Federal Way Short Term Rental Regulation: A Guide For Airbnb Hosts

Do you own a place in Federal Way and you're weighing whether to put it on Airbnb or Vrbo? Well, the good news is, you can. Federal Way has never passed a short-term rental ordinance, so there's no permit cap, no owner-occupancy requirement, and no dedicated zoning code to trip over the way there is in Seattle just up the road.

That doesn't mean it's free of paperwork, mind you. This is King County, Washington, and two layers still apply on top of whatever your HOA says: the city's ordinary business registration, and Washington's statewide safety and tax law, chapter 64.37 RCW. Neither one was written specifically for Airbnb, and that's exactly what makes them easy to miss.

So let's walk through what applies in 2026: what counts as a legal short-term rental here, what the business registration costs, the tax layers that stack on a stay, and how hard the city actually polices any of it. Every figure below comes from Federal Way's own municipal code, the state's own statutes, or Washington's Department of Revenue, checked in July 2026. If you're sizing up a Federal Way property against somewhere else in the state, run it through BNBCalc first.

What are short term rental (Airbnb, VRBO) regulations in Federal Way,Washington?

The honest answer starts with what's missing. I went through Federal Way's entire zoning code, Title 19 of the Federal Way Revised Code, looking for the words "short-term rental," "vacation rental," or "bed and breakfast," and none of them appear. Not in the 250-plus definitions in FWRC 19.05, not in the summary of allowable uses the city hands out for every zone, nowhere. That's unusual. Most Washington cities this size have at least tried to write a rule.

What Federal Way does have is two layers that apply to a short-term rental without ever naming it. The first is the city's own business registration, FWRC 12.05, which defines "engaging in business" broadly enough to include renting real property in the city, and requires a registration from anyone who does. The second is Washington's statewide short-term rental law, Chapter 64.37 RCW, which sets a floor of insurance, safety, and tax-remittance duties on every short-term rental operator in the state, city ordinance or not. Since Washington law doesn't preempt local rules either, cities are still free to add their own zoning restrictions any time they choose, so treat the absence of one today as the current picture rather than a permanent guarantee.

One wrinkle is worth flagging honestly. Federal Way also has a separate Hotels and Motels chapter, FWRC 12.55, adopted in 2022, that defines a hotel or motel as a building "containing individual sleeping units intended for transient occupancy" and requires a $500 annual license plus police-monitored safety standards. Every requirement in that chapter, front-desk staffing, key logs, calls-for-service tracking per room, is written for a multi-room commercial building, and I couldn't find city guidance saying whether a single-listing Airbnb host needs it too. I'd assume not, given the chapter's own design, but do check directly with the city before assuming that on your own property. For the bigger statewide picture, our Washington guide covers the framework this all sits on top of.

Starting a Short Term Rental Business in Federal Way

Since there's no dedicated ordinance to clear, starting here is mostly a paperwork exercise rather than a permitting gauntlet. Any legal dwelling unit, a detached house, an accessory dwelling unit, a condo, qualifies under the city's own summary of allowable uses, so you're not filing a conditional-use application just to list a spare room or a whole house.

What you are doing is registering as a business, once. From there, three obligations keep running: the state's insurance and safety law, the city's own lodging tax, and the state sales and B&O tax on your rental income. King County itself doesn't add a separate short-term rental permit on top, unlike some of its neighbors; our King County guide covers the county layer if your property sits in unincorporated King County rather than inside Federal Way's city limits. And if your HOA or condo bylaws say no short-term rentals, that private agreement still overrides all of this. The city has no power to override a use your own covenants forbid.

Short Term Rental Licensing Requirement in Federal Way

Since there's no short-term rental permit specifically, the licensing requirement you'll still hit is the citywide business registration under FWRC 12.05. Every person "engaging in business" in Federal Way has to register before starting, and renting out a dwelling unit for pay counts.

Registration runs through the city clerk, and the 2026 Fee Schedule, unchanged as of July 2026, sets the cost at $80 a year for a general business with 10 or fewer employees, or $50 a year if it qualifies as a home occupation in a residential zone. Washington's Department of Revenue, which processes the actual city endorsement alongside your state business license, shows those same figures at $81 and $51, the extra dollar being Federal Way's own IT processing fee. The registration is annual, due January 1st and delinquent after January 31st, and a late payment adds a penalty of 5% or $5, whichever is higher, for every month you're behind, up to a cap of 25% or $25.

