Arizona Short-Term Rental Laws (2026): State Rules, City Limits and Taxes
Short-term rentals are legal everywhere in Arizona, because the state says so: SB 1350 (2016) bars any city, town or county from prohibiting vacation rentals or restricting them based on their classification, use or occupancy. What the state took away in 2016 it partly gave back in 2022, when SB 1168 let local governments require a license, a local contact, liability coverage and neighbor notice, and suspend the license after repeat violations. A 2026 bill that would have let cities cap licenses passed the House and died in the Senate.
This guide is for hosts in Scottsdale, Phoenix, Sedona, Paradise Valley and the rest of the state who need the preemption rule, the transaction privilege tax (TPT) mechanics and the city license requirements in one place. It is part of our short-term rental laws by state roundup. Reviewed October 13, 2026. Not legal advice; confirm with the Department of Revenue or your city before acting.
Key facts
- A.R.S. § 9-500.39 (cities) and § 11-269.17 (counties), enacted by SB 1350 in 2016, prohibit local bans on vacation rentals and short-term rentals; SB 1168 (2022) authorized local licensing, emergency contacts, insurance and neighbor-notification rules and license suspension after three verified violations in 24 months.
- Every operator must hold a current state TPT license before advertising or renting, whether or not the property is listed on an online lodging marketplace, and the license number must appear in all advertising, per the Department of Revenue.
- Online lodging marketplaces such as Airbnb and Vrbo have been required to register and remit TPT on the bookings they facilitate since January 1, 2019; the state levy on marketplace transactions is 5.5 percent, with county and city hotel taxes on top.
- HB 2429 (2026), which would have let cities set occupancy limits and expand penalties, passed the House on March 10, 2026 and never received a Senate committee hearing; the sponsor said she would bring it back.
- City licenses are capped by state law at the lesser of actual cost or $250: Scottsdale and Phoenix charge $250 a year, Sedona $210, and all three require a local contact and, in Scottsdale and Phoenix, $500,000 in liability coverage.
Statewide rules
Arizona is the clearest preemption state in the country, and the statute is older than most of the ordinances it constrains. SB 1350 added § 9-500.39 to the cities code and § 11-269.17 to the counties code, each saying a local government may not prohibit vacation rentals or short-term rentals and may not restrict their use based on classification or occupancy. The original law let cities regulate only for public health and safety; the result in Scottsdale and Sedona was a decade of complaints about party houses that cities could not touch.
SB 1168, signed in 2022, is the correction. Cities and towns may now require a local license or permit, demand a designated emergency contact who responds within a set window, require liability insurance (or proof that the platform's coverage applies), require notice to neighbors before a property begins operating and impose escalating civil penalties, including suspending the license after three verified violations within 24 months. What they still cannot do is cap the number of rentals, require owner occupancy or impose minimum distances between them. HB 2429 would have reopened the cap question; as originally drafted it let cities limit the number of rentals and set spacing, it was narrowed to occupancy limits and enforcement before the House vote, and it stalled without a Senate hearing.
Licensing is therefore two-tier. The state license is a TPT license from the Department of Revenue, obtained through AZTaxes.gov, and it is a tax registration rather than a regulatory permit; the Department says an operator may not offer a property for rent without one, and the license number must appear in every advertisement. The city license, where one exists, is the regulatory layer, and it must be obtained in addition. There is no statewide safety inspection and no state platform data-sharing law beyond the marketplace tax reporting described below.
HOA covenants sit outside all of it. A declaration that restricts leases to 30 days or more binds a Scottsdale owner regardless of § 9-500.39. The appellate record on what a "residential use" covenant does and does not prohibit is surveyed in what courts have actually held about short-term rentals.
Major cities and counties
| Jurisdiction | Can you operate? | Key requirement | Notes |
|---|---|---|---|
| Scottsdale | Yes; no cap or spacing permitted by state law | $250 annual license, TPT license first, $500,000 liability coverage, 24/7 emergency contact, neighbor notification; $1,000 a month penalty for operating unlicensed | Neighbor-notice deadlines differ between city materials; confirm with the city |
| Phoenix | Yes | $250 permit through the SHAPE PHX portal, TPT license, $500,000 liability coverage, local contact who responds to police within one hour | Ordinance reported amended in May 2026; read the current text |
| Sedona | Yes; the city cannot prohibit rentals or cap permits | $210 annual permit per unit; notify adjacent, facing and diagonal single-family neighbors before the first booking; late renewal fees of $50 or $100 | — |
| Paradise Valley | Yes | Town license with emergency contact and neighbor notice rules adopted after SB 1168 | — |
| Flagstaff and Tucson | Yes | City license or registration under the SB 1168 framework; confirm the current fee | — |
| Mesa | Yes | City license (reported at $250) plus city transient lodging tax | — |
Because the state fixes what cities may ask for, the programs are similar in substance and differ in friction: how fast the contact must respond, whom you must notify and how the city counts a "verified violation" toward suspension.
