Indiana Short-Term Rental Laws: State Rules and Local Permits
Indiana Short-Term Rental Laws: State Rules and Local Permits
Renting a house, condo, or room to overnight guests in Indiana means dealing with two layers of law. The state sets limits on what cities and counties can do, and local governments still decide zoning, registration, and safety rules for your address. The state layer changed in 2026, and parts of that change are not yet confirmed. This guide separates what is settled from what you still need to check. It covers the state statute on short-term rentals, the 2026 bill that followed, local permits, the taxes that apply to guest stays, and the business setup most hosts consider.
Disclaimer: This is informational content, not legal or tax advice. Statutes change, and local ordinances vary by city and county. Confirm every rule here against the current Indiana Code and your local government before you list a property. For a complex situation, such as several properties, an LLC structure, or a dispute with a neighbor or HOA, consult a qualified attorney or CPA.
The Short Version
- Indiana does not have one statewide short-term rental license. Most of what you need comes from local government and from state tax registration.
- IC 36-1-24, created by House Enrolled Act 1035 (2018), protects owner-occupied short-term rentals from local bans in districts that allow residential use.
- House Enrolled Act 1210 (2026) restricts local rules that limit private owners from renting residential property. Its effective dates still need confirmation.
- Expect the 7% state sales tax question, a county innkeeper's tax, and possibly a Registered Retail Merchant Certificate, depending on your activity.
State Law: IC 36-1-24 (2018)
HEA 1035 added IC 36-1-24 to the Indiana Code in 2018. As written in the 2018 enrolled act, the chapter does three things:
- It treats an owner-occupied short-term rental as a permitted residential use under local zoning. A unit cannot disallow it in a district that permits residential use.
- It lets a unit charge a permit fee of up to $150, but only for an initial permit or a permit reissued after revocation. A unit may not charge for renewing a permit.
- It does not apply to a unit that adopted an ordinance regulating short-term rentals before January 1, 2018.
The current codified text could not be confirmed on iga.in.gov during research, so treat the $150 cap and the other details above as stated in the 2018 enrolled act. Read the current IC 36-1-24 before you rely on any figure. Also ask your city whether it adopted an ordinance before January 1, 2018, because that determines whether the chapter applies to you at all.
The 2026 Change: House Enrolled Act 1210
Governor Braun signed House Enrolled Act 1210 on March 12, 2026. It is a local-government omnibus bill. With certain exceptions, it prohibits a unit from adopting or enforcing an ordinance, resolution, regulation, policy, or rule that prohibits or restricts an owner of privately owned residential property from using that property as a rental property.
Three parts of the bill need careful reading:
- Caps on single-family rental homes. The bill also restricts local limits on the number of single-family rental homes. The effective date is unverified. The Department of Local Government Finance memo and the Association of Indiana Municipalities summary describe the restriction as starting in 2028. Other reports cite July 1, 2026, and say existing caps in Carmel and Fishers can stay in place until January 1, 2028. Do not plan around either date until you confirm it in the bill.
- The definition of short-term rental. The bill retroactively amends the definition to exclude certain private owner-occupied businesses. Check whether your use falls under that exclusion.
- Registration and safety rules. Secondary reports say cities can still use registration and safety rules. That is unverified, so confirm what your city can still require.
| Item in HEA 1210 | Status | Where to confirm |
|---|---|---|
| General ban on local restrictions on rental use | Enacted, with exceptions | Text of HEA 1210 on iga.in.gov |
| Limits on single-family rental home caps | Effective date unverified (2028 or July 1, 2026) | Text of HEA 1210 on iga.in.gov, plus your city or county planning office |
| Revised short-term rental definition | Retroactive, scope to confirm | Text of HEA 1210 on iga.in.gov |
| Local registration and safety rules | Reported as still allowed, unverified | Your city or county government |
Local Rules: Zoning, Registration, and Permits
Your city or county still controls the things that most affect your daily operation: whether a residential zone allows rentals at all, how many guests a home can hold, parking, trash, noise, and fire and building safety. Start with your zoning designation. Your local planning office can tell you whether the property is in a district that permits residential use, and whether an owner-occupied rental is treated differently from a non-owner-occupied one.
Next, ask whether your city or county requires a registration or permit. Some Indiana communities do. Others do not. Local fees vary, and this guide does not list them, so get the exact amount and renewal schedule in writing. Under the 2018 act, a local permit fee is capped at $150 for an initial permit, but confirm that cap against current law before you pay.
Some Indiana communities have been especially active on short-term rental rules. Indianapolis, Carmel, Fishers, Bloomington, and other larger cities have all been part of the local debate. Check the rules for your specific address rather than the city as a whole.
