The 2026 STR Preemption Wave. How State Legislatures Are Stripping Cities of the Power to Ban Short-Term Rentals

Missouri’s Senate just voted 30-3 to tell county assessors they cannot reclassify your short-term rental property as commercial real estate. If you think that sounds like a narrow tax bill, you are not looking at the bigger picture. SB 1066 is the latest in a wave of state-level legislation that is quietly reshaping the STR regulatory landscape across America, and the pattern is becoming impossible to ignore.

I have been tracking state STR legislation for most of 2026, and what I keep seeing is the same story playing out in different capitols: bills that protect STR operators are advancing, and bills that restrict them are dying in committee. That is not coincidence. It is a trend. And if you are an investor trying to figure out where to put capital, it is a trend you need to understand.

This article provides general information and should not be construed as legal advice. Consult a qualified attorney in your jurisdiction for advice specific to your situation.

The National Pattern: Preemption Is Winning

Picture this: you are sitting in a state capitol hearing room in early 2026. A lawmaker introduces a bill to let cities ban or heavily restrict short-term rentals. Testimony runs for hours. The bill gets tabled, postponed, or killed outright. Down the hall, another committee is voting to protect STR operators from local overreach. That bill passes with bipartisan support.

This is not a hypothetical. It happened in Washington. It happened in Colorado. It happened in Missouri. The 2026 legislative season has produced a remarkably consistent pattern: host-friendly preemption bills are clearing committees and passing chambers, while restriction-oriented bills are stalling or dying.

At least 11 states now have some form of STR preemption statute, including Florida, Arizona, Idaho, Indiana, Iowa, Montana, New Hampshire, North Carolina, Tennessee, Utah, and Wisconsin. That number grew by two in 2026 alone, with Idaho and Indiana signing new laws. And Missouri may be next in line.

Missouri SB 1066: The Tax Reclassification Fight

Missouri’s SB 1066, sponsored by Senator Ben Brown (R-District 26), tackles a problem that sounds technical but has real financial teeth. Several county assessors across Missouri (particularly in the St. Louis area) have been reclassifying short-term rental properties from residential to commercial for property tax purposes. The difference is not trivial: Missouri’s residential assessment rate is 19%, while the commercial rate is 32%.

For one St. Louis property owner, that reclassification turned an $8,000 annual property tax bill into a $20,000 one. Overnight. That is a 150% increase with no appeal, no hearing, and no warning. The owner stopped operating an STR entirely.

SB 1066 would fix this by explicitly defining single-family homes leased for fewer than 30 consecutive days as residential property for tax purposes. The bill caps eligibility at 15 properties per owner (so it is not a blank check for institutional portfolios) and requires assessors to consult with property owners before attempting any reclassification.

The bill passed the Missouri Senate on March 25, 2026, with a 30-3 vote, the kind of bipartisan margin that suggests this is not a close call for most legislators. It is now being considered by the House Special Committee on Tax Reform. The companion bill, HB 1768, is moving through the House side. The Missouri Vacation Home Alliance (MOVHA) has been the primary advocacy group pushing both bills.

Why this matters for investors: if you own or are considering purchasing STR properties in Missouri, the current tax classification ambiguity is a material risk. SB 1066, if signed into law, removes that risk. Watch the House committee for movement.

Idaho and Indiana: The 2026 Laws Already on the Books

Missouri is following a trail that two other states have already blazed this year.

Idaho HB 583, signed into law in March 2026, is a straightforward preemption statute. Cities and counties in Idaho can no longer ban short-term rentals outright. They can still regulate (permits, safety standards, noise ordinances), but they cannot prohibit. The bill passed the Idaho House 54-16 and the Senate 23-12. We covered the full details in our Idaho HB 583 analysis.

Indiana HEA 1210, signed by Governor Braun in March 2026 with a July 1 effective date, goes even further. Indiana cities can no longer cap the number of residential rental units in their jurisdiction. The bill passed the House on an 82-1 vote, which is about as close to unanimous as legislation gets in any state. There is a carve-out for Carmel and Fishers (both had existing per-subdivision caps) that expires January 1, 2028. The bill also limits who can vote on HOA rental restrictions to homestead members only. Our Indiana HEA 1210 breakdown covers the specifics.

Both of these laws share a common logic: the state, not the city, sets the floor for property rights. Cities can regulate. They cannot prohibit.

Arizona: The Preemption Cautionary Tale

If Idaho and Indiana represent preemption’s expansion, Arizona represents its limits.

Arizona was arguably the first state to go all-in on STR preemption. In 2016, the legislature passed SB 1350, which created ARS 9-500.39 and effectively banned cities from prohibiting vacation rentals. It was the gold standard for STR-friendly state law. Scottsdale, Sedona, Flagstaff (communities where STR density had become a genuine source of tension) were left with almost no tools to manage the growth.

That is changing. HB 2429, sponsored by Rep. Selina Bliss (R-Prescott), passed the Arizona House on a 36-19-4 vote in March 2026 and has been transmitted to the Senate. The bill would give cities new regulatory authority, including occupancy caps (two adults per sleeping area plus two additional), an expanded violation window from 12 to 24 months, and the ability to deny permits for unpaid fines. Permit caps and spacing requirements were stripped from the bill after opposition from the Arizona Association of Realtors and Airbnb, but the direction is clear: Arizona is walking back its preemption.

The lesson for investors is important. Preemption is not permanent. The political dynamics that produce a preemption law in one session can reverse in another, especially when STR density in popular tourist markets creates visible community friction. We covered the full Arizona rollback in our Arizona STR preemption analysis.