Taxes
Arizona taxes short-term lodging through the transaction privilege tax, a tax on the business of renting rather than a sales tax on the guest, applied to stays of fewer than 30 consecutive days. The state portion on online lodging marketplace transactions is 5.5 percent; counties add their own rate, and cities add a city hotel tax (Mesa, for example, levies 5 percent on transient lodging in addition to its general rate), so combined rates in the Phoenix metro land in the low to mid teens.
Since January 1, 2019, every online lodging marketplace must register with the Department of Revenue and remit TPT on all transactions it facilitates, reporting monthly and remitting the aggregate for each taxing jurisdiction. Airbnb and Vrbo therefore remit state, county and city TPT on platform bookings. The host still needs a TPT license (the Department is explicit that the license is required whether or not you use a marketplace), still reports under business codes 025 and 044 (and 144 where a city adds a further hotel tax), and remits directly on any booking that did not come through a registered marketplace: your own website, a repeat guest who pays by card, a corporate stay.
Direct bookings also carry the advertising rule: the TPT license number must appear on your site. For operators with properties across Maricopa, Pima and Coconino counties, the combination of state code, county rate and city hotel tax per property is the detail Haven's tax and accounting tooling stores, with cited AI rate suggestions per jurisdiction and per-property configuration.
What changed in 2025 and 2026
- February 18, 2026: HB 2429 cleared a House committee after being narrowed from a cap-and-spacing bill to occupancy limits and enforcement.
- March 10, 2026: The House passed HB 2429, 36-19-4 by one count (37-14 by another), and sent it to the Senate.
- April 1, 2026: Several city TPT rate changes took effect; Mesa's combined rate is reported at 12.5 percent on the Department's rate table.
- May 1, 2026: The Senate had held no hearing and no striker vehicle existed, leaving the bill dead for the session; sponsor Rep. Selina Bliss said work on a 2027 version had begun.
- May 2026: Phoenix reported amendments to its short-term rental ordinance; confirm the current requirements before applying.
- Not changed: § 9-500.39 and § 11-269.17 remain in force; no city may ban, cap or space rentals.
How to stay compliant
- Get the TPT license first, through AZTaxes.gov, and put the number on every listing and on your direct booking site.
- Apply for the city license or permit where one exists (Scottsdale, Phoenix, Sedona, Paradise Valley, Flagstaff, Tucson, Mesa) and renew annually; late renewals carry fees.
- Carry the liability coverage your city requires ($500,000 in Scottsdale and Phoenix) or document that the platform's policy satisfies the ordinance.
- Name an emergency contact who can respond within the city's window and keep the contact current with the city.
- Send neighbor notifications before the first booking and keep proof; Sedona's rule covers adjacent, facing and diagonal lots.
- File TPT returns on schedule and report direct bookings under the correct business codes; marketplace remittance does not file for you.
- Keep guest counts within the city's occupancy limit and respond to complaints quickly, since three verified violations in 24 months can suspend the license.
- Read the CC&Rs; the state's preemption does not reach your HOA.
FAQ
Is Airbnb legal in Arizona?
Yes, statewide. A.R.S. § 9-500.39 and § 11-269.17 prohibit cities and counties from banning vacation rentals or short-term rentals. Cities may license and regulate them under SB 1168, but they may not cap them.
Do I need a state license to host in Arizona?
You need a state TPT license from the Department of Revenue before you advertise or rent, and the number must appear in your listings. It is a tax license, not a regulatory permit; the regulatory permit comes from your city where one exists.
What taxes do I pay on an Arizona short-term rental?
Transaction privilege tax at the state rate of 5.5 percent on marketplace transactions plus county and city hotel taxes, on stays under 30 days. Airbnb and Vrbo remit on the bookings they facilitate; you remit on direct bookings and still file returns under your own license.
Can my Arizona city ban short-term rentals?
No. It can require a license, a local contact, insurance and neighbor notice, and it can suspend your license after repeated verified violations, but a ban, a cap or a spacing rule is preempted. HB 2429, which would have widened city powers, died in the Senate in 2026.
What changed in 2025 and 2026?
The state law did not change. HB 2429 passed the House in March 2026 and stalled; city rate changes took effect April 1, 2026; and Phoenix amended its ordinance in May 2026.
Sources
- Arizona Department of Revenue — Short-term lodging (accessed October 2026)
- Arizona Department of Revenue — Online lodging marketplace (accessed October 2026)
- Arizona Legislature — HB 2429 (2026) House engrossed text (accessed October 2026)
- Arizona Legislature — HB 2429 House bill summary (accessed October 2026)
- Arizona Capitol Times — Another year, another attempt at short-term rental reform (accessed October 2026)
- KJZZ — Arizona short-term rental bill now goes after 'repeat bad actors' to limit overnight occupancy (accessed October 2026)
- City of Mesa — Transient lodging tax (accessed October 2026)
- Thunderbird Law Firm — Cities get new enforcement powers against short-term rentals (accessed October 2026)
- BNBCalc — Scottsdale short-term rental regulations: 2026 guide (accessed October 2026)
- Lodgify — Sedona short-term rental regulations (accessed October 2026)
