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Illinois has no statewide short-term rental license; home-rule cities such as Chicago set the rules. Stays owe the 6% state Hotel Operators' Occupation Tax, plus county and city taxes.
Short-term rentals (STRs) are legal in Illinois, but their regulation varies significantly across the state, with specific rules set by local governments.
In Illinois, a short-term rental is legally defined as any rental of a residential dwelling unit for a period of 31 days or less. This encompasses various types of accommodations, including entire houses, apartments, condos, cabins, and other living spaces offered for short stays. The 31-day threshold is what separates short-term rentals from longer-term leases, which are subject to different regulations.
In Illinois, the statewide registration and licensing requirements for short-term rentals vary based on the type of rental and location. While state law provides a general framework for regulating short-term rentals, local municipalities have the authority to enact additional ordinances.
Statewide, hosts renting out two or more units in a building with four or more units must obtain a license from the Department of Public Health, mainly applicable to condos and apartment buildings. Home-sharing hosts who rent space in their primary residence for up to 30 consecutive days are exempt from licensing but must still register with the state. The registration process involves providing contact, property, and emergency information, paying annual fees, and ensuring the rental units meet safety codes. It's important to note that the licensing process includes a formal application, fee, inspection, and renewal. Non-compliance can lead to fines.
Furthermore, in cities like Chicago, different requirements apply. For example, vacation rentals must obtain a license from the city, and shared housing units need approval for registration. Chicago imposes various taxes on short-term rentals, including a Hotel Accommodations Tax, a Shared Housing Surcharge, and a Domestic Violence Surcharge.
A period of 31 days or less.
Stays of fewer than 30 consecutive days owe the 6% state Hotel Operators' Occupation Tax, charged on 94% of receipts. Counties and cities add their own hotel taxes; Chicago adds several. Airbnb and Vrbo collect the state tax on bookings made through them (Vrbo since August 2026), plus Chicago and Cook County taxes; you file for direct bookings.
Lodge Compliance is not a licensed tax or financial advisor. Therefore nothing in the above article should be construed as tax, legal, or financial advice. Contact your local tax office for information regarding your personal circumstance.
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