LOUISVILLE (WHAS11) -- Airbnb announced a historic tax agreement with the Commonwealth of Kentucky which will allow the company to remit state taxes on behalf of its Kentucky hosts.

With this agreement, Kentucky will see benefit from more visitors to the state who stay through home sharing. Effective October 1, Airbnb will automatically collect state sales taxes (6%) and transient room taxes (1%) on all bookings. This process aims to be easy and painless for hosts as well as the Commonwealth.

“We are extremely pleased to announce this agreement with Airbnb,” said Department of Revenue Commissioner Dan Bork. “Our goal is to work with all taxpayers fairly and equitably to ensure the appropriate taxes are paid and this agreement achieves that. Kentucky’s tourism sector is a huge economic driver for the state, so it is important to collect revenues for enhancing the quality of life for Kentuckians and our visitors.”

While Airbnb has similar agreements with other state governments, this is the first agreement of this kind with the state of Kentucky. This agreement currently covers taxes assessed by the Commonwealth; other local taxes would require separate agreements with city governments. Airbnb is currently engaged in discussions with the cities of Louisville and Lexington. They hope to secure agreements soon.

There are 3,100 active Airbnb hosts in Kentucky. A typical host earns $4,500 in supplemental income through Airbnb. Last year, Kentucky hosts earned $10.2 million through Airbnb, hosting about 80,000 visitors. This includes 43,000 visitors to Louisville alone. The home sharing expanded lodging capacity during the Kentucky Derby, infusing the economy with $3.5 million. Hosts in rural areas earned $1.3 million.

“Home sharing is introducing a whole new world of travelers to the authenticity of Kentucky while offering new economic opportunities for thousands of Kentucky residents,” said Laura Spanjian, Kentucky policy director for Airbnb. “We are so proud to have collaborated on this agreement. We believe this can serve as a model for other states, and we are dedicated to finalizing additional agreements to collect and remit taxes with Kentucky municipalities.”