2023 Lodging Tax Rates Ranked Per State

Travel and tourism have been a hot topic over the past few years. From the pandemic abruptly limiting travel and revenge travel chaotically bombarding 2022, to the rise of the short-term vacation rental industry and cities determining how best to regulate new rentals in their area, understanding an array of travel-related topics is valuable to create a better atmosphere for tourism. When digging into similar topics related to our industry, we found one important question often being asked by travelers – what are all of these tax fees being added to my stay?

Important Terms to Know

Before we dig into the research, let’s hit on a few important key terms to remember. Oftentimes, when referring to the added percentage that we pay on top of our accommodations, we will see the terms State Sales Tax, State Lodging Tax, Bed Tax, State Occupancy Tax, Hotel Tax, or Transient Occupancy Tax (TOT). Some government sites use these interchangeably, but it’s important to note that they are not the exactly same thing. Some are set at a state level and others are set by a local level. Some are split with tourism boards and associations while others are not. For the purposes of our study, we will be using these terms interchangeably as well to hit on both statewide tax rate percentages and local tax rate percentages.

Key Findings

  • The average of the most expensive lodging tax rates is 20%, while the average of least expensive lodging tax rates is only 9%. In states like Alabama, Idaho, and Kansas, you can expect to pay a maximum of over 22% on top of your accommodation cost. For states like Montana, South Dakota, and New Hampshire, you can expect to pay an 8%-8.50% additional expense added to your accommodation cost.
  • The total added sum of the 10 states with the least lodging options is 6,477. In comparison, the top state with the most lodging options is Texas which has 7,269 hotel options on average.

Several States Add 11%-15% Additional Tax Rates to Your Stay

Lodging taxes, state sales taxes, and local tax rates vary from state to state and county to county (sometimes even city to city.) To get a better understanding of the overall tax percentage added to each area, we came up with a maximum amount that you would be spending on top of your initial accommodation cost. This percentage includes the lodging tax rates at a state level and local level (when applicable), the sales and use tax at a state level and local level (when applicable), and any tourism fees.

Not every state has a state/local sales tax, tourism fees, or local/state lodging fees. For example, Connecticut has a 6.35% state sales tax rate, but that isn’t including on top of accommodation fees. What is included is an 11%-15% transient occupancy tax rate. To figure out the maximum percentage, we took the maximum number in the range – 15%. Since there was no other fees to add to it, Connecticut’s maximum percentage added remains at 15% total.

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Other states like California and Alaska don’t have a state sales tax or local sales tax imposed on their final cost of accommodation. This means that the only additional tax is the local lodging tax. For California, local lodging tax rates range from 8%-15%. For Alaska, it ranges from 0%-12%. That means, for California, the maximum additional tax rate is 15%, and for Alaska, it is 12%.

Let’s look at some of these in actual numbers. Say you wanted to stay at a hotel in Malibu, California the 15th-17th of December, 2023. The room that you book is $518 for two nights. If the maximum additional rate is 15%, that means you can multiply $518 by 15% to figure out the value of taxes being added to your rate. That’s $77.70. Add $77.70 to $518 and you have your total (including taxes) of $595.70. In comparison, take somewhere like Tennessee for those same dates. For 2 nights in Cookeville, the initial price is $264. The maximum rate percentage of Tennessee is 20%. Multiply 20% by $264 and get $52.80. Add that $52.80 to the original $264 and the new total (taxes included) is $316.80.

There’s No Tax Rates Like 23.00% in the States of Alabama and Idaho…

Among some of the most expensive lodging tax rates, you will find that Alabama and Idaho have both risen to the top with an additional tax percentage of 23% added on to your reservation. Alabama has a state lodging tax of 4%-5% depending on your location, a county lodging tax ranging from 1%-6%, and a municipality local lodging tax of 2%-12%. This means it’s possible that you could pay up to 23% additional taxes on your rental. Of course, since there are a lot of different ranges added to this amount, it could be slightly less.

For Idaho, there is a general state sales tax of 6%. In addition, certain districts and counties add an additional 5%. Then, you have the travel convention tax of 2% and a range of local lodging/option taxes of 1%-10%. Again, since there are different ranges and different districts that charge various different amounts, it could be slightly less.

