The Complete Indiana STR Lodging Tax Guide: Airbnb and VRBO Indiana Occupancy Tax Breakdown

Dreaming of Airbnb success in Indiana? Before you welcome your first guest, there’s a not-so-glamorous reality to face, taxes. While most hosts focus on creating Instagram-worthy spaces, those who truly thrive understand that mastering the tax landscape is just as crucial as that perfect five-star review. So, here’s our breakdown of the Indiana lodging and occupancy taxes.

Indiana-Wide Tax Requirements for Airbnb

Short-term rental operators in Indiana are all subject to two primary lodging tax obligations. These taxes are the Gross Retail Tax, also known as a Sales Tax and the County Innkeeper’s Tax. The Gross Retail Tax is set to a fixed 7% of your listing price and should include cleaning, guest fees, or other charges.

The County Innkeeper’s Tax varies by county but lies within the 2% to 10% range. Again, this tax applies to the total listing price with cleaning fees and other charges. Both taxes are applicable to rentals with periods of 30 days or less.

Example: A 2-night stay at $150 per night with a $50 cleaning fee.

• 2-Night Stay Subtotal: $350 ($300 + $50)
• Gross Retail Tax (7%): $24.50
• County Innkeeper’s Tax (5%): $17.50
• Total Taxes: $42.00
• Guest’s Total Payment: $392.00

County and City-Specific Tax Requirements

Marion County

In addition to the 7% state sales tax, hosts must collect a 5% Marion County innkeeper’s tax from guests. This brings the total taxes to 12% for hosts operating within Marion County jurisdictions. This includes one of the most popular cities within the state, Indianapolis.

Example: A $100/night rental with a $100 cleaning fee rented for 7 days.

1. Total Rental Amount: $800 ($700 + $100 cleaning fee)
2. Gross Retail Tax (7%): $56.00
3. Marion County Innkeeper’s Tax: $40.00 (5% rate)
4. Total Taxes: $96.00
5. Guest’s Total Payment: $896.00

Lake County

Lake County hosts are subject to a 5% county Innkeeper’s tax on top of the statewide sales tax. Hammond City hosts have it even harder because they are also subject to an extra 3% local lodging tax by the city itself used to fund tourism efforts.

Example: A $125/night for 3 nights with a cleaning fee of $75 in Hammond City.

1. Total Gross Revenue: $450 ($375 + $75 cleaning fee)
2. Indiana State Sales Tax (7%): $31.50
3. Lake County Innkeeper’s Tax (5%): $22.50
4. Hammond Local Lodging Tax (3%): $13.50
5. Total Taxes: $67.50
6. Guest’s Total Payment: $517.50

Hamilton County

Rentals located within Hamilton County are subject to a 5% innkeeper’s tax.

Example: A $175/night rental for a 4-night stay with a $100 cleaning fee.

1. Total Gross Revenue: $800 ($700 + $100 cleaning fee)
2. Gross Retail Tax (7%): $56.00
3. Hamilton County Innkeeper’s Tax (5%): $40.00
4. Total Taxes: $96.00
5. Guest’s Total Payment: $896.00

Allen County

Allen County imposes a Innkeeper’s tax of 7%, which is a bit on the higher end of the spectrum. Regardless, all rentals are required to remit it once a reservation is made.

Example: A $120/night rental for a 1-night stay and a $30 cleaning fee.

1. Total Charge: $150 ($120 + $30 cleaning fee)
2. State Sales Tax (7%): $10.50
3. County Innkeeper’s Tax (7%): $10.50
4. Total Taxes: $21
5. Guest’s Total Payment: $171

Monroe County

Monroe County hosts are subject to a modest 6% as an innkeeper’s tax rate. The county uses these funds to focus on promoting tourism in the area.

Example: A $100/night rental for a 2-night stay and a $40 cleaning fee.

1. Total Charge: $240 ($200 + $40 Cleaning fee)
2. State Sales Tax (7%): $16.8
3. County Innkeeper’s Tax (6%): $14.40
4. Total Taxes: $31.20
5. Guest’s Total Payment: $271.20

Hendricks County

The Innkeeper’s Tax rate in Hendricks County is 8%, one of the highest in all of Indiana. However, hosts can also think of it as a future investment because the government uses it to promote tourism within the county, helping them secure more bookings in the long run.

Example: A $180/night rental for a 5-night stay and a total of $100 in cleaning fees.

1. Total Charge: $1,000 ($900 + $100 cleaning fee)
2. Gross Retail Tax (7%): $70
3. Hendricks County Innkeeper’s Tax (8%): $80
4. Total Taxes: $150
5. Guest’s Total Payment: $1,150

Dubois County

The Innkeeper’s tax in Dubois County is levied at a rate of 5% on the gross retail income derived from lodging income and is in addition to the state gross retail tax.

Example: A $175/night rental for 3 nights and a $50 cleaning fee.

1. Total Charge: $575 ($525 + $50 cleaning fee)
2. Gross Retail Tax (7%): $40.25
3. Dubois County Innkeeper’s Tax (5%): $28.75
4. Total Taxes: $69
5. Guest’s Total Payment: $1,120

Jefferson County

Finally, Jefferson County hosts are subject to one of the lowest Innkeeper’s tax rates in the entire state at only 4%. However, there have been some talks to increase it to 8%, making it more in line with other nearby counties. So, Jefferson County hosts should be on the lookout.

Example: A $200/night rental for a 5-night stay and a $100 cleaning fee.

1. Total Charge: $1,100 ($1000 + $100 cleaning fee)
2. Gross Retail Tax (7%): $77
3. Jefferson County Innkeeper’s Tax (4%): $44
4. Total Taxes: $121
5. Total Cost for Guest: $1,221

Wrapping Things Up

Indiana’s short-term rental tax landscape continues to evolve. The state passed House Bill 1035 in 2018, which prevents local governments from banning short-term rentals outright but allows for reasonable regulation. As more municipalities adapt to the growing short-term rental market, staying informed about local ordinances and tax changes is a must for any Indiana-based host.

To keep up with ongoing regulation changes and tax rates applicable to Indiana short-term rental owners, make sure to check out the official Indiana Government Department of Revenue website.