For federal employees on official travel, the states where you are exempt from hotel tax depend entirely on which government travel card pays the bill. If lodging is charged to a Centrally Billed Account (CBA), state sales tax should be exempt in every state that levies one. If you use an Individually Billed Account (IBA) card and pay the hotel yourself, only six states voluntarily honor the exemption: Florida, Louisiana, New York, Pennsylvania, Texas, and Wisconsin.1General Services Administration. Tax Information by State Everywhere else, IBA travelers pay the tax and seek reimbursement.
The Six IBA Exemption States
Most federal travelers carry IBA cards, so this is the list that matters day to day. Florida, Louisiana, New York, Pennsylvania, Texas, and Wisconsin extend their state sales tax exemption to IBA transactions when the traveler is on official federal business.1General Services Administration. Tax Information by State Each of these states has its own documentation requirements, and the state-specific exemption form is what the hotel needs — not the general federal certificate. Texas uses Form 12-302 and Pennsylvania uses REV-1220, for example. Some forms need only your signature; others require a supervisor to sign before you travel.2Defense Travel Management Office. Save on Lodging Taxes in Exempt Locations
The exemption in these six states covers state sales tax only. County and city lodging taxes usually still apply, and some municipalities run their own separate exemption processes.3GSA SmartPay. Frequently Asked Questions
In every other state that taxes lodging, an IBA cardholder pays the tax at checkout and includes it in the travel voucher.
CBA Transactions: Exempt in Every Sales-Tax State
A CBA is billed directly to the agency, so the transaction is legally a purchase by the federal government. Because the federal government is generally immune from state taxation, all CBA GSA SmartPay travel cards should be exempt from state sales tax in every state that imposes one.4GSA SmartPay. Recognizing GSA SmartPay Cards/Accounts
Two states complicate the picture because their lodging levies are not structured as ordinary sales taxes. Arizona’s transaction privilege tax is imposed on the merchant’s privilege of doing business rather than on the sale itself. A hotel can request the exemption for a CBA guest, but the hotel is not required to process it, and Arizona law allows the tax to be passed through to the guest if the hotel declines.5GSA SmartPay. Arizona Tax Information Hawaii is similar: CBA transactions may be exempt from the general excise tax, but the exemption is not guaranteed, and IBA transactions are exempt from neither the general excise tax nor the transient accommodations tax.6GSA SmartPay. Hawaii Tax Information
States With No State Sales Tax on Lodging
Five states impose no statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. In these states, the CBA-versus-IBA question is irrelevant at the state level because there is no state sales tax to exempt.
That does not always mean a tax-free stay. Alaska localities can impose their own lodging taxes, and many tourist cities do. Montana charges a 4% lodging facility use tax that applies regardless of how you pay. New Hampshire has no state or local sales tax and no statewide lodging tax. Delaware and Oregon have no statewide taxes on accommodations, though some Oregon localities impose a transient lodging tax.
California is worth flagging alongside these five. It has no statewide lodging tax, but nearly every city and county levies a transient occupancy tax, sometimes at steep rates.7National Conference of State Legislatures. State Lodging Taxes Because those are local taxes rather than state sales taxes, the federal CBA exemption typically does not cover them.
What the Exemption Does Not Cover
Even at its broadest, the federal exemption reaches state sales tax only. States are not required to exempt any other category of tax unless they voluntarily do so.3GSA SmartPay. Frequently Asked Questions Several common charges stay on the folio:
- Local occupancy and lodging taxes set by counties and cities, which most jurisdictions do not waive for federal travelers and which can range from 2% to more than 7%.
- Tourism and convention taxes earmarked for convention centers or destination marketing, almost never covered by the federal exemption.
- Mandatory resort and destination fees, which are treated as part of the taxable room charge rather than as taxes, so the exemption does not eliminate them.
- Taxes on meals, minibar charges, and other incidentals. The exemption applies mainly to lodging and rental cars.3GSA SmartPay. Frequently Asked Questions
Seeing four or five separate tax lines on a bill and having the exemption knock out only one is normal.
Claiming the Exemption at Check-In
At a minimum, you need to be on official travel and pay with your government travel charge card. Federal Travel Regulation requires employees to use that card for all official travel expenses unless they have a specific exemption from the requirement.8Federal Register. Federal Travel Regulation; Mandatory Use of the Travel Charge Card Paying with a personal credit card kills the exemption, even if you are on orders and carrying a federal ID.3GSA SmartPay. Frequently Asked Questions
Most exempting states also require the state-specific exemption certificate at check-in. One warning: the standard federal exemption form, SF-1094, explicitly cannot be used for lodging purchases by employees in travel status.9General Services Administration. United States Tax Exemption Form You need the state form, not the general government certificate.
As the cardholder, you are responsible for working with the hotel to meet each state’s requirements.1General Services Administration. Tax Information by State FedRooms and DoD Preferred properties usually keep the forms on hand and know the process. Smaller or independent hotels often do not, so carry your own copies.
If the Hotel Refuses to Apply the Exemption
Hotels sometimes decline to process the exemption, particularly where the rules are ambiguous or the front desk has not seen a government card before. GSA’s guidance is to refer the hotel to the SmartPay website or the state taxation authority. If the vendor still will not honor it, pay the tax, keep the receipt, and reclaim it after the trip through your agency’s card program coordinator.10U.S. General Services Administration. SmartTax Customer Guide – State Taxes When You Travel
The Tax Advantage Travel Card Workaround
The GSA SmartPay Tax Advantage Travel card was designed to solve the IBA exemption gap. It is issued in the employee’s name but splits transactions automatically: lodging and rental cars are billed to the agency as CBA transactions, while meals and incidentals are billed to the employee as IBA transactions.11General Services Administration. GSA SmartPay Tax Advantage Travel Card Account
Because the lodging portion runs as CBA, the card provides state sales tax exemption at the point of sale, even in states that would normally tax an IBA stay. The front of the card is printed with “US Government CBA Tax Exempt” to signal the exemption to the hotel. Not every agency offers Tax Advantage accounts. If yours does and you often travel to states outside the IBA exemption six, it is worth asking your travel office. The exemption does not extend to airfare or GSA City Pair rates.11General Services Administration. GSA SmartPay Tax Advantage Travel Card Account
Long-Term Stays Get a Separate Exemption
Federal employees on extended TDY may qualify for a different exemption that has nothing to do with government status. Most states stop collecting lodging or occupancy taxes once a guest stays beyond a set number of consecutive days, treating the guest as a resident rather than a transient.
Thresholds vary. A majority of states use 30 consecutive days, including Arizona, Colorado, Illinois, Indiana, Kentucky, Michigan, Texas, Ohio, Pennsylvania, and Washington. Georgia and Connecticut use 90 days. Florida, Hawaii, and Alabama use 180 days. Maine uses 28 consecutive days.
This exemption applies to everyone, not just federal travelers, and it is independent of how you pay. On a 60-day assignment in a 30-day state, the transient occupancy tax stops on day 31 whether you paid with a CBA, an IBA, or a personal card. Some states require a written lease or formal agreement to trigger the exemption, so raise it with the hotel early in the stay.