Educational information only, not tax advice. Rules and figures change — confirm your situation with a qualified Massachusetts tax professional before filing.
Massachusetts · USA · Short-term rental taxes
Short-Term Rental Taxes in Massachusetts
STR income in Massachusetts is subject to a state Room Occupancy Excise of 5.7%, potential local option taxes up to 6%, and must be reported as rental income on both your federal and Massachusetts state income tax returns.
The 30-Second Answer
- Room Occupancy Excise Tax: Massachusetts charges a 5.7% state excise on all short-term rentals of 31 days or less; most cities and towns add a local option tax of up to 6%, and Cape Cod/Islands properties may owe an additional 2.75% Cape Cod and Islands Water Protection Fund excise.
- Registration required: Every host must register as an 'operator' on MassTaxConnect (mass.gov) before accepting bookings — listings not registered may be blocked by platforms like Airbnb.
- Platform collection: Airbnb collects and remits the Room Occupancy Excise on your behalf for bookings made through their platform; for direct bookings or other channels you must collect and remit the tax yourself via MassTaxConnect.
- Income tax: Net STR rental income is reported on federal Schedule E (or Schedule C if services are substantial) and on Massachusetts Schedule E, and is taxed at Massachusetts's flat 5% income tax rate.
Deductions
Expenses You Can Deduct Against STR Income
Massachusetts follows federal rules for rental expense deductions — allowable costs reduce your taxable net rental income on Schedule E.
Massachusetts allows the same rental expense deductions as the federal return (Schedule E), including depreciation, with certain adjustments noted on Massachusetts Schedule E. Land is never depreciable. If you use the property personally as well as for rental, expenses must be allocated between personal and rental use. Consult a tax professional for mixed-use situations.
Filing Calendar
Key Dates & Filing Calendar
Massachusetts Room Occupancy Excise returns are filed monthly or quarterly via MassTaxConnect; income tax returns follow the standard April deadline.
Register on MassTaxConnect before your first rental — unregistered listings may be blocked by booking platforms.
Massachusetts Department of Revenue, mass.gov/info-details/room-occupancy-excise-tax (updated April 2026)
Income Tax Treatment
How Is Your STR Income Taxed? Passive Rental vs. Active/Self-Employment
Unlike some countries, the US does not offer a flat-rate 'micro' regime. Instead, your STR income is taxed as either passive rental income (Schedule E) or active self-employment income (Schedule C), depending on the services you provide.
Passive Rental Income (Schedule E)
Standard rental treatment — deduct actual expenses, no self-employment tax
- Report gross rents and deduct actual expenses (mortgage interest, depreciation, repairs, insurance, utilities, management fees) on federal Schedule E and Massachusetts Schedule E.
- Net income taxed at Massachusetts flat rate of 5% (plus federal ordinary income rates); no self-employment (SE) tax applies.
- Passive loss rules may limit deductions if you have other passive income; the $25,000 rental loss allowance phases out above $100,000 AGI.
- Most straightforward option for typical vacation rental hosts who do not provide substantial services.
No income ceiling
Active / Self-Employment Income (Schedule C)
Business treatment — applies when you provide substantial services to guests
- If you provide substantial services (beyond basic utilities, trash, and linens), the IRS may treat income as self-employment income reported on Schedule C.
- Self-employment tax (15.3% federal on net earnings) applies in addition to income tax — a significant extra cost.
- You can deduct the same business expenses, plus the deductible portion of SE tax.
- Massachusetts taxes this income at the same 5% flat rate; consult a tax professional if you are unsure which schedule applies to your situation.
No income ceiling
Depreciation
Depreciation Deductions for Massachusetts STR Hosts
The IRS MACRS system lets you deduct the cost of your rental building and certain assets over their useful lives — Massachusetts follows federal depreciation rules.
| Asset | Typical write-off period | Notes |
|---|---|---|
| Residential rental building | 27.5 years (straight-line) | Deduct building cost (excluding land) ÷ 27.5 each year. Land is never depreciable. |
| Appliances & furniture | 5 years (MACRS) | Refrigerators, stoves, washers, dryers, and furniture used in the rental qualify for 5-year MACRS; bonus depreciation may allow faster write-off. |
| Carpets & flooring | 5 years (MACRS) | Carpeting is typically 5-year property; hardwood floors installed as an improvement may be 27.5-year property. |
| Roof, HVAC, structural improvements | 27.5 years (straight-line) | Major structural improvements are generally depreciated over the remaining life of the building. |
Massachusetts conforms to federal depreciation (MACRS) for rental property. A cost segregation study can identify components eligible for shorter depreciation periods. Always exclude land value from the depreciable basis.
When you sell the property, the IRS recaptures depreciation previously deducted at a maximum federal rate of 25% (unrecaptured Section 1250 gain). Massachusetts also taxes the gain on sale; consult a tax professional before selling.
Room Occupancy Excise Tax
Massachusetts Room Occupancy Excise: State + Local Layers
The total tax guests pay on your STR combines a mandatory state excise with optional local taxes — rates vary by municipality.
Massachusetts imposes a state Room Occupancy Excise of 5.7% on all STR stays of 31 days or less (where daily rent exceeds $15). Cities and towns may add a local option excise of up to 6%. Cape Cod and Islands properties face an additional 2.75% Cape Cod and Islands Water Protection Fund excise. The example below shows a typical Cape Cod town at maximum rates.
