Ending 2025 with New Legislative Proposals
Michigan lawmakers are once again looking to short-term rentals (STRs) as a new revenue source.
- Rep. Joey Andrews’ package to be re-presented for this session creates a statewide STR registry and allows an additional 6% STR-specific excise tax, with revenue split between local governments and Pure Michigan.
- Rep. John Roth’s new proposal would allow local communities, with voter approval, to impose up to a 3% tax on bookings made through platforms like Airbnb and Vrbo, and in some versions, on hotels and motels as well.WWMT+2Spectrum Local News+2
On the surface, these ideas are framed as “helping communities” and “funding tourism.” – ideas we can all get behind.
However, Michigan still has no clear, modern framework for how STRs fit into residential zoning.
This issue is ignored in these potential bills, leaving out an important and costly issue in STR in our state.
The Real Fight on the Ground: “Commercial” vs. “Residential”
Across Michigan, we see the same pattern repeating:
- A township attorney or planner looks at a 40–50-year-old zoning ordinance.
- They decide that STRs are a “commercial use” and therefore not allowed in residential districts.
- Hosts are suddenly told they’re illegal—even if they’ve paid their taxes, met safety requirements, and operated without incident for years.
- Lawsuits follow, costing time and money for both local government and property owners.
MSU Extension’s recent report on Michigan’s STR economy documents how vague, outdated zoning language has been used this way, with courts sometimes concluding that STRs lack the “continuity of residence” typical of traditional residential use—and therefore can be restricted or excluded.
This is not thoughtful planning. It’s policy by reinterpretation, built on decades-old language that never contemplated today’s mix of home-based work, tourism, and the digital economy.
The Double Standard: Many Businesses Already Operate in Neighborhoods
In one township where STRs were being labeled “commercial” and pushed out of residential zones, a quick look at Google Maps told another story.
In the same residential district, you could find:
- Ballroom dance lessons in a basement
- Automotive services in the driveway
- A doggy daycare
- A home-based print shop
All of these are income-generating activities operating within residential areas.
Yet only STRs were treated as uniquely unacceptable because of the “commercial nature of the activity.”
That is a selective and discriminatory use of zoning power. It doesn’t reflect how people actually use their homes today—for child care, tutoring, remote work, cottage industries, and, yes, hosting guests. It also doesn’t match the true purpose of zoning, which has never been to police whether money changes hands, but to manage impacts:
- Noise
- Parking
- Traffic
- Health and safety
- Density and infrastructure capacity
If the concern is late-night parties, crowded streets, trash, or fire safety, those impacts can and should be addressed directly—for all properties that create those issues, whether they’re STRs, long-term rentals, or owner-occupied homes.
What MSU Extension Says: Regulate the Impact, Not Just the Label
Michigan State University Extension has been clear about the challenge local governments face: STRs sit at the intersection of housing, tourism, and neighborhood quality, and many communities are struggling with ambiguous ordinances and uneven enforcement.
Their research points to a more modern, practical approach:
- Focus local rules on the externalities—noise, occupancy, parking, safety, and clustering—rather than simply declaring STRs “commercial” and banning them.
- Use zoning tools and licensing to manage where STRs can operate and under what conditions, instead of relying on old catch-all “residential use” language that was never designed for today’s reality.
In other words: regulate the impact of the activity, not just the name on the business card.
MiSTRA strongly supports this impact-based approach. It’s more honest, more enforceable, and fairer to both residents and responsible operators.
The Legislative Proposals
The Legislative Process is never linear; and solving all the problems isn’t going to happen in one bill. Roth’s bill focuses solely on taxation; Andrew’s past bill proposed a framework that included taxes; neither address this key issue of focusing on the impact of the activity vs the activity itself.
They treat STRs as a revenue source without first resolving how they are defined and treated under zoning.
That creates several problems:
- More taxes, same lawsuits.
Hosts could be taxed like lodging businesses while simultaneously being zoned out of neighborhoods as “commercial intrusions.” That’s a recipe for more conflict, not less. - No help for local governments trying to modernize ordinances.
