Indiana Hotel Tax Rate: State, County, and Exemptions

The Indiana hotel tax rate is a flat 7% state sales tax plus a county innkeeper’s tax that generally runs from about 3% to 10%, so most guests pay a combined 10% to 17% on their room. Indianapolis is the top of that range at 17%; a rural county with no innkeeper’s tax is the bottom at 7%.1Indiana Department of Revenue. County Innkeeper’s Tax – Rates and Effective Dates

The 7% State Sales Tax

Indiana treats any rental of a room, lodging, or similar accommodation for fewer than 30 consecutive days as a taxable retail transaction, and the tax rate is 7% of the total you pay.2Indiana General Assembly. Indiana Code 6-2.5-4-4 – Renting or Furnishing Rooms, Lodgings, or Other Accommodations3Indiana Department of Revenue. Sales Tax Information Bulletin 90 The rate is uniform statewide and covers hotels, motels, inns, vacation cabins, campground spaces, and short-term house or apartment rentals booked through any channel.4Indiana Department of Revenue. Sales Tax Information Bulletin 41 – Sales Tax Application to Furnishing of Accommodations

The County Innkeeper’s Tax

On top of the state 7%, counties can add their own innkeeper’s tax. The county council votes on whether to impose it and at what rate, which is why the total varies so much by location.5Indiana Department of Revenue. Indiana General Tax Information Bulletin 204 – County Innkeeper’s Taxes

Most participating counties charge between 3% and 6%. A few sit higher: Daviess County charges 9%, and Marion County (Indianapolis) charges 10%, effective since September 2009.1Indiana Department of Revenue. County Innkeeper’s Tax – Rates and Effective Dates Not every county has adopted an innkeeper’s tax, so in some rural areas the only lodging charge is the 7% state tax. The Department of Revenue publishes a current rate table, and it’s worth checking before you book because rates change from time to time.

What Parts of Your Bill Get Taxed

Both the state sales tax and the county innkeeper’s tax apply to the total gross receipts from furnishing accommodations, and that can include charges that appear as separate line items.6Indiana Department of Revenue. Sales Tax Information Bulletin 41 – Sales Tax Application to Furnishing of Accommodations The general rule: if a charge is mandatory and tied to your daily stay, it gets taxed. If it’s optional, refundable, or a one-time fee unrelated to length of stay, it usually doesn’t.

  • Mandatory resort or amenity fees are taxable.
  • Voluntary resort fees are not taxable, provided you truly can decline them.
  • Pet clean-up and smoking clean-up fees are not taxable, because they’re flat charges unrelated to how long you stay.
  • Refundable damage deposits are not taxable, since you get the money back.
  • Mandatory gratuities are taxable when the hotel keeps or distributes them as employee wages. A separately stated tip that goes entirely to the server is not.

Stays of 30 Days or Longer

Any rental of 30 or more consecutive days is not subject to either the state sales tax or the county innkeeper’s tax.6Indiana Department of Revenue. Sales Tax Information Bulletin 41 – Sales Tax Application to Furnishing of Accommodations Watch how this plays out in practice, though. If you’re billed less often than monthly, the hotel must charge you tax on the first 29 days. Once you hit day 30 you become eligible for a refund of the tax already paid, either from the hotel directly or by filing a claim with the Department of Revenue on Form GA-110L.

This is where money gets left on the table. If you know your stay will run 30 days or more, ask the front desk about the refund process before check-in. Some hotels handle it automatically; others require you to file the claim yourself.

Federal Employee and Nonprofit Exemptions

Employees of the U.S. federal government traveling on official business are exempt from both the state sales tax and the county innkeeper’s tax on lodging.7Indiana Department of Revenue. Indiana General Sales Tax Exemption Certificate – Form ST-105 To claim it, the traveler presents a completed Form ST-105 at check-in and pays with a Government Travel Charge Card.8Defense Travel Management Office. Save on Lodging Taxes in Exempt Locations The form uses the agency’s Federal Identification Number in place of a state ID. Any incomplete section on the ST-105 invalidates the exemption and the hotel has to charge the tax.

Nonprofits are treated more narrowly than people often expect. A registered Indiana nonprofit can rent meeting or event space tax-free when the space is used for the organization’s exempt purpose. Sleeping rooms booked for individual officers or members are not exempt, even when the organization pays directly from its treasury, and a member who books a room and gets reimbursed later owes the tax too. Nonprofits also cannot use Form ST-105, which excludes them by its terms. Qualifying nonprofits register with the Department of Revenue and use Form NP-1 instead.

Booking Through Airbnb or Vrbo

If you book a short-term rental through a platform like Airbnb or Vrbo, you’ll see both the state sales tax and any applicable county innkeeper’s tax added at checkout. Indiana law requires marketplace facilitators to register with the state and collect both taxes on behalf of their hosts, and that obligation can’t be shifted to the individual host by contract.9Indiana Department of Revenue. DOR: Marketplace Facilitators A host who lists a property independently, such as on their own website, has to register with the Department of Revenue and collect both taxes directly.4Indiana Department of Revenue. Sales Tax Information Bulletin 41 – Sales Tax Application to Furnishing of Accommodations