Accommodation Tax Increases 2026: Rhode Island, Colorado, Virginia, Tennessee Raise STR and Hotel Taxes

Rhode Island, Colorado, Virginia, Tennessee, Montana, Michigan, and Ohio are implementing significant new accommodation taxes in 2026, fundamentally reshaping travel costs across multiple US destinations. Travelers planning trips to these states should budget for substantially higher lodging expenses, as these taxes fund critical infrastructure and community services.

What Sparked This Move

States across the nation are leveraging tourism's economic boom to address local infrastructure gaps and community needs. The rise in short-term rental platforms like Airbnb and Vrbo has created a two-tier accommodation market—traditional hotels face established tax structures while STRs often operate with lighter regulatory burdens. These new tax initiatives aim to level the playing field and ensure tourism revenue directly benefits the communities hosting visitors.

Rhode Island exemplifies this strategy with its comprehensive approach. The state introduced a 5% tax on whole-home rentals effective January 2026, combined with a local hotel tax increase from 1% to 2%, bringing the total STR tax burden to 14% when including the existing 7% state sales tax. More aggressively, Rhode Island is implementing a property tax on non-resident owners of properties valued over $1 million effective July 2026, unless they rent the property for at least 183 days annually. This dual approach targets both transient visitors and investment property owners.

Destinations in the Spotlight

State	Tax Type	Rate	Effective Date	Impact
Rhode Island	STR tax (whole-home)	5%	January 2026	14% total with sales tax
Colorado (Eagle County)	Lodging tax (hotels/STRs)	4% (doubled from 2%)	January 2026	Voter-approved measure
Colorado (Statewide)	County lodging tax cap	6% (raised from 2%)	2026	House Bill 1247
Virginia (Fairfax County)	Lodging tax	6% (increased from 4%)	October 2025	9% total rate
Virginia (Arlington & Manager-Plan Counties)	Transient occupancy tax	+1% additional	July 1, 2026	Plus 10% event ticket tax
Tennessee (Franklin)	Hotel/motel tax	5% (increased from 4%)	January 1, 2026	Funds parks & preservation
Montana	Bed tax (statewide)	4%	Ongoing	Proposed revenue redirection
Michigan	Lodging tax (proposed)	Up to 3%	Pending voter approval	Subject to local approval

Colorado House Bill 1247 raised the county lodging tax cap from 2% to 6%, enabling aggressive revenue collection. Eagle County implemented a voter-approved doubling of its lodging tax from 2% to 4% effective January 2026, targeting both hotels and STRs. This generates substantial revenue for housing, childcare, and infrastructure—critical needs in mountain resort communities.

Virginia's Fairfax County increased its lodging tax from 4% to 6% in October 2025, bringing the total tax rate to 9%. Starting July 1, 2026, Virginia counties with a "county manager plan" (including Arlington) can impose an additional transient occupancy tax of up to 1%, plus a new local admissions tax on event tickets capped at 10%.

Tennessee's Franklin raised its hotel/motel tax from 4% to 5% effective January 1, 2026, with revenue earmarked for park improvements and historic preservation. New statewide legislation gives state officials greater oversight of Tourism Development Zones (TDZs), districts that reinvest local tax revenue into tourism hotspots.

Montana maintains its statewide bed tax at 4%, though recent legislative discussions propose redirecting some Lodging Sales Tax revenue toward residential property tax relief. Michigan is moving toward enabling tourist communities to implement a lodging tax of up to 3% on hotels and rentals, subject to local voter approval.

Ohio is reshaping its tourism tax model through proposed budget amendments suggesting that smaller counties collecting over $500,000 in lodging tax should divert two-thirds of funds away from tourism bureaus and toward community services affected by tourism.

What Travelers Get

• Rhode Island: 14% total tax on whole-home STRs (5% new tax + 7% sales tax + 2% local hotel tax); property tax on non-resident owners of $1M+ properties unless rented 183+ days annually
• Colorado Eagle County: 4% lodging tax on all accommodations (doubled from 2%) effective January 2026; statewide cap raised to 6% under House Bill 1247
• Virginia Fairfax County: 9% total lodging tax (6% county rate + 3% state); Arlington and manager-plan counties can add 1% transient occupancy tax starting July 1, 2026
• Tennessee Franklin: 5% hotel/motel tax (increased from 4%) effective January 1, 2026
• Michigan: Up to 3% lodging tax pending local voter approval in tourist communities

What This Means for Travelers

Budget 15-20% higher accommodation costs when booking 2026 trips to Rhode Island, Colorado, Virginia, and Tennessee. These taxes apply to all lodging types—hotels, motels, vacation rentals, and bed-and-breakfasts. While the financial impact is immediate, understand that these revenues fund infrastructure improvements, park maintenance, affordable housing initiatives, and community services that enhance your destination experience. Book early to lock in rates before tax increases take full effect, and consider visiting during shoulder seasons when base rates may offset tax increases. Verify current tax rates directly with your accommodation provider, as some properties may not yet reflect 2026 changes in their online listings.

FAQ: Accommodation Tax Increases 2026

Q: Do accommodation taxes apply to all lodging types? A: Yes. These taxes apply to hotels, motels, vacation rentals (Airbnb, Vrbo), bed-and-breakfasts, and other short-term accommodations. Some states exempt certain property types—verify with your specific accommodation.

Q: Can I avoid these taxes by booking outside these states? A: No. These taxes apply to all accommodations within the state boundaries. However, you can budget accordingly or consider alternative destinations with lower tax burdens.

Q: When do these taxes take effect? A: Most take effect January 1, 2026 (Rhode Island STR tax, Tennessee Franklin, Colorado Eagle County). Virginia Fairfax County's increase occurred October 2025. Verify effective dates for your specific destination.

---

Related Travel Guides

• United Airlines Launches Tiered Fare Structure in 2026
• Qantas Increases European Routes Amid Global Flight Disruptions Across UK, UAE, Qatar
• Boeing 747 Replacement: Why No Single Aircraft Can Match the Icon

Disclaimer: Flight schedules, travel conditions, and pricing are subject to immediate change. Verify all details directly with the airline or official authority before booking.