Greatly exceeding estimates, the short-term property rental company Airbnb returned $2.5 million to the state of Wisconsin during the first year of a tax collecting agreement.
The Wisconsin Department of Revenue originally projected in 2016 the state sales tax collections would total $700,000. The agreement took effect July 1, 2017.
Airbnb spokesperson Ben Breit said the company saw an 80 percent growth in Wisconsin guests during the first 12 months of the agreement with the state, which likely explains the higher than expected tax revenue.
“It's evidence that our platform is opening up the state to a new slice of prospective tourists by catering to travelers less able to afford hotels, those who desire to stay in neighborhoods or cities that lack hotels, and families who prefer to be together under one roof,” Breit said.
Airbnb hosts also take advantage of heavily attended events in Wisconsin cities. For example, UW-Madison’s commencement weekend in May drove Airbnb rentals up 79 percent over the previous week in guest arrivals with a total of 890 renters. In total, hosts earned $103,000 from renting out their units that weekend, according to Airbnb.
Breit said rural areas of Wisconsin are also seeing growth in home sharing.
Madison’s tax collection agreement with Airbnb, the first of its kind between the home-sharing company and a Wisconsin municipality, has also paid dividends and exceeded expectations. In the first year of payments, Airbnb returned $324,000 in room tax revenue, surpassing original projections of $200,000.
Under state law, hosts are required to pay Madison’s 10 percent nightly room tax. The city entered into an agreement that went into effect May 1, 2017, allowing Airbnb to collect the room tax and return it to the city.
Airbnb also has agreements with Green Bay, which collected $36,000 from Aug. 1 through Feb. 28, and Racine. The agreement with Racine began June 1.