Kansas City voters may get to decide whether to tax Airbnbs and other short-term rentals
The proposals would generate an estimated $6 million in revenue and are part of City Council’s recent efforts to better regulate short-term rentals, particularly after city reports showed an overwhelming majority of Airbnbs are unlicensed and skirt city law.
Kansas City hopes to bring in the millions it misses out on by not taxing short-term rentals like Airbnbs with two new measures that will go before City Council on Thursday.
The proposals follow months of frustration from Kansas City residents who have complained about unruly and unregulated Airbnbs causing quality of life issues in their neighborhoods, and have called on city officials to better regulate them. The ordinances are also a response to a recent report that found the city loses out on an estimated $2.2 million every year by not taxing short-term rentals like it does hotels.
“We need to be fair,” said Mayor Quinton Lucas, who co-sponsored the legislation. “Right now in Kansas City, we do not have the same type of taxation on those (short-term rentals) that we have on hotels and motels throughout the community.”
In a survey of residents late last year, 58% of more than 1,700 respondents said they supported taxes and fees on short-term rentals.
One ordinance proposes increasing the current $1.50 per night occupancy fee for hotels and motels to $3 and requiring short-term rentals to pay that fee. Another ordinance would place a 7.5% tax on short-term rentals; hotels and motels already pay a similar tax.
“The idea there is to generate a little bit more revenue for the city, especially as it relates to tourism and all of that stuff when we're coming up on a couple of really big events,” said 4th District Councilman Eric Bunch, referencing the World Cup games in 2026.
If they’re approved by city council, the measures would then have to pass a citywide vote during the April 4 election.
If the $3 occupancy fee is approved, it would generate about $4.5 million annually for the city. The 7.5% tax would generate about $2 to $3 million annually.
City officials say the revenue from the proposed measures would help support the city’s convention and tourism activities, pay to market and promote Kansas City to visitors and businesses and cover some of the costs of regulating short-term rentals. A report from the city auditor found that 93% of short-term rentals do not comply with city law.
Mayor Quinton Lucas, who sponsored the legislation, said taxing Airbnbs puts some enforcement teeth behind existing regulations.
“Us having passed an ordinance years ago that just said, ‘Hey, everybody let us know,’ has not worked,” Lucas said. “I think all of us saying, ‘No, if you don't actually pay your taxes, you’re violating the law,’ allows us to track much better.”
The proposed fee and tax are part of City Council’s recent efforts to better regulate short-term rentals, particularly after city reports confirmed what residents already suspected: that an overwhelming majority of Airbnbs are unlicensed and skirt city law. In December, City Council approved moving oversight of short-term rentals from City Planning and Development to the Neighborhoods Department.