Arkansas short-term rental rules for owners

Arkansas leaves short-term rentals almost entirely to its cities. The state taxes the stays and registers the businesses that collect those taxes, but it does not license rentals, set standards for them or stop local governments from restricting them. In 2025 the legislature considered doing exactly that, and decided not to. For an owner, the result is a patchwork where the city line can matter more than the house.

The 2025 preemption debate

Two bills in the 2025 session would have limited local power over short-term rentals. House Bill 1445, which aimed to stop cities from regulating them, cleared a House committee in February before being sent to interim study, which ended its chances for the session. A narrower compromise, House Bill 1790, failed on the House floor. City officials, including those from Hot Springs, argued against both. As a result, Arkansas remains a local-control state, and ordinances adopted by Little Rock, Fayetteville, Hot Springs and others stand. The issue may return in a future session.

State taxes on lodging

A short stay in Arkansas carries several layers of tax:

• the state sales tax, known as gross receipts tax, at 6.5%;
• a state tourism tax of 2% on lodging rented on less than a month-to-month basis, which the statute applies expressly to condominiums, townhouses and rental houses as well as hotels;
• city and county sales taxes;
• local lodging or advertising and promotion taxes, often called A&P or HMR taxes, set by each city.

You register with the Department of Finance and Administration and file on the schedule it assigns, including zero returns. If every booking goes through a marketplace such as Airbnb or Vrbo that collects the state-administered taxes, state registration may not be needed, but local taxes can still require their own filings.

A trap worth knowing: Arkansas also has a separate 1% tax called the short-term rental tax. Despite its name, it applies to rentals of tangible personal property such as vehicles and equipment, not to lodging. Do not add it to your nightly rates.

How the cities differ

Little Rock is among the strictest. Owner-occupied rentals need a special use permit from the Planning Commission; non-owner-occupied rentals need a planned zoning district approved by the Board of Directors, property by property; and the city allows no more than 500 short-term rentals at any one time. Insurance of $1 million per occurrence and a responsible party available within 60 minutes are required.

Fayetteville separates owner-occupied Type 1 rentals, which are not capped, from investor-owned Type 2 rentals, limited to 475 licenses. That cap was reached at the end of 2023, and new applicants go on a waiting list.

Hot Springs caps licenses in residential zones at 400 and announced in July 2025 that no new residential licenses were available. Commercial and mixed-use zones remain open.

Bentonville has, according to recent guides, no ordinance specific to short-term rentals, only its A&P tax. Nearby Bella Vista caps non-owner-occupied rentals, and Rogers requires registration for lodging tax purposes.

Our Arkansas markets are Little Rock, Hot Springs and the Fayetteville-Bentonville area.

Covenants, HOAs and insurance

Arkansas has many planned communities, lake developments and gated villages governed by property owners' associations. Their declarations can restrict or forbid short-term renting, set minimum stays or require registration with the association, and they apply regardless of city rules. Read the recorded documents and recent amendments, and ask the association about pending votes.

On insurance, choose a policy written for short-term rental use, with liability limits suited to pools, docks, hot tubs and stairs. Some cities, like Little Rock, set a minimum. Check wind and hail deductibles carefully in a state exposed to severe spring storms.

What an owner must check

• Which city, if any. Confirm whether the property is inside city limits, and which one; Northwest Arkansas cities sit side by side with very different rules.
• Availability. Where there is a cap, ask the city in writing whether a license can still be issued for that address and that rental type.
• Approval route. Is it an administrative license, a conditional use permit, a special use permit or a rezoning with a public hearing?
• Taxes. Which state and local taxes apply, who files them, and what the platform actually remits.
• Private rules. Association covenants, minimum stays and rental registration.
• Insurance and safety. Coverage for short-term rental use, smoke and carbon monoxide detectors, extinguishers and clear exits, which most ordinances require.

Our view

In Arkansas, the most attractive markets are often the ones that have already capped investor rentals, so buying the right address matters more than finding the right house. Treat any city without rules as open for now, not forever, since the state has chosen not to protect owners from new ordinances. If you own a property in Arkansas or are considering one, we study every request and tell you honestly whether and how we can help.