Up to ~14.45% (Cape Cod at max local rates)
Massachusetts Department of Revenue, mass.gov/info-details/room-occupancy-excise-tax (updated April 2026)
| Booking type | Who collects & remits | What it means for your books |
|---|---|---|
| Airbnb booking | Airbnb collects and remits Room Occupancy Excise to Massachusetts DOR on your behalf | You do not file a Room Occupancy return for Airbnb transactions, but you must still register on MassTaxConnect |
| VRBO / Vrbo booking | VRBO collects and remits occupancy taxes for Massachusetts STRs | Confirm with VRBO that taxes are being collected for your listing; keep records of all bookings |
| Direct / other platform booking | You (the operator) must collect the tax from guests and remit via MassTaxConnect | Add the tax to your rental agreement, collect it at booking, and file monthly or quarterly returns on MassTaxConnect |
Local option rates and community impact fees vary by municipality. Check the Massachusetts Division of Local Services municipal finance data or your town's official website for the exact rate in your location. Rates are set at the time of occupancy, not when the lease is signed.
Platforms
How Booking Platforms Handle Massachusetts STR Taxes
Major platforms collect and remit the Room Occupancy Excise for Massachusetts bookings, but you remain responsible for registration and income reporting.
| Platform | Reports your income | Collects the local lodging tax | Annual earnings summary |
|---|---|---|---|
| Airbnb | Yes — issues 1099-K (if thresholds met) or 1099-MISC to IRS and host | Yes — collects and remits Massachusetts Room Occupancy Excise for all MA bookings | Available in host dashboard by January 31 |
| VRBO / Vrbo | Yes — issues 1099-K to qualifying hosts | Yes — collects and remits Massachusetts occupancy taxes for MA listings | Available in host dashboard by January 31 |
| Direct booking / other | No — host responsible for all income reporting | No — host must collect and remit Room Occupancy Excise via MassTaxConnect | Host must maintain own records |
Using Multiple Platforms?
If you list on both Airbnb and VRBO plus take direct bookings, each platform remits taxes only for its own transactions. You must file Room Occupancy returns for any direct bookings and reconcile all income across platforms for your Massachusetts Form 1 / Schedule E. Keep separate records for each channel to avoid double-counting or missed remittances.
Federal 1099-K Reporting (US Rule)
For the 2025 tax year, Airbnb issues a 1099-K if you have more than $20,000 in gross transactions AND more than 200 transactions. The IRS has proposed lowering this threshold to $600 in future years; check IRS.gov for the latest threshold applicable to your tax year. Receiving a 1099-K does not change what income is taxable — all rental income is taxable regardless of whether a form is issued.
Airbnb Help Center, airbnb.com/help/article/2587 (Massachusetts occupancy tax collection); Airbnb Help Center, airbnb.com/help/article/414 (US tax documents, 2025)
Illustrative P&L: Schedule E (Passive Rental)
Example for a Massachusetts STR earning $30,000/year in gross rents. Numbers are illustrative only.
Record-Keeping
Stay Audit-Ready: What to Keep and for How Long
Massachusetts DOR and the IRS can audit STR income and Room Occupancy Excise returns — good records are your best protection.
| Keep | How long | Why |
|---|---|---|
| Rental income records (booking confirmations, payment receipts, platform statements) | At least 3 years from filing date (6 years if income underreported by >25%) | Supports gross income reported on Schedule E and Room Occupancy Excise returns |
| Expense receipts (repairs, cleaning, utilities, insurance, management fees) | At least 3 years from filing date | Substantiates deductions claimed on Schedule E; IRS and MA DOR may disallow unsupported deductions |
| Depreciation schedules and property purchase documents | For as long as you own the property, plus 3 years after sale | Needed to calculate depreciation recapture on sale and to defend basis calculations |
| MassTaxConnect Room Occupancy Excise returns and payment confirmations | At least 3 years | Proves compliance with Massachusetts Room Occupancy Excise obligations; required if DOR audits your excise filings |
| Personal-use logs (dates you or family used the property) | At least 3 years from filing date | Required to correctly allocate expenses between personal and rental use under IRS mixed-use rules |
Massachusetts DOR generally has 3 years to assess additional tax, but this extends to 6 years if income is substantially underreported. Keep records accordingly.
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 educational purposes only and does not constitute tax advice. Tax laws change frequently — always verify current rates and rules with the Massachusetts Department of Revenue (mass.gov/dor) and a qualified tax professional.
- Massachusetts Department of Revenue — Room Occupancy Excise Tax — mass.gov/info-details/room-occupancy-excise-tax — official guidance on state 5.7% excise, local option taxes, registration requirements, and operator obligations. Updated April 8, 2026.
- Massachusetts Department of Revenue — Learn about rent, royalties, and REMIC — mass.gov/info-details/learn-about-rent-royalties-and-remic — guidance on reporting rental income on Massachusetts Schedule E and allowable deductions. Updated February 8, 2023.
- Airbnb Help Center — Occupancy tax collection and remittance in Massachusetts — airbnb.com/help/article/2587 — confirms Airbnb collects and remits Massachusetts Room Occupancy Excise for all MA bookings and outlines host registration requirements.
- Airbnb Help Center — US tax documents from Airbnb — airbnb.com/help/article/414 — explains 1099-K, 1099-MISC, and 1099-NEC issuance thresholds and timelines for US hosts.
- We Need a Vacation — Massachusetts Short-Term Rental Lodging Tax FAQs — weneedavacation.com/str/lodging-tax-faqs/ — industry summary of Massachusetts STR tax rates including Cape Cod & Islands 2.75% surcharge. Updated January 9, 2026.
- IRS — Publication 527: Residential Rental Property — irs.gov/publications/p527 — federal rules for Schedule E reporting, depreciation (MACRS 27.5-year), mixed-use allocation, and passive activity loss rules applicable to Massachusetts hosts.
Questions
Frequently Asked Questions from Massachusetts STR Hosts
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