HB2663 creates the Short-Term Rental Occupation Tax Act and establishes a new state tax regime for short-term rental transactions in Illinois. The bill defines short-term rentals broadly to include owner-occupied, tenant-occupied, and non-owner-occupied dwellings rented for less than 30 consecutive days when reserved in advance, while excluding certain facilities such as schools, licensed care facilities, some senior housing, migrant housing, nonprofit patient housing, and hotels. It imposes two state-level taxes on transactions facilitated by a hosting platform: a 5% tax and an additional 1% tax, both calculated on 94% of gross rental receipts. The bill also requires short-term rental operators to obtain a business license from the Department of Revenue and requires hosting platforms to register with the Department before facilitating bookings in Illinois.
The bill places substantial compliance, reporting, and enforcement duties on hosting platforms. Platforms would have to collect, report, and remit the tax, maintain detailed transaction records, file monthly reports, and keep records for at least three years. The Department of Revenue could audit records, share information with local governments, and impose fines and registration sanctions for noncompliance. The bill also makes it unlawful for platforms to facilitate bookings for unregistered or otherwise unlawful short-term rentals, and it requires operators to display their state-issued business license number on listings and within the rental. In addition, the bill amends the Hotel Operators' Occupation Tax Act, the Counties Code, and the Illinois Municipal Code to align local hotel and short-term rental tax provisions with the new state framework.
The bill would also affect local taxing authority by conforming county and municipal hotel tax statutes to include short-term rentals and by clarifying how local governments may tax these transactions. Counties and municipalities could continue to impose certain occupation or use taxes on hotels and short-term rentals, but the bill adds coordination rules, including that some local taxes may not be imposed if another specified local tax is already in place. It also preserves local authority to regulate short-term rentals through ordinances or resolutions that are not inconsistent with, and are at least as stringent as, the state act. The bill specifies that revenue collected under the new act would be deposited and distributed in the same manner as hotel occupation tax proceeds.
No committee transcripts or recorded votes were provided, so there is no direct evidence of legislative debate or formal support/opposition in the available materials. Based on the bill text alone, the measure appears designed to expand tax collection and regulatory oversight of the short-term rental market, which suggests likely support from revenue and local-government interests. At the same time, the bill’s detailed registration, reporting, and enforcement requirements, along with felony penalties for certain violations, indicate that hosting platforms and short-term rental operators could view it as burdensome. The bill also expressly bars use of the new revenue to promote new competition in the hotel industry, reflecting sensitivity to hotel-industry concerns and suggesting that protecting existing lodging businesses is part of the policy design.
HB2663 would add a new state tax on short-term rental bookings and extend Illinois tax administration to hosting platforms and short-term rental operators. It would amend the Hotel Operators' Occupation Tax Act, the Counties Code, and the Illinois Municipal Code to incorporate short-term rentals into existing hotel-tax structures and to conform local taxing authority to the new state act. The Department of Revenue would gain new registration, licensing, reporting, audit, and enforcement responsibilities, and local governments would receive expanded access to information for compliance and tax administration purposes.
No committee discussion or vote history is available in the provided record, so the bill’s formal legislative sentiment cannot be measured from recorded debate. From the text, the bill appears to be a revenue-raising and regulatory measure aimed at bringing short-term rentals into a tax and licensing framework similar to hotels. That suggests likely support from state and local fiscal interests, while also implying resistance from hosting platforms, operators, and possibly some property owners because of the added tax burden, licensing requirements, and enforcement provisions.
The main points of contention are likely the new 6% combined state tax rate on short-term rental transactions, the requirement that hosting platforms register with the Department of Revenue and collect/remit taxes, and the extensive reporting and data-sharing obligations. Operators must obtain a state business license and display it publicly, and platforms face fines, suspension, and potential felony exposure for certain violations. Another likely issue is the bill’s interaction with local regulation and existing hotel taxes, including whether the new framework preempts, duplicates, or complicates local short-term rental rules. The explicit prohibition on using revenue to promote new hotel competition also signals a policy choice that may be welcomed by hotels but opposed by short-term rental advocates.