The Florida Keys Vacation Rental Tax Guide Every Owner Needs (2026)
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Owning a vacation rental in the Florida Keys means operating in one of the most regulated and highest-taxed short-term rental markets in the country. Monroe County vacation rental owners collect a combined 13.5% in occupancy taxes, file with two separate government entities every month, and must obtain a Special Vacation Rental Permit that doesn’t exist anywhere else in Florida. Get it right and your investment runs smoothly. Miss a filing or skip a permit and you’re looking at 10% penalties, permit revocation, and potential audit exposure going back five years.
Quick Answer: Florida Keys vacation rental owners in Monroe County collect 13.5% in total occupancy taxes composed of 7.5% state sales tax (6% base + 1.5% Monroe County surtax), 5% tourist development tax, and 1% tourist impact tax. You register separately with the Florida Department of Revenue and the Monroe County Tax Collector, file monthly returns with both, and must hold a Special Vacation Rental Permit to legally operate.
This guide covers exactly what you owe, how to register, what changed for 2026, how the tax burden affects your returns, and what happens when owners don’t comply. Written by a management company that has filed hundreds of Monroe County tax returns since 2018.
Why the Florida Keys Has the Highest Vacation Rental Tax Rate in Florida
Most of Florida charges 8% to 10% in combined occupancy taxes. The Florida Keys charges 13.5%. That gap exists for three specific reasons, and understanding them matters if you’re evaluating an investment here versus elsewhere in the state.
Reason 1: Monroe County’s 5% Tourist Development Tax
Monroe County collects the maximum allowable TDT rate under Florida law. Where most counties charge 2% to 4%, Monroe County charges the full 5%. The revenue funds the Florida Keys Tourist Development Council, which manages an $11 million annual capital budget for beach improvements, park maintenance, coral restoration projects, and destination marketing. In 2023 and 2024 combined, the TDT generated $61.4 million from Keys visitors. Money that directly funds the infrastructure that makes your property valuable and rentable.
Reason 2: The Tourist Impact Tax (1% for Keys-Only)
The 1% Tourist Impact Tax applies exclusively to Monroe County. It exists because the Florida Keys holds designation as an Area of Critical State Concern under Florida Statute 380.0663, recognizing the ecological fragility of the reef system, the backcountry, and the freshwater supply that a barrier island chain relies on. This tax is not a bed tax you’ll find in Sarasota or Jacksonville. It’s a Keys-specific charge rooted in environmental policy.
Reason 3: Monroe County’s 1.5% Discretionary Sales Surtax
This surtax is added to Florida’s base 6% sales tax, bringing the effective state rate to 7.5% in Monroe County. Many Florida counties charge lower surtaxes; Monroe County charges 1.5%.
Stack all three layers together and you get this (per Florida DOR Form DR-15TDT, updated January 2026):
| Tax | Rate | Who Collects |
| Florida state sales tax | 6.0% | Florida Dept. of Revenue |
| Monroe County discretionary surtax | 1.5% | Florida Dept. of Revenue |
| Monroe County Tourist Development Tax | 5.0% | Monroe County Tax Collector |
| Tourist Impact Tax (Keys-only) | 1.0% | Monroe County Tax Collector |
| Total | 13.5% | Two separate entities |
The two-entity filing requirement, the state and county, is where most new owners get tripped up. You can’t file everything in one place. You need two accounts, two monthly returns, and two payment systems.
What Does Each Tax Actually Pay For?
Understanding where your collected taxes go isn’t just a useful background, it’s a selling point for guests who ask, and it’s the context that helps you appreciate why Monroe County enforces compliance so aggressively.
Florida State Sales Tax (7.5%) funds general state government operations. The Florida Department of Revenue collects it under Florida Statute 212.03, which classifies any accommodation rented for six months or less as a taxable transient rental.
Tourist Development Tax (5%) flows directly to the Monroe County Tourist Development Council. In FY2026, the TDC spent over $11 million on capital projects alone which included the Mallory Square seawall in Key West ($2.6M), the Jacobs Aquatic Center in Key Largo, coral restoration through the Coral Restoration Foundation, and beach facility renovations across all five island districts. This is also the funding source for the marketing that fills your calendar: the “The Florida Keys & Key West” destination brand reaches millions of travelers annually.
