Arizona is one of the most STR-friendly states in the country. A statewide preemption law enacted in 2016 and strengthened over time prohibits cities from banning short-term rentals or imposing restrictive special permits. Cities can require registration and collect transaction privilege tax (TPT), but that's the scope of what local regulation can do.
| Rule | Detail |
|---|---|
| Statewide preemption | Yes. Cities cannot ban STRs or require special permits beyond transaction privilege tax registration. |
| State transaction privilege tax (TPT) | 5.6% state TPT applies to all short-term rental revenue. |
| Local transaction privilege tax | Cities collect additional local TPT. Scottsdale: ~1.75%. Phoenix: ~2%. Combined state + local typically 8-11% of gross nightly revenue. |
| Special permits or local STR licenses | Not allowed under Arizona preemption law. Cities can require TPT registration; that's it. |
| Zoning restrictions | Preemption limits city ability to zone-restrict STRs. Investors can operate in any zone unless explicitly prohibited by state law. |
| Owner-occupancy requirement | No statewide owner-occupancy mandate. Cities cannot impose one. |
| Tax remittance | Platforms (Airbnb, VRBO) typically collect and remit state TPT. Hosts register for local TPT with their city. |
Statewide preemption
Yes. Cities cannot ban STRs or require special permits beyond transaction privilege tax registration.
State transaction privilege tax (TPT)
5.6% state TPT applies to all short-term rental revenue.
Local transaction privilege tax
Cities collect additional local TPT. Scottsdale: ~1.75%. Phoenix: ~2%. Combined state + local typically 8-11% of gross nightly revenue.
Special permits or local STR licenses
Not allowed under Arizona preemption law. Cities can require TPT registration; that's it.
Zoning restrictions
Preemption limits city ability to zone-restrict STRs. Investors can operate in any zone unless explicitly prohibited by state law.
Owner-occupancy requirement
No statewide owner-occupancy mandate. Cities cannot impose one.
Tax remittance
Platforms (Airbnb, VRBO) typically collect and remit state TPT. Hosts register for local TPT with their city.
The preemption law shifts regulatory risk from the state level to the local level, but the impact is drastically different from non-preemption states. Arizona investors don't face the threat of a city banning STRs outright. Scottsdale and Phoenix have tried to regulate STRs through nuisance ordinances and enforcement actions, but they cannot legally ban the business model itself. That certainty is a major advantage in underwriting.
Arizona's largest STR markets are Scottsdale and Phoenix. Both benefit from preemption, but they serve different investor profiles.
A luxury and resort-focused STR market, especially strong during winter months when snowbirds migrate to Arizona. High nightly rates, strong seasonal demand, and minimal regulatory risk. See the full Scottsdale page for TPT registration, taxes, and underwriting guidance.
A large, diverse metro area with a broad range of STR opportunities - from downtown condos to suburban homes. Regulatory risk is low due to preemption; the underwriting focus is on market saturation, seasonal pricing, and demand trends. See the full Phoenix page for local TPT rates, taxes, and market specifics.
Arizona STRs are subject to state and local transaction privilege tax (TPT). The tax is collected on gross nightly revenue, not after expenses. Understand the full stack before building the pro forma.
Platforms collect and remit state TPT. Hosts must separately register for local TPT with their city and remit monthly or quarterly based on city requirements.
Arizona's preemption law removes regulatory uncertainty that exists in most states. Your due diligence shifts from asking 'Can we operate here?' to 'What's the demand and can we hit our return targets given the local tax rate?' Model the full state and local TPT stack (8-11% of gross revenue), confirm the city's specific local TPT rate and registration process, and layer market-specific seasonality and demand analysis on top.
Sources
This is general information, not legal advice. Verify current rules with local authorities and the Arizona Department of Revenue before advising a client.
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Can Arizona cities ban short-term rentals?
No. Arizona's statewide preemption law explicitly prohibits cities from banning STRs. They can require TPT registration and enforce nuisance ordinances, but they cannot ban the business model.
Does Airbnb collect Arizona transaction privilege tax?
Yes, Airbnb and VRBO collect and remit Arizona state TPT (5.6%) on behalf of hosts. Hosts must separately register for and remit local TPT to their city.
What is the total tax rate on Arizona STRs?
Combined state and local TPT typically ranges from 8-11% of gross nightly revenue depending on the city. Scottsdale ~7.35%, Phoenix ~7.6%. Confirm the exact local rate with your city's tax office.
Can I operate an STR in any zone in Arizona?
Preemption limits cities' ability to zone-restrict STRs. Barring specific state-level prohibitions, investors can typically operate in any zone. Verify zoning with your city or the Arizona Department of Revenue.
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