5% on hotel and short-term residential rentals. https://codes.baltimorecity.gov/us/md/cities/baltimore/code/28/21-2
- Worcester County — Room tax rate of 6.0% effective January 1, 2026 — Rentals of 4 months or less. https://worcestermd.gov/news/newly-adopted-room-tax-rate-60-effective-january-1-2026
Questions
Frequently Asked Questions — Maryland STR Taxes
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