Chicago, IL Airbnb & Short-Term Rental Regulations 2026

Regulation Overview

The nation's third-largest city, with year-round convention, sports, and tourism demand; STR investors need to check the Shared Housing Ordinance's prohibited-buildings list and restricted residential zones before buying, since a meaningful share of housing stock is off-limits.

STRs are banned on a citywide Prohibited Buildings List and within City Council-designated Restricted Residential Zones, so a meaningful share of housing stock is off-limits even though registration itself is a straightforward online process elsewhere.

Illinois State Law

State preemption: None — Illinois does not preempt local short-term rental regulation; cities and counties set their own rules, resulting in a patchwork of ordinances statewide.

Statewide rules: No statewide STR license or registry. The state's Hotel Operators' Occupation Tax (HOOT) was expanded to explicitly cover STR marketplaces (Airbnb, Vrbo, etc.), effective January 6, 2026; platforms must register with the IL Dept of Revenue to collect and remit the tax.

Taxes: State Hotel Operators' Occupation Tax of roughly 6% of 94% of gross rental receipts (a 5% tax plus a 1% tax), applying to STR platform bookings since January 6, 2026, on top of any local hotel/lodging tax.

2025–2026 legislation: HOOT expansion to STR marketplaces took effect January 6, 2026 (IL Dept of Revenue Publications FY 2025-28 and FY 2026-33).

Chicago Rules

Governing jurisdiction: City of Chicago, Dept. of Business Affairs and Consumer Protection (BACP).

• Chicago regulates STRs under the Shared Housing Ordinance, Municipal Code Chapter 4-14, which defines a 'shared housing unit' as a dwelling with six or fewer sleeping rooms rented for stays under 31 days through an online platform.
• Every listing needs an approved Registration Number before it can legally operate; eligibility review checks the property against the Prohibited Buildings List and the Restricted Residential Zone map.
• The Prohibited Buildings List and Restricted Residential Zone boundaries are published as open datasets on the city's data portal and should be checked for a specific address before purchase.
• The annual registration fee is $250 per unit; hosts registering more than one shared housing unit must also hold a $250 Shared Housing Unit Operator License.
• Illinois' statewide Hotel Operators' Occupation Tax now applies to STR platform bookings (effective January 6, 2026) in addition to Chicago's own hotel tax stack.
• City aldermen have historically been able to petition to prohibit shared housing within their ward via City Council vote, which is one mechanism behind the Restricted Residential Zones.

Not confirmed

We could not verify the following against a primary source. Confirm each with the jurisdiction before you rely on it:

• Current total count/boundaries of Restricted Residential Zones (these change over time — check the live data portal before purchase)
• Occupancy limits per unit
• Whether registration transfers on sale
• Specific penalty amounts for unregistered operation

Buyer Due Diligence Checklist

Before you write an offer on a short-term rental here:

• Get a written determination from the governing jurisdiction for the specific parcel. Verbal guidance from anyone else is not diligence.
• Establish which jurisdiction governs — city, town, village and unincorporated county can differ sharply within a few miles.
• Ask whether an existing permit transfers on sale. In many markets it does not, and a listing marketed as a running short-term rental may convey nothing of the sort.
• Read the HOA or condo covenants during your inspection period. Private covenants bind even where the jurisdiction permits the use.
• Model revenue against the legal occupancy cap, not the bedroom count.

Frequently Asked Questions