Hochul Pitches Sales Tax for Short-Term Rentals

New York Gov. Kathy Hochul is once again looking to get short-term rentals on par with hotels, in terms of state taxes.

Hochul proposed a sales tax for short-term rentals in her executive budget plan, the Times Union reported. Her administration estimates the tax would generate $16 million in annual revenue for the state.

The proposal would also undo the “bungalow rule,” which allows cabins without hotel-like amenities to avoid the sales tax. It’s unclear if the tax would be passed down to consumers, though it’s intended to be collected by a short-term rental company, rather than the person renting their home.

The proposal has support from Airbnb, which said it was “pleased the governor recognizes the important role short-term rentals play in supporting New York’s tourism economy.”

The company, which already has voluntary tax agreements in dozens of New York counties, has said the centralization of collection and remittance could streamline the process.

For Airbnb, it would also have the underlying benefit of protecting short-term rentals’ place in the state at a time where some municipalities — including those in New York City — are making it more difficult for the company to operate.

This isn’t the first time the state has tried to institute a sales tax on short-term rentals. Hochul had it in her first budget as governor, while predecessor Andrew Cuomo also had a similar rule in his 2021 executive budget. Neither made it to the finish line.

The state Legislature needs to come to an agreement on the proposal for it to be included in the final budget, which is due in roughly two months.

Other policies in Hochul’s executive budget proposal include a replacement for the 421a property tax break, an extension on the deadline for the lapsed program and an authorization for New York City to legalize existing basement and cellar apartments.

— Holden Walter-Warner