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Massachusetts Senate Considers AirBnB Tax to Help Finance Earned Income Credit

Massachusetts Senate Considers AirBnB Tax to Help Finance Earned Income Credit

The Massachusetts State Senate is looking at a bill that would install a tax on rooms rented through AirBnB to help the state pay for an increase in its Earned Income Credit.

According to MassLive, the state Senate Ways & Means Committee plans to apply the existing hotel room tax to short-term rentals, which would impact on-demand apps such as AirBnB. The senate committee believes between $13 million and $20 million could be raised this way, in order to offset an increase in the state EIC rate.

Limiting the EIC to full-time in-state residents – instead of allowing for out-of-state residents who work in Massachusetts – would add another $8 million - $10 million.

A spokesman for tech sector companies told MassLive the proposal would stifle growth in that particular economic sector and would unfairly apply a tax meant for large brick-and-mortar hotels to individual entrepreneurs.

Even with the expanded hotel room tax and a narrowed EIC, the state would still have to come up with more than $20 million every year to make up for the expanded tax credit amount.

Bob Williams

Forget genes; I’ve got words in my DNA. Communication has been part of who I am nearly all my life. From a long career in radio news to another one in newspapers – and a University of Georgia journalism degree sandwiched between the two – language has been my life. I’ve also been fortunate to have learned the tax business from the ground up here at Drake, starting with 1040.com online forms some years ago before moving on to work on the Web. In all things tax-ish, we aim to give you tools you can use.