2026 tax year
Hotel or motel owner taxes and deductions
The building is the business and depreciation is the largest deduction on the return. A cost segregation study splits out the parts that are not really building, carpets, fittings, signage, car park surfacing, into much shorter lives, and 100% bonus depreciation is now permanent on the qualifying portion.
Hospitality is not a specified service trade, so the 20% business profit deduction is not withdrawn by income alone the way a law or medical practice's is. Above the threshold it is still capped by what you pay in wages and what you have invested in property, which a hotel with staff and a building usually clears comfortably. Occupancy taxes you collect are never your income. Renovation is the line that needs care: a repair is deductible now, an improvement is capitalized, and the distinction is governed by rules that reward getting an opinion before the work rather than after.
The rest of the hotel or motel owner deduction list
Ordinary and necessary business expenses, deductible in full in the year you pay them, provided they are genuinely for the business:
- Staff wages
- Utilities
- Property insurance
- Repairs and maintenance
- Furnishings
- Property tax
- Marketing
- Software subscriptions
- Supplies
Worth knowing
The building is the asset, and a cost segregation study can move millions of its cost into far shorter depreciation lives.
That is what is specific to this trade. The larger deductions are the universal ones, see the full checklist.
What each deduction is worth to you
On $100,000 of profit with no state income tax, $1,000 deducted saves $305, 30.5%, because it comes off self-employment tax and income tax together:
| Net profit | Saved per $1,000 deducted | Effective |
|---|---|---|
| $40,000 | $231 | 23.1% |
| $100,000 | $305 | 30.5% |
| $200,000 | $297 | 29.7% |
The last row is worth less than the one above it, and that is not a mistake: past the Social Security wage base the self-employment part of the saving drops from 15.3% to 2.9%, and the higher income-tax bracket does not quite make up the difference. A deduction is worth most in the middle.
Add a state income tax and every row rises. The 1099 calculator applies that layer.
Where this comes from
The rules on this page that are specific rather than general are cited below. Follow a link to read the provision itself rather than taking our word for it:
- Bonus depreciation is 100% for property placed in service in 2026, on components with recovery periods of 20 years or lessIRC 168(k), as amended by P.L. 119-21 sec. 70301
- Nonresidential real property depreciates over 39 yearsIRC 168(c)
What these words mean
- Depreciation
- Spreading the cost of something long-lasting, a vehicle, a camera, a tractor, across the years you use it, rather than deducting it all at once.
- Specified service trade or business
- Work where the main asset is the skill or reputation of the people doing it, health, law, accounting, consulting and similar. These lose the qualified business income deduction above an income threshold, where other trades keep it.
Related
- Full deductions checklist
- Every profession
- 1099 taxes by state
- Quarterly payments
- Is an S-corp worth it?
- Local income tax
General information about how these deductions work, not tax advice. Whether a particular expense is deductible for you depends on facts this page does not have, check with a tax professional before claiming anything listed here.