California Joins New York, Georgia, Illinois, Pennsylvania, North Carolina and Others US States in Implementing New Lodging, Rental Car, and Entertainment Taxes to Boost Tourism in 2026: Everything You Need To Know

Published on
January 6, 2026

In 2026, California Joins New York, Georgia, Illinois, Pennsylvania, North Carolina, and Others in Implementing New Lodging, Rental Car, and Entertainment Taxes to Boost Tourism and Enhance Infrastructure. As part of a growing trend across the U.S., California has introduced new tax measures aimed at boosting tourism and improving infrastructure in 2026. Joining states like New York, Georgia, Illinois, Pennsylvania, and North Carolina, California is rolling out updated lodging taxes, higher rental car fees, and entertainment taxes. These changes are designed to generate additional revenue, which will be reinvested into tourism-related infrastructure, sustainability initiatives, and public services. With iconic cities such as Los Angeles and San Francisco, California’s new taxes will help support eco-friendly transit options, improve public amenities, and further develop the state’s tourism industry. This article will explore how these tax updates are set to enhance the visitor experience, attract more tourists, and ensure long-term growth for California’s tourism sector.

California: Rolling Out the Red Carpet for Tourism with New Taxes

Lodging Tax: California is making waves with its new lodging tax updates, particularly in iconic cities like Los Angeles and San Francisco. Los Angeles has one of the highest Transient Occupancy Taxes (TOT) in the country at 12%, with additional tourism fees in select zones. These hikes are expected to bring in more revenue, which will be reinvested in tourism infrastructure and public services, ensuring the state’s tourism scene stays vibrant and well-equipped.

Rental Car Tax: Rental car taxes in California are also getting an overhaul. At major airports like Los Angeles International (LAX) and San Francisco International (SFO), the new “Tourism Assessment” fees now range from 5.9% to 11.9%, depending on the location. The additional funds will go toward supporting green transit initiatives, enhancing the state’s appeal to eco-conscious tourists, and making it easier to get around for visitors exploring California’s vast attractions.

Entertainment Tax: While no new entertainment taxes have been introduced, California’s entertainment industry continues to thrive. Hollywood and the state’s numerous theme parks still shine as major draws for tourists. By using increased tax revenue to further develop public attractions and infrastructure, California can solidify its status as a top global tourism destination.

Tourism Impact: These new tax changes will create a ripple effect in California’s tourism industry by enhancing public amenities and making travel more sustainable. Visitors will benefit from better infrastructure, transit options, and environmentally-friendly initiatives, cementing California’s reputation as an eco-conscious, tourist-friendly state.

New York: A New Era of Short-Term Rental Taxes and Cultural Boosts

Lodging Tax: New York is raising the bar for short-term rental taxes, applying full sales tax to all such transactions. In New York City, a new $1.50 per-unit, per-day fee on short-term rental stays aims to bring these rentals in line with traditional hotel taxes. The revenue generated will be invested in tourism infrastructure, ensuring that cities like Manhattan and the Finger Lakes remain top-tier travel destinations for both domestic and international visitors.

Rental Car Tax: New York’s rental car tax continues to be among the highest in the nation, with a supplemental 6% tax on car rentals, leading to a total tax rate of about 17.38% in New York City. These taxes are dedicated to enhancing the state’s public transportation system, making it easier for tourists to navigate everything from bustling city streets to scenic rural areas.

Entertainment Tax: New York’s Broadway continues to shine thanks to the extension of the Musical and Theatrical Production Credit. This initiative ensures that the state remains a top destination for theater lovers, boosting both local and international tourism. As Broadway thrives, so too does New York’s tourism industry, drawing in theater enthusiasts and culture seekers.

Tourism Impact: New York’s updated tax policies will make the state even more attractive to tourists by investing in public transportation and entertainment infrastructure. As a result, visitors can expect an upgraded experience across the state, with improved travel options and more world-class cultural experiences to enjoy.

Illinois: A Boost for Chicago’s Tourism with New Tax Initiatives

Lodging Tax: Illinois has launched the Short-Term Rental Occupation Tax Act (SB1749), imposing a 6% state tax on short-term rental transactions. Chicago, as a major hub for short-term rentals, stands to gain from these changes, with the new revenue being directed toward tourism promotion and infrastructure development, further enhancing the city’s appeal to travelers.