Tourist Impact Tax (1%) addresses the direct infrastructure burden that tourism places on a fragile, linear island chain. Roads, water systems, waste management are some of the infrastructure burden as the Keys handle more visitors per square mile than almost any geography in the United States, and this tax offsets that cost.
The practical takeaway: these taxes aren’t arbitrary. They’re the financial engine behind the destination quality that commands the rental rates Marathon properties can charge.
How Do I Register to Collect Taxes on a Keys Rental Property?
Registration requires two separate steps completed before your first booking. Missing either one means you’re operating illegally from day one.
Step 1: Florida Department of Revenue (State Sales Tax)
Register at floridarevenue.com using the “Register a New Business” portal. Select Sales and Use Tax as your tax type. You’ll need:
- Your legal name or business entity name
- Federal EIN or Social Security Number
- The Marathon (or other Keys) property address
- An estimate of monthly rental revenue
Registration is free and takes 2-3 business days. The state issues a Sales Tax Certificate number that you’ll reference on every monthly return. Once registered, you file Form DR-15 (Sales and Use Tax Return) every month in which the 1st is the due date and the 20th is the late deadline.
One detail that catches owners off guard: if you file and pay electronically by the 20th, Florida lets you keep a collection allowance of 2.5% of the first $1,200 in taxes collected monthly. Small amount, but free money if you file on time.
Step 2: Monroe County Tax Collector (TDT + Tourist Impact Tax)
This is completely separate from the state registration. Monroe County runs its own TouristExpress system at monroe.county-taxes.com/tourist. You create an account and then register each property individually where every rental unit gets its own TDT account number.
You’ll need:
- Full property address and legal description
- Owner name, mailing address, and contact information
- Property manager details (name, phone, email)
- Bedroom count and maximum occupancy
- List of platforms where you advertise (Airbnb, Vrbo, direct)
No registration fee for the TDT account itself. Monthly returns are due the 1st, late after the 20th, same as the state. Monroe County imposes a 10% late penalty plus 1% monthly interest on any delinquent amount. File a $0 return every month you have no bookings since failure to file zero returns generates automatic penalties just like missing a month with revenue.
For questions or to verify your registration, contact the Monroe County Tax Collector’s TDT office directly:
- Email: [email protected]
- Phone: (305) 295-5058
The Monroe County Special Vacation Rental Permit and What Most Owners Miss
This is the compliance piece that surprises investors who did their homework on taxes but didn’t dig into Monroe County’s operational requirements. The Special Vacation Rental Permit is separate from your tax registrations. You need both.
Any property in Monroe County renting for less than 28 consecutive days requires an annual Special Vacation Rental Permit issued through Monroe County’s Growth Management Division. The permit costs approximately $400 per year and comes with specific operating conditions:
- Defined quiet hours the guest agreement must reference
- A designated trash service plan (not “guests take out trash”)
- Parking plan showing exact vehicle capacity
- Maximum occupancy posted inside the property
- A locally-based vacation rental manager on call 24/7 where someone is physically in the Keys who can respond to complaints in person
That last requirement is significant. The manager doesn’t just need to be reachable by phone. Monroe County expects them to be able to get to your property quickly. This is one reason many property owners in Marathon use a professional management company because it satisfies the permit’s local manager requirement while also handling monthly tax filings.
Apply for the permit through the Monroe County Growth Management Division before your first booking. Operating without a valid permit is a code enforcement violation that can result in fines, and a revoked permit means you cannot legally advertise or accept bookings until it’s reinstated.
What Changed for Keys Vacation Rental Taxes in 2026?
Several enforcement and regulatory changes took effect or intensified for 2026 that Keys property owners should know about, particularly around compliance cross-referencing and platform tax responsibility.
Monroe County Is Cross-Referencing Every Listing
Monroe County’s Tax Collector actively monitors Airbnb, Vrbo, and other listing platforms and compares active listings to registered TDT accounts. Properties advertising short-term rentals without a matching Monroe County TDT registration receive compliance notices. This cross-referencing happens routinely, not just in response to complaints.
If your property is listed on any platform under a rental duration of 28 days and you don’t have an active TDT account in Monroe County’s TouristExpress system, expect a notice.
