State hotel occupancy tax applies to charges of $15 or more per day for sleeping accommodations, meeting rooms and banquet rooms in a hotel or motel. The tax also applies to lodging at bed and breakfasts, condominiums, apartments and houses rented for less than 30 consecutive days. The state hotel tax rate is 6 percent.
Local hotel taxes apply only to charges of at least $2 per day for rooms ordinarily used for sleeping. The Comptroller’s office administers the state portion of the hotel tax. Each local government determines its local hotel tax rate, and the tax collected is sent to the local government entity. Information about local hotel tax responsibilities is available from the city and county governments where the property is located.
There are four types of guests who can claim a hotel tax exemption; they are explained in the following sections.
Employees and representatives of nonprofit religious, charitable, or educational organizations are exempt from the state hotel tax when traveling on official business of the organization. They must, however, pay local hotel taxes. The Texas Tax-Exempt Entity Search lists entities that are currently exempt from hotel tax.
These organizations can qualify for hotel tax exemption:
Employees of qualifying nonprofit organizations are exempt when traveling on official business and can pay for their accommodations with personal funds. Representatives claiming an exemption who are not employees must pay with the organization's funds (check, credit card or direct billing) to obtain the exemption.
When traveling on official business, employees of specific nonprofit entities are exempt from both state and local hotel taxes.
Examples of such nonprofit entities include the following:
See Publication 96-1045, Guidelines to Texas Tax Exemptions, for more information on qualifying nonprofit organizations.
Employees of U.S. government agencies (including military personnel) traveling on official business with a valid government ID card are exempt from both state and local hotel taxes.
Foreign diplomatic personnel with a hotel tax exemption card issued by either the U.S. Department of State or the American Institute in Taiwan are exempt from state and local hotel taxes. Foreign guests staying at Texas hotels are not exempt from state and local hotel tax.
Generally, employees of state agencies, boards, commissions and institutions must pay state and local hotel taxes, but they can request a refund of the hotel tax paid. Most state employees are automatically reimbursed through travel vouchers.
For designated Texas state employees – mostly judicial officials, heads of agencies, and members of state boards, commissions and the Texas Legislature – the employing agency will issue a special hotel tax exemption photo ID or card. District attorneys and district judges will receive their cards from the Comptroller’s office. These employees are exempt from state and local hotel taxes.
Contractors and city and county government employees working for the State of Texas or the federal government are not exempt from state or local hotel taxes.
To apply for exemption, an organization must complete and submit the appropriate application and supporting documentation. If an organization qualifies for the exemption, the Comptroller’s office will send instructions on how to get an exemption verification letter.
Except for permanent residents, every person claiming a hotel tax exemption must complete and provide Form 12-302, Texas Hotel Occupancy Tax Exemption Certificate (PDF), and proof of exemption to the hotel.
Hotels must keep all records, including exemption certificates, for at least four years. Exempt organizations can use one exemption certificate to claim exemption for more than one room.