Ohio enacts new excise tax for short-term rental properties and hotel lodging

On February 19, 2025, Ohio lawmakers introduced Senate Bill 104, a legislative proposal aimed at addressing the growing landscape of short-term rental properties and their economic implications for local municipalities. This bill seeks to empower local governments to levy an excise tax of up to three percent on transactions involving lodging provided by hotels and short-term rental properties, such as those listed on platforms like Airbnb.

The primary purpose of Senate Bill 104 is to provide municipalities and townships with a new revenue stream to support local services and infrastructure, which have increasingly come under strain due to the rise of short-term rentals. By allowing local governments to impose this tax, the bill aims to create a more equitable financial framework that reflects the economic activity generated by transient guests.

Key provisions of the bill include definitions for "local product" and "short-term rental platform," clarifying the scope of the legislation. Notably, the bill stipulates that if a municipality or township decides to repeal the tax, it cannot reimpose it if a county tax remains in effect, ensuring a level of consistency in tax policy across jurisdictions.

The introduction of Senate Bill 104 has sparked notable discussions among stakeholders. Proponents argue that the tax will help fund essential services, such as public safety and infrastructure maintenance, which are often impacted by the influx of short-term renters. Critics, however, express concerns that additional taxes could deter tourism and negatively affect the local economy, particularly for small businesses reliant on transient visitors.

The economic implications of this bill are significant. As short-term rentals continue to proliferate, local governments are grappling with how to manage the associated challenges, including housing availability and neighborhood dynamics. By enabling municipalities to generate revenue from these rentals, Senate Bill 104 could help balance the interests of residents, local businesses, and visitors.

As the bill moves through the legislative process, its future remains uncertain. Lawmakers will need to navigate the competing interests of various stakeholders, including property owners, local businesses, and residents, to determine the best path forward. The outcome of this legislation could set a precedent for how Ohio manages the evolving landscape of short-term rentals and their impact on local economies.