Occupancy tax is a tax on the rental of rooms that the city, county, state or country may require; it is generally owed on the price of accommodations or any additional fees like cleanings or extra guests. An occupancy tax can also be referred to as a lodging tax, a room tax, a sales tax, a tourist tax, or a hotel tax.

In some places, occupancy tax is required on a per person, per night basis. There are typically long-term stay exceptions that exempt reservations over a certain number of nights.

Occupancy tax is generally paid by the guest, but the obligation to remit the taxes to the government usually falls on the host. We expect all hosts to familiarize themselves with and follow their local laws and regulations.

Who is responsible for occupancy taxes?

Hotel owners, operators or managers must collect state hotel occupancy tax from their guests who rent a room or space in a hotel. The tax applies not only to hotels and motels, but also to bed and breakfasts, condominiums, apartments, and houses rented out for less than 30 days.  

How much is Hotel Occupancy Tax?

  • The state hotel occupancy tax rate is 6 percent (.06) of the cost of a room.
  • Cities and certain counties and special purpose districts are authorized to impose an additional local hotel tax that the local taxing authority collects.

 

    • Due Date
      • Monthly: 20th day of the month following the end of each calendar month (for example, April 20 for March activity).
      • Quarterly (if qualified): 20th day of the month following the end of the calendar quarter (for example, April 20 for first quarter activity).

 

    • Penalties and Interest
      • A $50 penalty is assessed on each report filed after the due date.
      • If tax is paid 1-30 days after the due date, a 5 percent penalty is assessed.
      • If tax is paid over 30 days after the due date, a 10 percent penalty is assessed.
      • Interest – Past due taxes are charged interest beginning 61 days after the due date.
      • To calculate interest on past due taxes, visit Interest Owed and Earned.

 

What are the Hotel Tax Exemptions?

There are four types of guests who can claim exemption from state hotel tax:

  • Nonprofit religious, charitable or educational organizations:

 

    • Religious organizations are nonprofit churches and their guiding or governing bodies. Missionary organizations, Bible study groups or churches that are made up of only family members do not qualify.
    • Charitable organizations are nonprofit organizations that devote all or substantially all of their activities to providing food, clothing, medicine, medical treatment, shelter or psychological counseling directly to indigent and similar individuals for little or no charge. Not included are fraternal organizations and social, professional and business groups.
    • Educational organizations include independent school districts, public or nonprofit private elementary and secondary schools, and Texas institutions of higher education.

 

  • specific nonprofit entities
  • government
  • permanent residents

 

Retailers, including hotel and motel operators, can search Texas comptroller records to find and obtain online verification of an organization’s exemption from Texas franchise tax, sales and use tax, and hotel occupancy tax.

Employees of nonprofit qualifying organizations are also exempt when traveling on official organization business. Representatives claiming an exemption who are not employees of the organization must pay with the organization’s funds (check, credit card or direct billing) to obtain the exemption.

How is Hotel Occupancy Tax used?

Funds from the state six percent hotel occupancy tax flow directly to the Texas Comptroller’s office and are largely used for the general governmental operations of the State. A portion of the state hotel occupancy tax revenue also goes toward funding tourism promotion through Texas’s ad campaign

How to apply for a Hotel Occupancy Tax Permit?

While the Comptroller’s office does not issue printed hotel tax permits, you can get hotel occupancy forms here. https://comptroller.texas.gov/taxes/hotel/forms/

Also find the Occupancy Tax Questionnaire (PDF) to be sent to the Comptroller’s local field office.

Contact our THLA team if you have any questions.

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