A year of change for short-term rentals: 2025 regulation trends and 2026 outlook

The U.S. short-term rental (STR) industry remained strong in 2025 — and local governments were just as busy with the business of STR regulation. Here are some of the important trends and developments in STR laws and lodging taxes that shaped the year.

The FIFA World Cup, coming to North America in summer 2026, is expected to draw more than 6 million fans to Atlanta, Boston, Dallas, Houston, Kansas City, Los Angeles, Miami, New York/New Jersey, Philadelphia, the San Francisco Bay Area, and Seattle. Many of those fans will be looking for an STR stay — for example, demand for STRs in Dallas in June is up about 300% to 500% compared to last year, while Fort Worth is seeing about 500% to 700% more bookings. 

In Kansas City, Missouri, officials are trying to make it easier to accommodate the influx of visitors by educating potential STR hosts. The City Council has also approved a new category of STRs for major events. If a city declares a major event, residents can apply for a special STR permit and pay a $50 permit fee rather than the usual $200 fee. Otherwise, the city’s normal rules still apply, including requirements for registration and lodging tax compliance.

The World Cup isn’t the only major event impacting local STR rules. Southampton, New York, will lift limits on STRs during the U.S. Open Championship golf tournament in June. And Boulder, Colorado, the new home of the Sundance Film Festival starting in January 2027, has introduced a new Festival Lodging Rental License. This permit will allow residents to rent out their homes for less than a month during designated multiday special events.

In January 2025, the New York state Legislature approved a law allowing counties to develop their own STR registries. In counties that create registries, marketplaces such as Airbnb and Vrbo must submit detailed quarterly reports to the county that include rental locations, occupancy nights, guest counts, and taxes collected. The legislation also requires STRs to collect the same local lodging taxes as hotels. 

Counties that have opted to create registries since the law passed include Albany, Columbia, Oneida, Tompkins, and Washington counties. Meanwhile, Monroe County has opted out of creating a registry. Several other New York counties already required STRs to register before the state law took effect.

State governments have also been active in levying new lodging taxes on STRs or increasing rates for existing lodging taxes that guests staying at STRs are required to pay. 

In Colorado, a new law allows counties to raise lodging taxes to a maximum of 6% via ballot measures. Lodging tax increases were approved by voters in several counties in the November 2025 election.

Delaware imposed a 4.5% tax on stays of 31 consecutive nights or less. The law requires “accommodations intermediaries” to obtain a license from the Delaware Division of Revenue and collect and remit the STR tax. This includes STR marketplaces such as Airbnb and Vrbo, owners who arrange stays directly with guests, and real estate brokers. 

Hawaii introduced a new type of tax: a “green fee” that applies to STRs and other types of accommodations. The state Transient Accommodations Tax (TAT) rose from 10.25% to 11% starting January 1, 2026, with the extra revenues dedicated to a fund for environmental projects such as conservation, renewable energy, and disaster mitigation efforts. The fee is expected to raise $100 million annually.

Illinois made STR properties subject to the state Hotel Operators’ Occupation Tax under the fiscal year 2026 budget. The new tax went into effect July 1, 2025.

In Rhode Island, the statewide local hotel tax rate was raised from 1% to 2%. In addition, lawmakers created a new 5% tax on whole-home STRs.

Utah also amended its laws to allow counties to increase transient room tax (TRT) by 0.25% to a maximum of 4.5%. Several have taken advantage of the law, including Beaver, Box Elder, Cache, Daggett, Duchesne, Garfield, Grand, Juab, Kane, Millard, Piute, Rich, San Juan, Sevier, Tooele, Uintah, Utah, and Wasatch counties.

Continuing a trend of the past several years, more state governments are ensuring that tax revenues are paid by requiring STR marketplaces to collect lodging taxes on stays booked through their platforms. Louisiana and Maryland are among the states that followed the trend in 2025. Currently, most states require STR marketplaces to collect lodging taxes.

The Federal Trade Commission (FTC) finalized a rule requiring certain businesses to display fees along with the base price of transactions so consumers can immediately see the total cost of a transaction. Businesses covered in the rule include short-term accommodations providers such as Airbnb and Vrbo as well as independent STR operators. California and Minnesota had previously passed their own laws requiring price transparency.

Over the past several years, local governments have been active in tightening STR regulations in response to community concerns and an ongoing debate about affordable housing. Some examples from 2025 include the following.

• Portland, Oregon, approved a law requiring STRs to follow stricter safety standards.
• Oklahoma City, Oklahoma, updated the city’s home-sharing ordinance with stricter rules, including limits on the number of guests per stay and the number of nights per month an STR can be rented.
• Under a new ordinance in Pinellas County, Florida, STR operators must obtain an operating permit, undergo a property inspection, and follow parking, occupancy, and noise rules.
• In Houston, Texas, STR operators are required to register with the city; observe regulations on noise, safety, and waste disposal; and follow other new rules under an ordinance passed by the City Council. 
• In Austin, Texas, a new ordinance restricts the density of STRs and makes STR marketplaces responsible for ensuring all listings have a valid license number. 
• In Chicago, Illinois, STR operators are now required to submit data to the city every month to provide aldermen with more information on STRs in their wards.
• Hawaii County, Hawaii, passed a law requiring both STR operators and marketplaces to register with the county and provide information about STR properties.

While many new local laws are increasing STR regulation, residents in a few jurisdictions have voted directly to reject stricter rules. Nantucket residents approved a measure that allows STRs in all zoning districts on the island except for a commercial-industrial area near the airport. And in Ocean City, Maryland, voters rejected a new STR law in a referendum, allowing residential rental operators to continue offering stays of less than five days.

Courts have also been involved in decisions on STR rules. In New Orleans, Louisiana, for example, The Fifth Circuit Court of Appeals struck down the city’s prohibition against corporate ownership of STRs, saying the provision “discriminates against business entities that own homes by preventing them from being licensed to own STRs.” The court upheld most of the other provisions of the law. In Clark County, Nevada, a U.S. District Court judge granted a preliminary injunction that prevents the county from enforcing some of its STR ordinances. The Arizona Court of Appeals ruled against the city of Sedona’s law that prevents mobile homes from operating as STRs. And the Arkansas Supreme Court upheld a lower court decision to keep Fayetteville’s STR ordinance in place.

Along with strengthening regulations, local authorities have also taken steps to boost enforcement of the rules with legal measures and technological tools. 

In Florida, several communities have taken action on STR enforcement. Key Biscayne is following the lead of many local governments across the country in using software that scrapes online STR listings to identify owners who don’t comply with local rules. High fines are also used to deter operators from breaking the rules. Cape Coral recently fined an STR owner more than $30,000 for breaking local rules at three STR properties. Hilton Head Island, South Carolina, also raised its STR-related fines. STR operators that violate STR laws in Virginia Beach, Virginia, can face criminal penalties under rule changes approved by the Virginia Beach City Council.

Looking ahead to 2026, these trends are likely to continue evolving as governments, the short-term rental industry, local communities, and courts all play a role in shaping STR regulation. While some jurisdictions may settle into more stable operational and tax frameworks, many others are expected to face ongoing regulatory change and uncertainty. For STR operators, staying informed and adaptable will be essential to navigating compliance requirements in the year ahead.

Avalara MyLodgeTax can help STR hosts automate registration and filing for state and local lodging taxes. If you have tax questions related to STR properties, drop us a line and we’ll get back to you with answers.