taxes

Hotel Occupancy Tax Exemptions

The 6 percent state hotel tax applies to charges for sleeping accommodations, meeting rooms and banquet rooms in a hotel or motel.

Local hotel taxes apply only to charges for rooms ordinarily used for sleeping. Cities, authorized counties and special purpose districts levy hotel taxes at varying rates.

The Comptroller’s office administers the state portion of the hotel tax. Local taxes are administered by the local government imposing the tax.

Who Can Claim Exemption

There are four types of guests who can claim exemption from state hotel tax: nonprofit religious, charitable or educational organizations; specific nonprofit entities; government; and permanent residents.

Employees of nonprofit qualifying organizations are also exempt when traveling on official organization business. Representatives claiming an exemption who are not employees of the organization must pay with the organization's funds (check, credit card or direct billing) to obtain the exemption.

Nonprofit Religious, Charitable or Educational Organizations

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. Local hotel taxes must be paid. For purposes of hotel tax exemption:

  • Religious organizations are nonprofit churches and their guiding or governing bodies. Missionary organizations, Bible study groups or churches that are made up of only family members do not qualify.
  • Charitable organizations are nonprofit organizations that devote all or substantially all of their activities to providing food, clothing, medicine, medical treatment, shelter or psychological counseling directly to indigent and similar individuals for little or no charge. Not included are fraternal organizations and social, professional and business groups.
  • Educational organizations include independent school districts, public or nonprofit private elementary and secondary schools, and Texas institutions of higher education.

Rule 3.161 further defines exempt organizations.

Learn more about qualifying and applying for a letter of exemption.

Specific Nonprofit Entities

When traveling on official business, employees of specific nonprofit entities are exempt from state and local hotel taxes. Examples include:

  • certain nonprofit electric cooperatives
  • nonprofit telephone cooperatives
  • nonprofit housing authorities
  • housing finance corporations
  • public facility corporations
  • health facilities development corporations, and
  • cultural education facilities finance corporations

Government

Employees of U.S. government agencies (including military personnel) traveling on official business are exempt from state and local hotel taxes.

Diplomatic personnel with a hotel tax exemption card issued by the U.S. Department of State are exempt from state and local hotel taxes.

With few exceptions, employees of state agencies, boards, commissions and institutions are not exempt and must pay state and local hotel taxes. Most state employees are reimbursed automatically through travel vouchers. Texas state agencies can also request a refund of the hotel tax paid. 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 . These employees are exempt from state and local hotel taxes. (District attorneys and district judges will receive their cards from the Comptroller’s Office.)

Contractors working for the State of Texas or the federal government are not exempt from state or local hotel taxes.

Employees of city and county governments are not exempt from state or local hotel taxes.

Permanent Residents
(30-Day Rule)

Guests who occupy a hotel room for 30 or more consecutive days are considered permanent residents and are exempt from hotel tax as long as there is no interruption of payment during that period.

Guests who notify the hotel in writing of their intention to stay 30 or more consecutive days, and who actually stay for at least the next 30 consecutive days, will be exempt from the date of notification. Guests who do not notify the hotel must pay the tax for the first 30 days and thereafter will be exempt.

Hotel records are proof of a permanent resident’s exemption and an exemption certificate is not required.

Application for Exemption

To apply for exemption, a group should complete and submit an application for exemption in the appropriate category. When the application is approved, the Comptroller’s Office will notify the company and provide a link from which they can print out a letter as evidence of the group’s hotel tax exemption.

Evidence of Exemption Required

Every person claiming a hotel tax exemption, except permanent residents, must provide an exemption certificate. The person should write the reason for exemption on the Texas Hotel Occupancy Tax Exemption Certificate. Appropriate examples include "exempt per Electric Cooperative Act, Utilities Code, Chapter 161" or "exempt per Telephone Cooperative Act, Utilities Code, Chapter 162."

Hotels must keep a copy of the signed certificate to show why tax was not collected. One exemption certificate can be used to claim exemption for more than one room. Hotels can accept the exemption certificates in good faith when presented with the following supporting documentation:

  • federal employees traveling on government business – a valid government identification card
  • designated Texas state employees – a special hotel tax exemption photo ID or card that states holder is exempt from hotel occupancy taxes
  • foreign diplomats – a tax exemption card issued by the U.S. Department of State that exempts diplomat or mission from hotel occupancy tax
  • employees and representatives traveling on organization business for an entity that has applied for and received exemption from hotel tax – the Comptroller's letter of hotel tax exemption, which can be printed from the Comptroller’s list of exempt entities.

You can also download a file containing the names of organizations that have received a letter of hotel tax exemption. Hotel rules, forms and other information are available online.

96-224
(11/03)