DBPR Licenses now trigger Tax Verification
The Florida Department of Business & Professional Regulation and the Department of Revenue improved data sharing for 2026. When you apply for or renew your DBPR vacation rental license (required under Chapter 509 for properties renting more than three times per year under 30 days), that data now flows to tax authorities to verify you’ve registered for sales tax collection.
Renewing your license now effectively flags your property for tax compliance verification. Owners who had licenses but hadn’t registered for state sales tax are being identified through this process.
Airbnb’s Tax Collection doesn’t cover your Monroe County obligations
This misunderstanding costs Keys owners real money. Airbnb currently collects and remits Florida’s state sales tax (6%) in Monroe County, but does not collect or remit:
- The Monroe County Tourist Development Tax (5%)
- The Tourist Impact Tax (1%)
- The Monroe County discretionary surtax in some circumstances
Even if your Airbnb statement shows taxes collected, you are still responsible for the county-level taxes. You must register in TouristExpress, file monthly TDT returns, and remit the county’s portion directly to the Monroe County Tax Collector. Platforms change their tax collection policies that is why you should always verify your specific situation with Monroe County directly rather than assuming platform collection covers your full obligation.
The TDC Funding battle is over, just for now
In early 2025, a serious legislative proposal threatened to eliminate Florida’s county Tourist Development Councils by redirecting TDT revenue to reduce property taxes instead of funding tourism. Monroe County TDC CEO Kara Franker called it “an existential threat” since the Keys TDC generates roughly $61.4 million annually and funds the marketing infrastructure that drives rental demand.
The proposal failed. For 2026, the TDC structure is intact and the 5% TDT rate stands. Tourism officials are watching the next legislative session closely, but for now your tax rates and the institutions they fund remain unchanged.
How Do Keys Vacation Rental Taxes Affect Your Investment Returns?
Let’s run the real numbers so you can build accurate projections.
A Sample Marathon Booking at $350/Night
A guest books a 6-night stay at your Marathon waterfront property. Nightly rate: $350. You also charge a $175 cleaning fee and a $60 pet fee.
| Item | Amount |
| Rental (6 nights × $350) | $2,100 |
| Cleaning fee | $175 |
| Pet fee | $60 |
| Gross taxable revenue | $2,335 |
| State sales tax (7.5%) | $175.13 |
| TDT (5%) | $116.75 |
| Tourist Impact Tax (1%) | $23.35 |
| Total taxes guest pays | $315.23 |
| Total guest payment | $2,650.23 |
You remit $175.13 to the Florida Department of Revenue and $140.10 to Monroe County. You keep $2,335 as gross rental income before your operating expenses.
Taxes apply to every mandatory charge which includes cleaning fees, pet fees, early check-in fees, late checkout fees. They apply to the gross amount collected, not your net after platform fees or management commissions.
Annual Returns on a Well-Performing Marathon Property
Consider a 4-bedroom Marathon waterfront property generating $90,000 gross rental revenue annually:
| Item | Amount |
| Gross rental revenue | $90,000 |
| Taxes collected and remitted | $12,150 |
| Gross revenue retained | $90,000 |
| Property management (25%) | $22,500 |
| Property taxes (no homestead) | $11,000 |
| Insurance (property + flood) | $8,000 |
| Maintenance and repairs | $4,500 |
| Utilities | $3,600 |
| Platform fees (~3%) | $2,700 |
| Net operating income | $37,700 |
The 13.5% tax burden doesn’t reduce your gross rental income directly because guests pay it. What it does affect is your competitive pricing ceiling, for example: a $350/night rate shows as $390 with taxes on Airbnb, which can price-sensitive guests compare against lower-tax-rate counties.
The Homestead Exemption you lose
Renting a Florida property as a short-term vacation rental disqualifies it from homestead exemption, which reduces assessed value by up to $50,000. For a Marathon property assessed at $1.2 million, losing the homestead exemption at Marathon’s current millage rates means roughly $800 to $1,200 more per year in property taxes compared to a primary residence. Factor this into acquisition analysis if you’re also considering using the property personally.
Tax Deductions that actually help
While you can’t deduct the occupancy taxes you collect and pass through (they’re not your income), the federal deductions available on Schedule E offset your taxable rental income substantially:
Fully deductible in the year incurred: property management fees, mortgage interest, flood and property insurance, utilities during rental periods, repairs and maintenance, cleaning costs, advertising and listing fees, accounting and legal fees, guest amenities and supplies.
