Arkansas short-term rental taxes start at 8.5% of gross booking revenue: a 6.5% state sales tax plus a 2% state tourism tax on lodging. Local city and county taxes add another 0% to roughly 5% on top, so the total rate depends on where the property sits. If you list on a platform like Airbnb, the platform generally collects and remits these taxes for you. If you rent directly, the responsibility is yours, and Arkansas penalties for missed filings climb to 35% of the tax owed.
The 6.5% State Gross Receipts Tax
Arkansas treats short-term lodging as a taxable service. Furnishing a condo, townhouse, rental house, guest room, suite, or any other accommodation to a transient guest falls under the state gross receipts tax.1Legal Information Institute. Arkansas Gross Receipts Tax Regulations – GR-8 Services Subject to Tax The base state rate is 6%, and additional state levies bring the combined state sales tax to 6.5%.2Code of Arkansas Rules. 26 CAR 30-103 – Amount and Nature of Tax
The tax applies to gross receipts, meaning the full rental charge before your expenses. Charge a guest $150 a night and you owe the state 6.5% on the full $150. It applies whether you rent through a platform or book guests directly.
The 2% Tourism Tax
On top of the gross receipts tax, Arkansas levies a 2% tourism tax on lodging revenue. It covers the same range of accommodations furnished to transient guests.3FindLaw. Arkansas Code 26-63-402 – Tourism Tax The tourism tax is not an alternative to the sales tax; it stacks with state and local sales taxes on the same booking.4Code of Arkansas Rules. 26 CAR 30-1407 – Tourism Tax That’s how every booking carries at least 8.5% in state-level tax before any local rate is added.
Local City and County Taxes
Arkansas cities and counties set their own sales tax rates that layer on top of the state rate. These vary widely, adding anywhere from 0% to roughly 5% depending on the jurisdiction. A rental in Little Rock, for instance, carries an additional 1.5% city tax and a 1% county tax. A property in a rural area with no city tax may only owe the county rate.
Some Arkansas cities also impose local advertising and promotion taxes or tourism-specific taxes on short-term lodging, separate from the general local sales tax and dedicated to local tourism promotion. Because rates and structures differ from one municipality to the next, confirm with your city or county government which local taxes apply to your specific address before you set guest pricing.
What About the 1% Short-Term Rental Tax?
Arkansas has a separate 1% tax on “short-term rentals,” but this one is a common source of confusion for vacation rental hosts. Under Arkansas Code 26-63-301, that tax applies to short-term rentals of tangible personal property, meaning physical items like construction equipment, party supplies, or audio-visual gear rented for less than 30 days.5Justia. Arkansas Code 26-63-301 – Short-Term Rentals of Tangible Personal Property – Definitions
It does not apply to lodging. Property already subject to the 2% tourism tax is exempt from the 1% tangible personal property rental tax, so vacation rental income is not double-taxed under this provision.5Justia. Arkansas Code 26-63-301 – Short-Term Rentals of Tangible Personal Property – Definitions Vacation rentals fall under the gross receipts tax and tourism tax described above, and that’s the full state picture on the booking itself.
Compensating Use Tax on Out-of-State Purchases
The compensating use tax fills a gap left by the gross receipts tax. If you buy tangible personal property from an out-of-state seller who doesn’t charge Arkansas sales tax, you owe the compensating use tax when you store, use, or consume that property in Arkansas.6Justia. Arkansas Code 26-53-106 – Imposition and Rate of Tax The rate mirrors the state sales tax rate.
For vacation rental operators, this typically comes up with furniture, linens, appliances, and similar items ordered from out-of-state vendors or online retailers who don’t collect Arkansas tax. If the seller didn’t charge it, you’re responsible for reporting and paying the use tax yourself. It’s a routinely overlooked liability that can surface in an audit.
Airbnb, Vrbo, and Marketplace Platform Collection
If you list on Airbnb, the platform collects and remits Arkansas state taxes and applicable local taxes on your behalf. That includes the 6.5% gross receipts tax, the 2% tourism tax, and city and county taxes tied to the property’s location. The taxes are handled at checkout and sent to the Arkansas Department of Finance and Administration directly.
Arkansas requires marketplace facilitators that exceed $100,000 in Arkansas sales or 200 transactions in the current or previous year to collect and remit sales and use tax. Hosts who sell exclusively through a qualifying marketplace facilitator generally don’t count those platform-facilitated sales toward their own nexus thresholds. If you also rent directly to guests outside the platform, though, you’re responsible for collecting and remitting all applicable taxes on those bookings yourself. And even where a platform is doing the collection, the underlying tax liability sits with the operator, so you need to understand what’s owed if an audit comes.
Registering with the DFA and Filing Returns
Before you collect any tax, get a sales tax permit from the Arkansas Department of Finance and Administration. Registration runs through the DFA’s Taxpayer Access Point portal. Once registered, the DFA assigns you a filing frequency based on your expected liability, typically monthly, though lower-volume operators may file quarterly or annually.7Arkansas Department of Finance and Administration. Sales and Use Tax FAQs
File every period, even the empty ones. In an off-season month with no bookings and no tax collected, you still owe a zero-dollar return. Skipping it can trigger penalties even when nothing was due. Keep detailed records of rental income, tax collected, and any exemptions claimed. Clean documentation is what separates a routine review from a costly assessment if the DFA audits you.
Penalties for Late Filing or Payment
Arkansas penalties escalate quickly. Miss a return deadline and the state adds a 5% penalty on the tax owed for the first month, plus another 5% for each additional month the return goes unfiled, capping at 35%.8FindLaw. Arkansas Code 26-18-208 – Penalties
The failure-to-pay penalty runs on the same schedule. File on time but don’t pay the tax shown on the return, and you owe 5% of the unpaid amount for the first month plus 5% for each additional month, again capping at 35%.8FindLaw. Arkansas Code 26-18-208 – Penalties Interest accrues on top of the penalties. Penalties can be waived on a showing of reasonable cause, but not knowing rarely qualifies. For an operator collecting $2,000 per month in taxes, a six-month lapse means about $700 in penalties before interest, straight off your profit.