Neither proposal dedicates meaningful support to help communities rewrite outdated zoning codes, clarify definitions, or build fair, impact-based regulatory frameworks. - Layering costs without clear benefits for those paying them.
Guests and owners would pay new taxes on STR stays, but there is no guarantee those dollars will be used to:
- Improve enforcement of existing nuisance or noise ordinances,
- Support housing initiatives, or
- Fund technical assistance to help communities regulate well.
- Improve enforcement of existing nuisance or noise ordinances,
What MiSTRA Believes Michigan Should Do Instead
MiSTRA is not opposed to responsibility, structure, or even well-designed revenue mechanisms.
But we would like to see the regulatory battles on the ground – expensive for communities and property owners alike in terms of legal costs and good will, mitigated with some legislative guardrails.
A better path would:
- Affirm that STRs are a residential lodging use with clear conditions, not inherently “commercial” simply because guests are short-term.
- Support impact-based local regulation that:
- Uses tools like occupancy limits, noise rules, parking standards, and spacing/density controls;
- Applies those rules consistently to all problem properties, not just STRs.
- Uses tools like occupancy limits, noise rules, parking standards, and spacing/density controls;
- Provide state-level guardrails, so communities can:
- Effectively establish local controls without trying to re-create a basic understanding
- Focus on identifying the local guardrails that make sense – and implementing
- Only then consider tax mechanisms, and ensure that:
- STRs are not singled out for punitive treatment, and
- Any revenue meaningfully supports the communities bearing the costs (including housing and infrastructure).
- STRs are not singled out for punitive treatment, and
Tax Parity isn’t “Parity”
Short-term rentals are not hotels. AirDNA data (Nov. 2025) show that fewer than 75% of STRs are available year-round (more than 271 days per year), meaning a substantial share are truly part-time uses of a home, not dedicated lodging businesses. Individual STRs also do not operate at hotel-like guest density; they typically host one household or travel group at a time, not hundreds of people cycling through a single building. That means they don’t drive the same high-density life-safety and land-use impacts that hotels and large resorts do.
For many owners, STR is simply a way to use a second home or even a primary residence for economic gain during periods when they’re not personally using the property. Like any economic activity, taxation is appropriate—but calling hotel-style tax structures “parity” ignores the very different way STRs use land, buildings, and neighborhood infrastructure.
Michigan STR owners already
- Pay 6% General Use Taxes on all rental income
- Pay property taxes – often at a higher rate as nonhomestead homes (a gross estimate of incremental property taxes attributed to STR is ~$139M in taxes retained by local communities)
- Pay additional local assessments & fees. From local permit and inspection fees to convention & visitor bureau assessments, depending on location substantial additional fees and assessments may be charged
- Pay income taxes. All income is reported and taxed (excepting any income <$1500/annually)
Exorbitant additional taxes, and the uneven application of convention and visitor bureau assessments on individual STR owners makes for a complex and expensive endeavor that for most isn’t a full-time business. MiSTRA supports a tax structure that is straightforward and doesn’t create uncapped taxation, disincentivize working with a professional property manager, and keeps taxes where they are most useful – in the local community.
How Hosts and Allies Can Respond: Join MiSTRA & Get Involved
These tax proposals are moving in a policy environment where STRs are still being selectively labeled “commercial” and pushed out of neighborhoods using old ordinances. That must change.
If you care about fair, impact-based regulation and the future of STRs in Michigan, here’s how you can help:
- Join MiSTRA – Your membership strengthens our voice in Lansing and gives us the capacity to push for better solutions than “tax first, fix later.”
- Stay informed & share your story – Local examples of double standards (like home-based businesses being allowed while STRs are singled out) are powerful in legislative conversations.
- Engage locally – Show up at township and city meetings, reference MSU Extension research, and advocate for zoning that focuses on impacts, not labels.
MSU_Extension_July2025 - Talk to your legislators – Let them know you support responsible, impact-based STR regulation and that you oppose new STR-specific taxes that don’t fix the underlying zoning and legal instability.
MiSTRA will continue working to ensure Michigan’s approach to short-term rentals is fair, evidence-based, and focused on real community impacts—not just new layers of tax.
And we need you with us.