The Bills That Died: Washington and Colorado

The flip side of the preemption wave is equally telling. Restriction-oriented bills introduced in 2026 have consistently failed to advance.

Washington HB 2559 would have authorized local governments to impose an excise tax of up to 4% on short-term rental bookings, layered on top of existing lodging taxes. The bill drew enormous opposition: more than 250 people testified, with the majority opposing the measure. Airbnb mounted a significant lobbying campaign against it. The House Finance Committee postponed the bill indefinitely on February 9, 2026. It is dead for this session.

Colorado HB 1036, the vacancy tax bill, met the same fate on the same day (February 9, 2026). The bill would have allowed counties and municipalities, with voter approval, to levy an excise tax or additional property tax on residential properties classified as vacant. While the bill technically exempted licensed short-term rentals, an amendment created a loophole: in communities with STR license caps, unlicensed properties could have been reclassified as “vacant” and taxed accordingly. The Colorado Short-term Rental Association mobilized against it. The House Finance Committee voted 7-4 to kill it after four hours of testimony.

Colorado has now seen multiple STR-related tax and restriction proposals fail in consecutive sessions. The legislature keeps trying to find a mechanism to increase the tax burden on STRs, and the industry keeps successfully fighting it off. But the attempts are not stopping, which means Colorado belongs in the “active battleground” column, not the “safe” column.

The 2026 STR Preemption Scorecard

Here is where things stand as of April 2026, organized by how each state treats the relationship between state power and local STR authority.

States with Active Preemption Laws (cities cannot ban STRs)

• Florida (2011, revised 2014): Cities cannot ban STRs or limit frequency/duration unless they had ordinances before June 1, 2011. The original preemption state.
• Arizona (2016, amended 2022): ARS 9-500.39 prevents outright bans but now allows some local regulation. HB 2429 would loosen preemption further (pending Senate vote).
• Idaho (2026): HB 583 prevents local bans. Cities can regulate but not prohibit. Effective July 1, 2026.
• Indiana (2026): HEA 1210 prevents cities from capping rental unit numbers. Carmel/Fishers carve-out until 2028. Effective July 1, 2026.
• Iowa, Montana, New Hampshire, North Carolina, Tennessee, Utah, Wisconsin: Various forms of preemption limiting local authority over STRs.

States with Host-Friendly Bills Advancing in 2026

• Missouri: SB 1066 (tax classification protection) passed Senate 30-3, in House committee.
• New Mexico: HM 52 established a work group to develop statewide preemption framework.
• Pennsylvania: HB 2303 proposes the first statewide STR regulatory framework. Not preemption per se (it explicitly preserves local authority), but establishes consistent state standards. We covered this in our Pennsylvania HB 2303 analysis.

States Where Restriction Bills Failed in 2026

• Washington: HB 2559 (4% STR excise tax) died in committee February 9, 2026.
• Colorado: HB 1036 (vacancy tax) died in committee February 9, 2026. Follows a pattern of failed STR tax proposals.

States with Strong Local Regulation (no preemption)

• New York: Local Law 18 in NYC remains one of the strictest STR regimes in the country. No state preemption.
• California: Cities like Santa Monica, San Francisco, and Los Angeles set their own rules. No state preemption, though courts have blocked some local bans in the Coastal Zone.
• Hawaii: County-by-county regulation including Maui’s vacation rental phase-out. No state preemption.

What This Means for STR Investors

The legislative landscape is not random. There is a pattern, and it has investment implications.

States governed under Dillon’s Rule (where cities only have the powers the state explicitly grants them) are more likely to pass preemption laws. Home Rule states (where cities have broad self-governing authority) tend to leave STR regulation to local governments. This distinction explains a lot of the map. Idaho, Indiana, and Virginia are Dillon’s Rule states. Colorado, California, and New York are Home Rule states.

For investors evaluating new markets, here is the practical framework:

Lower regulatory risk: States with established preemption laws (Florida, Idaho, Indiana, and others listed above). Your ability to operate is protected at the state level. Local regulation exists but cannot eliminate your right to operate.

Improving regulatory environment: Missouri (if SB 1066 passes), New Mexico (work group developing framework), and states where restriction bills have repeatedly failed.

Active battleground: Arizona (preemption being rolled back), Colorado (repeated tax proposals), Texas (Dallas STR ban heading to Supreme Court). These states have ongoing legislative activity that could go either way.

High regulatory risk: New York, California, Hawaii. Local governments have broad authority and have used it aggressively. No state preemption exists or is likely to pass.

None of this means you should avoid high-regulation states entirely. Some of the best-performing STR markets in America are in California and Hawaii. But you need to price the regulatory risk into your underwriting and have a plan for compliance. In preemption states, the regulatory floor is set. In Home Rule states without preemption, the floor can drop out from under you with a single city council vote.

Use StaySTRA’s city analyzer tool to evaluate market performance data alongside regulatory conditions. Pair that data with the legislative tracking in this article to build a complete picture of where the opportunity and risk sit.

We do our best to keep our regulatory guides accurate and up to date, but ordinances change and we are only human. Always verify current requirements directly with your local municipality before making business decisions.

The 2026 legislative season is not over. Missouri’s SB 1066 still needs to clear the House. Arizona’s HB 2429 is pending in the Senate. New sessions will bring new bills. But the direction of travel is clear: more states are moving to protect STR operators at the state level, and the bills trying to restrict them are running into organized opposition that is winning.

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