The Texas hotel occupancy tax is a 6 percent state tax on any room rented for sleeping accommodations at $15 or more per day, and cities, counties, and venue districts can add local hotel taxes on top, up to a combined ceiling of 17 percent.1State of Texas. Texas Tax Code 156.051 – Tax Imposed2Texas Comptroller of Public Accounts. Local Hotel Occupancy Tax Overview It covers hotels, motels, bed and breakfasts, and short-term rentals booked through platforms like Airbnb and Vrbo. Operators collect it from guests and remit it to the Texas Comptroller of Public Accounts.
Rates and the $15-Per-Day Threshold
The state rate is a flat 6 percent of the room price.3Texas Comptroller of Public Accounts. Hotel Occupancy Tax It applies only when the room costs at least $15 per day. Rent a space for less, and no state hotel tax is due.1State of Texas. Texas Tax Code 156.051 – Tax Imposed Most stays clear that floor easily, but it can matter for deeply discounted or off-season rates.
Local governments layer their own taxes on top of the 6 percent. Most cities can impose up to 7 percent, and counties can add up to 7 percent. Cities funding a convention center may add another 2 percent, and sports or community venue districts can tack on more. State law caps the combined total from all sources at 17 percent, so no guest should see a rate above that.2Texas Comptroller of Public Accounts. Local Hotel Occupancy Tax Overview A downtown hotel in a major city often lands in the 15 to 17 percent range; a rural property with no county or venue tax may collect only the 6 percent state rate. Check with your city and county to confirm exactly which local rates apply to your property.
What’s Taxable and What Isn’t
The tax applies to more than the nightly room rate. Any mandatory charge tied to the use or preparation of the room is taxable, including cleaning fees, pet charges, and rollaway bed fees.4Texas Comptroller of Public Accounts. Quick Reference Guide for Hotels If a guest has to pay it to stay in the room, it’s part of the room price.
Personal services billed separately are not taxable. Charges for telephone calls, dry cleaning, room service food, and similar items fall outside the tax when they appear as distinct line items on the bill.1State of Texas. Texas Tax Code 156.051 – Tax Imposed The statute draws its line at services “related to cleaning and readying the room for use.” Bundle non-taxable services into the room rate and you’ll tax the whole thing unnecessarily.
Cancellation fees trip up a lot of operators. A cancellation charge is taxable only when the guest pays an amount equal to the full room rate. A flat penalty or a percentage less than the room rate is not taxed.4Texas Comptroller of Public Accounts. Quick Reference Guide for Hotels The same rule covers no-show charges, room attrition fees for group bookings, and early or late departure fees.
Who Is Exempt
Permanent Residents
A guest with the right to use a room for at least 30 consecutive days, with no break in payment, is treated as a permanent resident and owes no hotel occupancy tax for that stay.5State of Texas. Texas Tax Code 156.101 – Exception – Permanent Resident The operative phrase is “right to use or possess,” and a written agreement covering the full 30 days is the cleanest way to prove it. If the guest checks out early or lets a payment lapse, the exemption fails and tax is owed for the entire stay.
Federal Employees on Official Business
Federal employees traveling on official business, including military personnel, are exempt from both state and local hotel occupancy taxes when they present a valid government ID.6Texas Comptroller of Public Accounts. Hotel Occupancy Tax Exemptions They should give the hotel a completed Form 12-302, the Texas Hotel Occupancy Tax Exemption Certificate, along with their ID at check-in.
