Texas has no statewide preemption law for short-term rentals. That means every city and county sets its own rules. The state's role is limited to taxation, but it's critical for your underwrite: 6% hotel occupancy tax applies to all STRs statewide, plus local sales tax and any local hotel taxes that vary by jurisdiction.
| Rule | Detail |
|---|---|
| Statewide preemption | None. Local governments retain full authority to regulate, permit, or ban STRs. |
| State hotel occupancy tax | 6% applies to all short-term rental revenue (stays under 30 days). |
| State sales tax on STRs | 6% Texas state sales tax applies to STR revenue. |
| Local sales tax | Varies by city and county. Austin: 2% (combined local rate). Other TX cities: 0.5% to 2%. |
| State-level permit | No statewide STR permit. Permit requirements are entirely local. |
| Tax remittance | Platforms (Airbnb, VRBO) collect and remit state hotel tax and state sales tax. Local hotel taxes often remitted by host. Confirm platform coverage. |
Statewide preemption
None. Local governments retain full authority to regulate, permit, or ban STRs.
State hotel occupancy tax
6% applies to all short-term rental revenue (stays under 30 days).
State sales tax on STRs
6% Texas state sales tax applies to STR revenue.
Local sales tax
Varies by city and county. Austin: 2% (combined local rate). Other TX cities: 0.5% to 2%.
State-level permit
No statewide STR permit. Permit requirements are entirely local.
Tax remittance
Platforms (Airbnb, VRBO) collect and remit state hotel tax and state sales tax. Local hotel taxes often remitted by host. Confirm platform coverage.
Texas STR markets vary sharply. Austin is the most heavily regulated major market, with a strict licensing requirement and zoning-based restrictions on non-owner-occupied properties. Most other Texas cities take a lighter approach. Your due diligence starts with the specific city and zoning, not the state.
Austin requires a License to Operate (LTO) for all STRs. Type 1 licenses (owner-occupied, primary residence) are available broadly. Type 2 licenses (non-owner-occupied investment properties) are banned in single-family residential zones but allowed in multi-family and commercial zones. If your client is underwriting an investment STR in Austin, zoning is the first check before any pro forma work. See the full Austin city page for permit types, zoning restrictions, taxes, and underwriting implications.
Most other Texas cities have lighter regulatory touch than Austin. Some require business licenses or local permits; others do not. All must comply with the 6% state hotel tax. Local hotel taxes vary. Investor-facing markets like San Antonio, Dallas, Houston, and Corpus Christi generally permit STRs with business license or operational compliance, not zoning bans.
For Texas deals, the state-level analysis is straightforward: budget 12% of gross nightly revenue for the stacked tax load in high-tax cities like Austin (6% state hotel tax + 6% state sales tax + 2% local sales tax). The regulatory complexity is entirely at the local level, which means your due diligence needs to drill into the specific city and zoning district, not just the state.
Sources
This is general information, not legal advice. Verify current rules with local authorities before advising a client.
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Does Texas have a statewide STR preemption law?
No. Texas has not passed a preemption law limiting local governments' authority to regulate short-term rentals. Each city and county sets its own rules.
Does Airbnb collect Texas state hotel tax?
Yes, Airbnb and VRBO both collect and remit the 6% Texas state hotel tax. However, platforms may not collect all local hotel taxes or occupancy fees. Confirm coverage with the platform and your local jurisdiction before advising clients.
Which Texas markets are best for STR investors?
Austin has strong nightly rates but strict zoning controls on non-owner-occupied properties. Most other Texas cities have lighter regulatory environments. The Smoky Mountain corridor (Broken Bow, Oklahoma, just outside Texas) is highly permissive. Market selection depends on both regulation and demand.
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