Rental Car Tax: In Cook County, Illinois, a 6% tax on rental car receipts remains one of the highest in the Midwest. This tax supports the Metropolitan Pier and Exposition Authority (MPEA), helping fund the city’s extensive transit system and making it easier for tourists to travel around the region, including Chicago’s world-class museums, parks, and iconic landmarks.

Entertainment Tax: Although Illinois hasn’t introduced new entertainment taxes, the state’s vibrant cultural and entertainment industries continue to drive tourism. Chicago remains a cultural powerhouse, attracting visitors from across the globe to its theaters, museums, and live music venues. This ongoing vibrancy plays a crucial role in maintaining Illinois as a major tourism hub.

Tourism Impact: The tax changes will enhance Illinois’ tourism industry by funding necessary infrastructure projects, including public transit systems and cultural attractions. Chicago’s position as a leading destination for both business and leisure travelers will only be strengthened as a result.

Georgia: Gearing Up for Major Stadium and Convention Upgrades

Lodging Tax: Georgia has updated its local lodging tax policies to fund major stadium and convention center renovations. Atlanta, as the primary tourism hotspot, is set to benefit from these changes, which aim to attract larger sporting events, conventions, and festivals. By upgrading key venues, Georgia is positioning itself as a top destination for events and gatherings.

Rental Car Tax: Georgia’s rental car tax remains steady at $5 per day, but new specialty license plate fees are introduced, helping fund green transit projects. These taxes will contribute to a more eco-friendly and accessible transportation network, improving the experience for tourists exploring Georgia’s diverse landscapes and attractions.

Entertainment Tax: Georgia’s introduction of “Patriot” fees for specialty entertainment-themed license plates provides an innovative way to fund cultural and entertainment projects. These funds will be reinvested into local arts and cultural initiatives, boosting tourism and offering unique experiences tied to Georgia’s identity.

Tourism Impact: By improving venues and supporting local culture, Georgia is enhancing its tourism infrastructure. These tax changes will make the state more attractive to visitors looking for a mix of cultural experiences, entertainment, and sporting events, ultimately boosting tourism and local economies.

North Carolina: Streamlined Taxes for a Thriving Tourist Destination

Lodging Tax: North Carolina is streamlining its Room Occupancy Tax collection process in counties like New Hanover and Orange. By requiring short-term rental platforms to remit taxes directly, the state can ensure more funds are directed toward enhancing tourism services. Areas like the Outer Banks and Asheville will benefit, making them even more appealing to visitors seeking natural beauty and cultural experiences.

Rental Car Tax: North Carolina has not introduced major changes to its rental car tax system. However, efficient tax collection will help ensure funds are used to improve public transportation and green initiatives that benefit tourists. A seamless rental car experience helps visitors enjoy North Carolina’s varied landscapes, from mountain retreats to coastal towns.

Entertainment Tax: North Carolina’s existing policies support a vibrant arts and cultural scene. By continuing to fund local events and festivals, the state attracts tourists interested in music, theater, and cultural experiences. No major new entertainment tax laws have been introduced, but the continued support for these industries ensures that North Carolina remains a dynamic destination for cultural tourism.

Tourism Impact: North Carolina’s tax reforms will help the state enhance its tourism infrastructure, providing better services for visitors and promoting its rich cultural and natural attractions. The streamlined tax system ensures that more revenue is directed toward improving the state’s tourism offerings, making it an even more attractive destination.

In 2026, California joins New York, Georgia, Illinois, Pennsylvania, North Carolina, and others in implementing new lodging, rental car, and entertainment taxes to boost tourism and enhance infrastructure.

Conclusion

California’s decision to join New York, Georgia, Illinois, Pennsylvania, North Carolina, and others in implementing new lodging, rental car, and entertainment taxes in 2026 reflects a broader commitment to enhancing their tourism industries. These new tax measures aim to boost tourism by generating much-needed revenue to improve public infrastructure, fund sustainable transit options, and support local attractions. By reinvesting these funds into their tourism sectors, these states are positioning themselves to provide better services and experiences for visitors, ensuring they remain top travel destinations in the coming years.