Indiana Short-Term Rental License: What You Actually Need
Indiana does not have one comprehensive business license. The state's Business Owner's Guide says so directly. That means the "Indiana short-term rental license" most hosts need is a local registration or permit, plus whatever state tax registration applies to your activity. Profession-specific licenses from the Indiana Professional Licensing Agency do not cover a typical short-term rental, but confirm that for your situation.
If you sell taxable goods, such as branded items or add-on products, you will need a Registered Retail Merchant Certificate from the Department of Revenue. The fee is $25 per the INBiz fee calculator. Confirm whether your guest services require one.
Taxes on Guest Stays
Short-term rentals touch several Indiana taxes. The table below lists the ones this guide can verify and the ones you need to confirm with the Department of Revenue.
| Tax or fee | Rate or amount | What to know |
|---|---|---|
| State sales tax | 7% | Confirm with the Department of Revenue whether it applies to your nightly rates and how it applies to your setup. |
| County innkeeper's tax | Set by each county | The Department of Revenue lists rates by county. Look up your county before your first booking. |
| Registered Retail Merchant Certificate | $25 | Needed for selling taxable goods. Confirm whether your activity requires it. |
| Individual adjusted gross income tax | 2.95% for 2026, plus county local income tax | Applies to your rental income if you own the property as a sole owner or through a pass-through LLC. |
Which booking platforms collect which taxes was not verified. Do not assume a platform handles your state or county tax obligations. Ask the Department of Revenue, and check the platform's host help pages for its collection rules.
Business Setup: Should You Form an LLC?
Many hosts hold rental property in a Limited Liability Company. The Indiana Secretary of State handles the filing, and the figures below come from the INBiz fee calculator and the official state forms:
- Articles of Organization: $95 filing fee, submitted on State Form 49459 through INBiz. The name must include Limited Liability Company or an abbreviation of it, and it must be distinguishable from other names on record.
- Name reservation: $10, held for 120 days.
- Registered agent: Required at all times. The agent must have a street address in Indiana. A P.O. Box is not enough unless it comes with a rural route reference. You cannot serve as your own registered agent.
- Business Entity Report: $32 online, due every other year by the end of the month in which the LLC was formed. The first report is due two years after formation. A paper filing costs $50.
- Franchise tax: Indiana has no franchise tax. An LLC taxed as a pass-through passes its income to the owners.
The Secretary of State does not offer an expedited option for LLC formation, and it does not publish a processing time, so plan for that gap. Forming an LLC does not change your local zoning or permit obligations, and it does not change your guest tax obligations. It only changes who owns the property and who is responsible for contracts. Talk to an attorney and a CPA before you decide, especially if you plan to hold more than one property.
Before Your First Booking: A Checklist
- Confirm the zoning designation for your address with your city or county planning office.
- Read the current IC 36-1-24 and HEA 1210 on iga.in.gov. Note the effective dates for each provision you rely on.
- Ask your local government whether a registration or permit is required, the fee, and the renewal schedule.
- Check your HOA or deed restrictions. A private covenant can restrict rentals even when local law permits them.
- Register with the Department of Revenue for the taxes that apply to your activity, and look up your county innkeeper's tax rate.
- Decide whether to hold the property in an LLC, and if so, file the Articles of Organization and appoint a registered agent.
- Ask your insurance agent whether your policy covers short-term rental activity. Standard homeowner's policies often do not.
- Keep dated records of every permit, tax filing, and fee payment in one place.
Where to Confirm Each Rule
- Indiana General Assembly, current Indiana Code and bill text: https://iga.in.gov/
- Indiana Department of Revenue, taxes and county innkeeper's tax rates: https://www.in.gov/dor/
- Department of Revenue business registration: https://www.in.gov/dor/i-am-a/business-corp/business-education/register-business/
- Indiana Secretary of State, Business Services Division: https://www.in.gov/sos/business/
- INBiz online filing: https://inbiz.in.gov/
- Business entity search: https://bsd.sos.in.gov/publicbusinesssearch
- Indiana Small Business Development Center, free advising: https://isbdc.org/
When to Get Professional Help
Short-term rental law sits where state statute, local zoning, tax, and private contracts meet. If you own more than one property, operate in a city that has recently changed its rules, plan to rent a property you do not live in, or have a dispute with a neighbor or HOA, consult a qualified Indiana attorney. For tax questions about the innkeeper's tax, sales tax, or LLC income, consult a CPA. Bring the bill numbers, your zoning designation, and your county so the advice fits your actual situation.