Depreciated over time: the property itself (27.5 years for residential), major improvements (roof, HVAC, pool), furniture and appliances (5-7 years).
A well-managed Marathon property typically has $28,000 to $45,000 in deductible annual expenses, significantly reducing the federal income tax owed on rental profits.
What are the Penalties for Non-Compliance in Monroe County?
The consequences for getting this wrong stack up faster than most owners expect.
State Penalties (Florida DOR)
Late filing: 10% of tax due. Late payment: 10% of tax due. Take note that these are additive, not alternative. Monthly interest: 1% per month on unpaid balance. Failure to register: up to $500
A property owner who owes $800 in monthly sales tax and files 90 days late faces $160 in combined penalties plus $24 in interest. The state can also revoke your sales tax certificate, which makes continued operation illegal.
Monroe County TDT Penalties
Monroe County applies the same structure which includes 10% late penalty plus 1% monthly interest. The additional consequence here is permit-related: chronic non-payment or failure to register can result in revocation of your Special Vacation Rental Permit. Without a valid permit, you cannot legally list or accept bookings in Monroe County.
Audit Exposure
Both the state and Monroe County can audit your rental records. Standard look-back is three years; if they find evidence of intentional underreporting, it extends to five years. Auditors request booking records from all platforms, bank statements, platform payout statements, prior tax returns, and guest correspondence.
With Monroe County’s active cross-referencing of listing platforms, the audit trigger is no longer just a random selection. Operating an unlisted property or filing returns that don’t match platform data creates a clear audit risk.
The IRS Dimension
Platforms send 1099-K forms to the IRS for hosts earning over $600 annually. The IRS matches these against your federal return. If rental income appears on a 1099-K but not on your Schedule E, you’ll receive an automated notice and likely an audit. Unreported rental income from Keys properties gets the IRS’s attention in which the amounts involved are typically large enough to warrant pursuit.
What Are the Step-by-Step Compliance Requirements for a Keys Property?
Before Your First Booking
- Obtain your DBPR vacation rental license through the Florida Department of Business & Professional Regulation. Required for properties renting more than three times annually under 30 days. Fees run approximately $400 every two years. A fire safety inspection may be required.
- Register for Florida state sales tax at floridarevenue.com. Free, 2-3 business days. You’ll receive a Sales Tax Certificate number.
- Register each property in Monroe County TouristExpress at monroe.county-taxes.com/tourist. Each rental unit needs its own TDT account. Free registration.
- Apply for your Monroe County Special Vacation Rental Permit through Monroe County Growth Management. Submit floor plans, parking plan, and property manager contact information. Budget $400/year. Don’t list your property until this is in hand.
- Verify platform tax settings for each platform you use. Note exactly what taxes each platform collects versus what you’re responsible for. Document this in writing.
Every Month
File your Florida sales tax return (Form DR-15) with the state. Due on the 1st, late after the 20th, even if $0 revenue that month.
File your Monroe County TDT return through TouristExpress which includes same deadlines, same zero-return requirement.
Pay both by the 20th to avoid penalties.
Keep detailed records of each booking: guest name, check-in and checkout dates, rental amount, fees charged, taxes collected, platform used. You’ll need these for any audit and for reconciling platform statements with your filed returns.
Every Year
Renew your Monroe County Special Vacation Rental Permit before it lapses.
Renew your DBPR license on its two-year cycle.
File Schedule E with your federal tax return reporting all rental income and deductible expenses.
Verify that Monroe County’s TDT rate hasn’t changed (Florida counties can adjust rates; check the Monroe County Tax Collector website each January).
Working With a Property Manager on Tax Compliance
If you use a property management company for your Keys rental, the tax responsibilities can shift but not disappear.
Florida allows property managers to act as a “dealer” for tax purposes, collecting and remitting occupancy taxes for multiple properties under a single consolidated dealer account. The manager files one combined return covering all properties they manage, which simplifies reporting considerably.
