The Complete Minnesota Airbnb Host Lodging Tax Guide: Airbnb Minnesota Occupancy Tax Breakdown

As a new host, you’re likely focused on creating the perfect listing, setting competitive rates, and designing an unforgettable guest experience. But, overlooking tax obligations can turn your profitable rental into a financial headache. The good news? Once you understand the specific tax requirements for your location, it gets easier. So, here’s our complete breakdown of the Minnesota lodging and occupancy taxes that apply to Airbnb and VRBO hosts.

Minnesota-Wide Lodging Tax Requirements for Airbnb Hosts

Every short-term rental host in Minnesota must collect and remit the state sales tax of 6.875% on all rentals less than 30 consecutive days. This tax applies to the full rental price, including any cleaning fees or additional charges collected from guests. This is required for rentals listed on Airbnb, VRBO, other booking platforms, and direct bookings.

Example: For a 5-night stay with a nightly rate of $150 and a $75 cleaning fee.

• Total rental amount: ($150 × 5) + $75 = $825
• State sales tax: $825 × 0.0675 = $56.72
• Amount to collect from guest: $881.72

Aside from the state-wide sales tax requirement, there are also a handful of cities in Minnesota that implement their own lodging taxes. Hosts are required to pay these taxes on top of the sales tax.

County and City-Wide Occupancy Tax Requirements

Minneapolis

Minneapolis hosts face additional tax obligations beyond the state requirements. The city imposes several taxes that can significantly impact your revenue calculations.

Minneapolis charges a 3% lodging tax on accommodations with more than 50 rooms, typically for hotels. Smaller short-term rental properties aren’t required to pay the 3% lodging tax but they are still required to pay the 3% entertainment tax that applies citywide. Additionally, Minneapolis hosts also need to consider the Hennepin County transit tax of 0.5%, Hennepin County sales tax of 0.15%, Metro Area Sales Tax of 0.25%, Metro Area Transportation tax of 0.75%, and the Minneapolis Sales tax of 0.5%.

I understand that these taxes can get a bit complicated, so here’s a quick example computation for a host within the Minneapolis metro area.

Example: For a 3-night stay with a nightly rate of $200 and a $100 cleaning fee:

1. Total rental amount: ($200 × 3) + $100 = $700
2. State sales tax (6.875%): $700 × 0.06875 = $48.13
3. County sales tax (0.15%): $700 × 0.0015 = $1.05
4. County transit tax (0.5%): $700 × 0.005 = $3.50
5. Metro Area sales tax (0.25%): $700 x 0.0025 = $1.75
6. Metro Area transportation tax (0.75%): $700 x 0.0075 = $5.25
7. City sales tax (0.5%): $700 × 0.005 = $3.5
8. Total taxes: $63.63
9. Amount to collect from guest: $763.63

Rochester

Rochester has its own specific tax structure for short-term rentals. Hosts in this city must collect the state sales tax of 6.875% plus the city’s 7% lodging tax on stays under 30 days.

The city’s lodging tax applies to the total rental amount, including any cleaning fees or other charges. Stays of 30 days or more are exempt from these lodging taxes. This brings the total taxes to 13.875% for Rochester hosts.

Example:For a 4-night stay with a nightly rate of $175 and a $90 cleaning fee:

1. Total rental amount: ($175 × 4) = $700
2. Total rate: $700 + $90 = $790
3. Minnesota Sales Tax (6.875%): $790 x 0.06875 = $54.31
4. Rochester tax rate (7%): $790 × 0.07 = $55.30
5. Total Taxes: $109.61
6. Amount to collect from guest: $899.21

Duluth

Duluth has specific tax requirements for short-term rental hosts. Airbnb and VRBO hosts mustcollect a lodging excise tax of 3% of the listing price, including any cleaning fees, for reservations 29 days or shorter.

Example: For a 2-night stay with a nightly rate of $225 and an $80 cleaning fee:

1. Total rental amount: ($225 × 2) = $450
2. Total rate: $450 + $80 = $530
3. State sales tax (6.875%): $530 × 0.06875 = $36.44
4. Lodging excise tax (3%): $530 × 0.03 = $15.90
5. Total taxes: $52.34
6. Amount to collect from guest: $582.34

Wrapping Things Up

As the short-term rental market in Minnesota continues to evolve, so do the tax regulations that apply to them. Stay connected with local host communities, consider working with a tax professional who specializes in short-term rentals, and periodically check for updates from your local tax authorities. Your future self will thank you when tax filing becomes a straightforward process rather than a dreaded annual ordeal.

If you’re looking to learn more about the specific Minnesota lodging and occupancy tax requirements for Airbnb and VRBO hosts, check out the official Minnesota Department of Revenue website.