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Other than the most expensive, on the least expensive side we have states like Montana, South Dakota, and New Hampshire. Montana has no state sales and use tax, but it does have a lodging facility use tax of 4%. It also has a bed tax of 4%. This means, at most, you are looking at around 8% added on to your accommodations cost. For South Dakota, there is a 4.5% state sales and use tax rate, an excise tax rate of 2%, a 1.5% tourism tax, and a 1%-2% local lodging tax rate.

Let’s say I am booking a hotel in South Dakota. For 2 nights, the price is $271.53. If I multiply that by 8%, I get $21.69. Add that to the total price and your new total is a little over $293. Knowing the approximate amount that you would have to pay with added fees means being more prepared and avoiding the shock that comes with added expenses.

Fewer Hotels Means Less Expensive Tax Rates Added to Your Stay

There are plenty of destinations that simply don’t have a lot of tax rates added to your stay. We’ve noticed that less-frequented states with fewer hotels are the destinations that have fewer tax rates added to your accommodation cost. Cities like North Dakota, Nebraska, Delaware, and South Dakota are the first few on the list of least lodging options, and their maximum tax rate percentages all stay below 11%. Meanwhile, some of the cities that are highly frequented and have many hotels are places like Texas, Florida, California, and Tennessee. Those percentages all range over 15%, with only one state (North Carolina) faltering below at 13.50%.

For lodging options, we didn’t focus on the number of rooms that a hotel has, but rather the number of hotels within the area. This is why we see a popular state like Nevada on our least lodging options list. Nevada has several hotels with thousands of rooms but fewer all-around hotels. While Las Vegas, Nevada has an exceeding amount of rooms, the entire state still has on average 845 hotels.

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This information correlates with the facts we know pretty well. Where tourism is high, fees are high. This is because the tax rates added to your accommodation can also contribute to the overall tourism department in the area. These fees are vital to helping the local economy and hospitality industry flourish.

Where there is also a high population, there are a lot of changes within the city and a larger push for tourism development. If one of these states with the least lodging options were to experience a rush in travel & tourism in their area, odds are they would opt for more lodging and accommodations options, thus also revisiting their added tax rates to help improve the area.

How Does This Affect Tourism and Why Is It So Important?

It may just look like a lot of added fees and numbers, but what do these percentages mean exactly? Tourism is important for state and city development. The more tourists, the more pressure is on the city to keep it clean and promote tourism. The more tourists, the more business and revenue that local shops and restaurants in the area gain. These tourism fees, lodging tax fees, tourist development fees, and state sales and use tax fees all go into making the destination better overall for both tourists and locals alike.

To gain some more knowledge on each state’s lodging taxes, take a look at this list. Search a state you are visiting soon, see how many hotels they have in the area, and learn about the lodging tax rates that they include on top of accommodation costs:

For travelers, they get to make the difference in these locations. While it may seem like a nuisance to pay such added taxes and fees, these fees are helping to improve the city that tourists visit, as well as the lives of the people within that city, the revitalization of that city, and the hospitality industry as a whole. In fact, tourism is known to help create jobs for the local community, help the development of these cities, and help reduce local poverty.

If you like visiting states like New York, Maine, Hawaii, and Tennessee, now you can get a glimpse into why these destinations are doing so well when it comes to tourism.

Methodology & Sources

HawaiianIslands.com analyzed each individual state government site in order to find the applicable local and statewide tax rates for accommodations. After we found the rates, we added the state lodging tax rates to the state sales and use tax (if applicable), the local sales and use tax (if applicable), the local lodging tax rates, and any other tourism development fees. For statewide lodging tax rates and sales tax rates, there was a definitive number. For local tax rates and sales tax rates, there were a range of numbers. For each local tax rate, we took the maximum percentage number to dictate the highest possible percentage of taxes added to the total stay.

For an accurate count of hotel lodging options, we analyzed several highly reputable booking sources and averaged out the count of hotels available. It is important to note that this is an average of all options and not the official hotel count within the area.