taxes

Hotel Occupancy Tax Exemptions

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.

Who Can Claim Exemption

There are four types of guests who can claim a hotel tax exemption; they are explained in the following sections.

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. 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:

  • Religious organizations – nonprofit churches and their guiding or governing bodies. Evangelistic organizations, religious study groups or churches made up of family members only do not qualify.
  • Charitable organizations – 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. Fraternal organizations and social, professional and business groups do not qualify.
  • Educational organizations – independent school districts, public or nonprofit private elementary and secondary schools, and Texas institutions of higher education. Out-of-state colleges and universities do not qualify.

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.

Specific Nonprofit Entities

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.

Government Agencies

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.

Permanent Residents (30-Day Rule)
  • Guests who occupy a hotel room for 30 or more consecutive days with no payment interruption are considered permanent residents and are exempt from hotel tax.
  • Guests who notify the hotel in writing that they intend to stay for 30 or more consecutive days, and who actually stay for at least the next 30 consecutive days, will be exempt as of the notice date. Guests who do not notify the hotel must pay the tax for the first 30 days and will be exempt after that.
  • Hotel records are proof of a permanent resident’s exemption, and Form 12-302, Texas Hotel Occupancy Tax Exemption Certificate (PDF), is not required.

Application for Exemption

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.

Claiming the Exemption and Keeping Records

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.

Additional Resources

96-224
(06/2020)