To authorize a manager as your dealer:
- Execute a notarized Special Power of Attorney granting tax authority
- Confirm the manager’s Florida Sales Tax dealer certificate number
- Confirm their Monroe County TDT dealer registration
- Request monthly tax reports showing exactly what was collected and remitted for your property
The critical point: using a dealer doesn’t eliminate your liability as the property owner. If your management company fails to remit taxes on your behalf, the Monroe County Tax Collector and the Florida Department of Revenue can pursue you, not just the manager. Ask for proof of filing every month, not just an annual summary.
At Villa Paraiso Vacation Rentals, monthly tax compliance reporting is a standard part of our management service and not an add-on. Property owners receive documentation showing TDT and state tax filings for each property each month.
Frequently Asked Questions
What is the total tax rate for vacation rentals in the Florida Keys?
In Monroe County which covers all of the Florida Keys including Marathon, Islamorada, Key Largo, and Key West, the combined occupancy tax rate is 13.5%. This includes 6% Florida state sales tax, 1.5% Monroe County discretionary surtax, 5% tourist development tax, and 1% tourist impact tax.
Does Airbnb collect my Monroe County taxes for me?
No. Airbnb currently collects Florida’s 6% state sales tax in Monroe County, but does not collect or remit the 5% tourist development tax or the 1% tourist impact tax. You must register in Monroe County’s TouristExpress system and file those returns yourself, or through your property manager.
What is the Special Vacation Rental Permit and do I need it?
Yes. Any Monroe County property renting for less than 28 consecutive days requires an annual Special Vacation Rental Permit from Monroe County Growth Management. It covers noise, trash, parking, occupancy limits, and mandates a locally-based property manager available 24/7. Cost is approximately $400/year. You need this permit before listing your property.
How often do I file vacation rental tax returns in the Keys?
Monthly, for both the state and the county. State returns go to the Florida Department of Revenue; TDT returns go through Monroe County’s TouristExpress system. Both are due the 1st and late after the 20th. You must file a $0 return in any month with no rental activity.
What happens if I don’t file a return in one month?
Both the state and Monroe County assess a 10% late penalty on any taxes due, plus 1% monthly interest. For $0 months, the penalty is $0, but failing to file still triggers a late filing notice and can create compliance flags on your account. File every month regardless of revenue.
Will renting my Keys home disqualify me from homestead exemption?
Almost certainly yes. Homestead exemption requires the property be your primary residence. Operating it as a short-term vacation rental particularly with DBPR licensing and active listings is incompatible with primary residence status. Most Keys vacation rental owners maintain a separate primary residence and pay full property taxes on their rental property.
Does the 13.5% tax burden hurt my rental income?
No, guests pay the occupancy taxes on top of your rental rate, not you. The taxes don’t reduce your gross rental revenue. They can affect competitive pricing since a $350/night rate shows as approximately $397 with taxes on platforms. On the expense side, you offset federal income taxes through substantial deductions on Schedule E.
Can a property manager handle all my tax filings?
Yes, if they’re registered as a dealer with both the state and Monroe County. Verify their dealer registration numbers, confirm they file monthly (not just quarterly), and request monthly tax reports. You remain ultimately liable for correct filing even when a manager handles the filings.
Resources for Monroe County and Keys Property Owners
Monroe County Tax Collector — TDT Division monroetaxcollector.com/services/tdt/ (305) 295-5058 | [email protected]
TouristExpress — Monthly TDT Filing monroe.county-taxes.com/tourist
Florida Department of Revenue floridarevenue.com Taxpayer Services: (850) 488-6800
Florida DBPR — Vacation Rental Licensing myfloridalicense.com/DBPR
Monroe County Growth Management — Special Permits monroecounty-fl.gov (305) 289-2500
Ready to Invest in the Florida Keys? Tax Compliance Comes First.
The 13.5% tax rate sounds like a lot until you compare it to what Keys properties generate in nightly rates compared to almost anywhere else in Florida. A well-positioned Marathon property can command $300 to $600 per night during peak seasons. The compliance work composed of two registrations, two monthly filings, one annual permit becomes routine quickly. The risk of skipping it doesn’t.Properties in our portfolio like Blue Pearl, Ocean Muse, Mermaid Manor, Deep Blue, Luna Light, and Emerald Oasis operate with full tax compliance as standard practice and not something owners have to manage themselves. If you’re considering a Keys investment and want to understand what professional management handles versus what stays with you as the owner, the full picture is worth understanding before you close.