State Officials — But Not Regular State Employees
This is where operators make the most mistakes. Regular Texas state employees are not exempt. They pay the full hotel tax and get reimbursed through their agency’s travel voucher system. They should not present a hotel tax exemption certificate.7Texas Comptroller of Public Accounts. State Employees Not Exempt from Hotel Occupancy Tax
A narrow group of designated state officials does qualify for an exemption from both state and local hotel taxes: judicial officials, heads of state agencies, members of state boards and commissions, and members of the Texas Legislature. They receive a special hotel tax exemption photo ID or card from their employing agency. When they present that card with a completed Form 12-302, the hotel should not charge any hotel occupancy tax.7Texas Comptroller of Public Accounts. State Employees Not Exempt from Hotel Occupancy Tax
Qualifying Nonprofits
Employees and representatives of qualifying nonprofit religious, charitable, and educational organizations are exempt from the state hotel tax when traveling on official business. They still pay local hotel taxes unless the city or county has its own exemption.6Texas Comptroller of Public Accounts. Hotel Occupancy Tax Exemptions Not every self-described nonprofit qualifies. The entity must hold a letter of hotel tax exemption from the Comptroller or appear on the Comptroller’s online list of exempt entities.8Cornell Law Institute. 34 Texas Administrative Code 3.161 – Definitions, Exemptions, and Tax Responsibilities
How the room is paid matters here. An employee of an exempt organization can pay with personal funds and still claim the exemption. A representative who is not an employee must pay with the organization’s money, whether by organizational check, credit card, or direct billing.8Cornell Law Institute. 34 Texas Administrative Code 3.161 – Definitions, Exemptions, and Tax Responsibilities An outside consultant paying with a personal card and expecting the organization’s exemption to cover it won’t work. For religious groups, the exemption reaches nonprofit churches and their governing bodies; evangelistic organizations, religious study groups, and family-only churches do not qualify.6Texas Comptroller of Public Accounts. Hotel Occupancy Tax Exemptions
Paperwork for Every Exempt Stay
Every exempt transaction requires the operator to collect and retain a completed Form 12-302 along with documentation matching the type of exemption claimed. If an auditor asks for the certificate and you can’t produce it, you become personally liable for the tax that should have been collected. There is no grace period for missing paperwork.
Registering and Keeping Records
Before collecting any hotel occupancy tax, register with the Texas Comptroller through the eSystems portal. Registration produces an eleven-digit Texas Taxpayer ID that you’ll use on every tax report and in all correspondence with the Comptroller’s office.3Texas Comptroller of Public Accounts. Hotel Occupancy Tax
Keep complete, detailed records of receipts, exemptions, and reimbursements so reports can be verified by a state auditor.9Texas Comptroller of Public Accounts. Texas Hotel Occupancy Tax Report Retain them for at least four years: guest receipts, exemption certificates, and copies of every report you file. If you can’t back up the numbers on your reports during an audit, you’ll owe the tax plus penalties.
Buying an existing lodging business is a separate trap. A buyer who closes without first obtaining a Certificate of No Tax Due from the Comptroller becomes liable for the seller’s unpaid hotel taxes, up to the full purchase price.10Texas Comptroller of Public Accounts. Buying an Existing Business Request that certificate before closing and hold back enough of the purchase price to cover any balance the Comptroller identifies.
Filing and Paying
Operators report the tax on Form 12-100, the Texas Hotel Occupancy Tax Report. The form takes total receipts for the period, subtracts exempt receipts from permanent residents and exempt organizations, and applies the 6 percent rate to what remains.9Texas Comptroller of Public Accounts. Texas Hotel Occupancy Tax Report
How you file depends on how much tax you paid in the prior state fiscal year (September 1 through August 31). Under $50,000, you can use the Comptroller’s Webfile system or submit paper forms. At $50,000 or more, Webfile is the only option.3Texas Comptroller of Public Accounts. Hotel Occupancy Tax
Most operators file monthly. Monthly reports are due by the 20th of the month following the reporting period, so March activity is due April 20.3Texas Comptroller of Public Accounts. Hotel Occupancy Tax Operators who collect smaller amounts of state tax may qualify for a quarterly schedule. Either way, the deadline is firm.
The 1 Percent Timely Filing Discount
File and pay on time, and you can keep 1 percent of the tax collected as reimbursement for the cost of collecting it.11Texas Comptroller of Public Accounts. Revenue Object 3139 – Hotel Occupancy Tax On a $10,000 quarterly tax bill, that’s $100 retained. It disappears entirely if you file even one day late.
Penalties and Interest
Late filers face three stacked consequences:
- A flat $50 penalty on every report filed after its due date, regardless of the amount owed.
- A 5 percent penalty on the unpaid tax if it’s paid 1 to 30 days late, doubling to 10 percent after 30 days.
- Interest that starts accruing on past-due tax 61 days after the due date.
These charges compound quickly. A single missed quarterly filing can produce a penalty-and-interest bill that rivals the original tax.
If the business itself can’t or won’t pay, the Comptroller can pursue the individuals who were responsible for collecting and remitting the tax. Any officer, manager, director, or employee who had a duty to handle the tax and willfully failed to pay it over can be held personally liable for the full amount, including penalties and interest. Dissolving the business entity doesn’t erase this liability; the responsible person stays on the hook after the company is gone.10Texas Comptroller of Public Accounts. Buying an Existing Business