
OCEAN CITY, N.J. — Airbnb is warning of possible legal action after Ocean City approved a 3 percent occupancy tax on short-term rentals booked through online platforms like Airbnb and Vrbo. The ordinance, which passed in a narrow 4-3 City Council vote, imposes the tax on online vacation rentals only, exempting hotels, motels, bed-and-breakfasts, and properties rented by local real estate agents. City officials estimate the new tax could generate approximately $1.8 million annually, based on more than $60 million in online bookings last year. Supporters argue the measure will increase city revenue without raising property taxes for residents. Opponents, including Airbnb, say the tax unfairly targets online rentals and does not comply with New Jersey law, which typically requires occupancy taxes to apply uniformly to all forms of lodging. Airbnb has formally notified Ocean City that the ordinance could trigger costly litigation, claiming it could make local vacations less affordable and harm the tourism-dependent economy. A previous effort to tax all lodging types—including hotels and motels—was defeated last year following industry opposition. The new occupancy tax must now be reviewed by the New Jersey Treasury Department, a process expected to take up to 90 days. If approved by the state, the tax could take effect later this year.