Key Takeaways

  • Woodstock will apply its 5 percent hotel-motel tax to Airbnb and VRBO rentals starting Jan. 1, 2027
  • The ordinance eliminates an exemption for owner-occupied lodging facilities with five or fewer guest units
  • The city projects about $24,640 in annual revenue, though officials say the estimate depends on occupancy levels

Woodstock, Illinois will start collecting a 5 percent hotel-motel tax from Airbnb and VRBO hosts on Jan. 1, closing a gap that let short-term rentals skip a levy hotels have paid for decades.

The change also erases an existing carve-out for owner-occupied lodging with five or fewer guest units, meaning even small-scale hosts renting out a spare room or converted floor will now owe the city.

City officials told the council the ordinance closes an ambiguity in the code rather than creating a new tax, writing that the change ensures equitable treatment among lodging providers, according to Shaw Local. Woodstock expects the expansion to bring in roughly $24,640 a year, though the city says that figure depends on occupancy and market conditions.

Not every host is on board. Stacy McCaskill, who put a converted historic farmhouse near Route 47 and Calhoun Street on Airbnb, called the tax a “money grab” and argued the city needs more short-term rentals, not fewer, given its shortage of hotel rooms.

Hosts push back on the new short-term rental tax

McCaskill said she expects to pass the added cost to guests, which she believes will suppress demand, and rejected the city’s framing that the tax merely levels the field between hotels and independently run rentals.

She argued big hotel chains and small operators like her shouldn’t be treated the same, especially with her side income helping offset rising costs elsewhere in her business.

Related: South Bend weighs new short-term rental rules as listings climb to 1,500

The timing lands awkwardly for the city’s own hospitality ambitions. Plans for a 60-room hotel at the Calhoun and Jefferson streets intersection collapsed in July after the developer couldn’t secure financing, leaving Woodstock’s downtown lodging capacity unchanged even as it moves to tax the informal supply that has filled the gap. Proceeds from the hotel-motel tax fund nonprofit tourism grants, and the city says guests who prepay reservations before Jan. 1 won’t owe the new charge retroactively.

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