When staying at a hotel, short-term rental, or any temporary lodging in Texas, guests often notice an additional charge on their invoice labeled as Hotel Occupancy Tax. This tax is not arbitrary it’s part of a state and sometimes local requirement that helps fund public services, tourism promotion, and municipal projects. Understanding how the Texas Hotel Occupancy Tax works can be useful for both travelers and business owners, especially those involved in the hospitality or short-term rental industries. Whether you’re a hotel operator or planning a vacation in the Lone Star State, knowing the ins and outs of this tax is essential.
Overview of the Texas Hotel Occupancy Tax
What is the Hotel Occupancy Tax?
The Texas Hotel Occupancy Tax (HOT) is a state-imposed tax on the cost of a room or space in a hotel, motel, bed and breakfast, or similar lodging that is rented to guests for a period of less than 30 consecutive days. This short-term lodging tax is collected by the lodging facility and then remitted to the Texas Comptroller of Public Accounts. Local governments such as cities and counties may also impose their own occupancy taxes in addition to the state tax.
Applicable Lodging Types
The hotel occupancy tax applies to a wide range of accommodations in Texas, including:
- Hotels and motels
- Inns and bed-and-breakfasts
- Campgrounds with cabins or rooms
- Short-term rentals, including those listed on platforms like Airbnb and Vrbo
- Corporate housing rented for less than 30 days
Statewide Tax Rate
Base State Tax
The base statewide hotel occupancy tax rate is 6%. This tax is mandatory and must be collected on all eligible short-term rentals across the state, regardless of the lodging’s size or type. The tax is calculated based on the room rate, excluding any separately stated charges such as meals, parking, or other services.
Local Taxes
In addition to the 6% state rate, many Texas cities and counties impose their own local hotel occupancy taxes. These local rates vary but can range between 1% and 9% depending on the jurisdiction. In some popular destinations, the total combined rate (state and local) can exceed 15%.
For example:
- Austin: 6% state + 9% city/local = 15%
- Houston: 6% state + 7% city + 2% county = 15%
- San Antonio: 6% state + 9% local = 15%
Lodging operators are responsible for determining the correct total tax rate based on the property’s location and remitting the applicable amounts to the appropriate taxing authorities.
Who Needs to Collect Hotel Occupancy Tax?
Hotel Operators and Lodging Providers
Anyone who provides lodging to the public for less than 30 consecutive days is required to collect and remit the Texas Hotel Occupancy Tax. This includes traditional hotels and motels, but also individual property owners who rent out a room, home, or apartment through short-term rental platforms.
Short-Term Rental Hosts
In recent years, short-term rentals have surged in popularity. As a result, platforms like Airbnb and Vrbo often collect and remit state-level taxes on behalf of hosts. However, hosts are still responsible for verifying whether local hotel occupancy taxes must be collected and reported separately to the city or county.
Exemptions and Exceptions
Stays Longer Than 30 Days
Guests who stay in the same facility for more than 30 consecutive days are considered long-term residents and are exempt from the hotel occupancy tax. The exemption only applies if there is no interruption or change in the agreement during that period.
Government and Nonprofit Use
Some exemptions also apply to government employees and certain nonprofit organizations:
- U.S. federal employees on official business are exempt with proper documentation.
- Texas state employees are not exempt from the state tax but may be exempt from local taxes in some cities.
- Charitable organizations may qualify for exemption if the lodging is used for exempt purposes.
How to Register, Report, and Pay
Registering for a Tax Permit
Lodging providers must register with the Texas Comptroller’s Office to obtain a hotel occupancy tax permit. This process can be completed online and is necessary before collecting any tax from guests.
Filing Requirements
Tax reports must typically be filed on a monthly or quarterly basis, depending on the volume of revenue generated by the lodging provider. Deadlines for submission are strictly enforced, and late filings may result in penalties or interest charges.
Online Payment Options
Providers can remit their taxes using the Texas Comptroller’s online portal. The system allows filers to report both the amount of taxable receipts and the corresponding tax collected, simplifying the process for busy property owners and hotel managers.
Penalties for Non-Compliance
Failure to Register or Remit Tax
Lodging providers who fail to register, collect, or remit the Texas Hotel Occupancy Tax may face significant penalties, including fines and interest on unpaid taxes. Continued non-compliance could lead to legal action or revocation of business licenses.
Audit Risks
The Texas Comptroller’s Office has the authority to audit lodging businesses. If discrepancies or failures to remit taxes are found during an audit, the provider may be required to pay back taxes in addition to penalties and interest.
Best Practices for Lodging Providers
Maintain Accurate Records
Keeping detailed records of all transactions, including dates of stay, rates charged, and taxes collected, is essential. Accurate record-keeping ensures compliance and simplifies reporting.
Stay Informed of Local Regulations
Because local hotel occupancy tax rates and regulations can change, it’s important for lodging providers to stay current on any updates from their city or county authorities. Subscription to city newsletters or joining local lodging associations may be helpful.
Educate Staff and Guests
Make sure that employees and guests understand that hotel occupancy tax is a standard practice in Texas. Clearly list the tax as a separate line item on invoices or booking platforms to avoid confusion or disputes.
The Texas Hotel Occupancy Tax plays a vital role in supporting state and local services by leveraging revenue from the booming hospitality and tourism sectors. Whether you’re a hotel owner, short-term rental host, or traveler visiting Texas, understanding how this tax works helps ensure transparency and compliance. From registration to collection and remittance, each step in the process matters. Staying informed, keeping accurate records, and adhering to both state and local requirements will help lodging providers remain in good standing and avoid costly penalties. As tourism continues to grow across Texas, so does the importance of proper hotel occupancy tax management.