Don't skip this step to save $80. Failing to register is a misdemeanor, and it carries its own escalating civil penalty on top: $100 for a first violation, $200 for a second, $300 for a third, and $500 for anything beyond that, per FWRC 12.05.020. Layered above the city registration is the state side of things, which most hosts also need. You'll want a Washington state business license, a UBI number, through the Department of Revenue's Business Licensing Service. It's required once your gross rental income clears $12,000 a year, or sooner if you're already required to collect retail sales tax.

Required Documents for Federal Way Short Term Rentals

Getting registered is only the paperwork you file once. Keep in mind that the state law layered on top asks for things you'll maintain for as long as you keep hosting, not just at signup. Your business registration application itself asks for the basics: your name, the property address, the nature of the business, and emergency contact information, per FWRC 12.05.050.

Washington's Chapter 64.37 RCW adds the documents and postings that actually matter for compliance:

• Proof of primary liability insurance of at least $1,000,000, or confirmation that your booking platform provides equivalent coverage, per RCW 64.37.050. A standard homeowner's policy typically won't cover short-term rental use, so verify this rather than assuming it.
• A posted floor plan showing fire exits and escape routes, visible inside the unit.
• Posted contact information for police, fire, and medical emergencies, along with your own contact details and the maximum occupancy, all required under RCW 64.37.030.
• Carbon monoxide alarms that meet RCW 19.27.530 and the state building code.
• A Washington state business license (UBI number), once you clear the $12,000 gross-income threshold.

None of these get filed with the city as a batch of documents the way a permit application would be. They're standing requirements you keep current, and the state's enforcement mechanism, a warning letter followed by escalating civil infractions, assumes you'll fix a gap once flagged rather than face an immediate fine.

Federal Way Short Term Rental Taxes

Assuming you've got the registration and the postings sorted, there's still the tax side to work through, and it stacks in more layers than most hosts expect from a city this size. Washington's combined state and local retail sales and use tax in Federal Way runs 10.3% (location code 1732), per the Department of Revenue's own rate table for the first quarter of 2026. On top of that sits Federal Way's own 1% Transient Lodging Tax, and King County's 2.8% Convention and Trade Center Tax, which has applied to every lodging business in the county regardless of size since January 1, 2019.

Charge	Rate	Collected by
State and local retail sales/use tax	10.3%	Guest pays; Airbnb collects and remits automatically
Transient Lodging Tax (FWRC 3.25)	1.0%	Washington DOR, acting as Federal Way's collection agent
King County Convention and Trade Center Tax	2.8%	Washington DOR
DOR's published total lodging tax rate	12.5%	Combined figure DOR itself reports for Federal Way lodging

That bottom row is DOR's own number, not my arithmetic. DOR's lodging rate flyer for Federal Way lists a "total lodging tax rate" of 12.5% at location code 1732, which is lower than what adding the three lines above would produce by hand. Washington sometimes structures a special lodging tax as a credit against the state's own share rather than a straight add-on, and since I couldn't confirm that mechanism from a page explaining it directly, I'm reporting DOR's published total as the number that governs rather than a total I built myself.

Separately, and this is the one platforms don't handle for you, Federal Way's own 1% Transient Lodging Tax funds tourism promotion through the city's Hotel/Motel Tax fund, and it's been on the books since 1999. And your rental income owes the state's Retailing B&O tax, currently 0.471% of gross revenue, which you pay directly rather than passing to the guest. Since 2015, Airbnb has collected and remitted the sales tax, the special hotel/motel tax, and the convention center tax on your behalf, but you're still the one who owes the B&O tax and has to register with DOR to claim the credit for what the platform already collected. Vrbo's collection practices aren't confirmed on that same DOR page, so don't assume it works identically until you've checked your own account. One more thing worth tracking is SB 5576, a proposed state bill that would let cities like Federal Way add up to a 4% local excise tax on short-term rental charges for affordable housing. It was still sitting in the legislature as of this writing, not yet passed.

Federal Way wide Short Term Rental Rules

Once the tax bill is sorted, what's left is mostly the same nuisance and safety rules that apply to any residential property in Federal Way, short-term guests included. There's no cap on the number of nights you can host, no owner-occupancy requirement, and no limit on how many listings one owner can run, which puts Federal Way in a noticeably lighter category than Seattle or many of its own King County neighbors.

The rules that do apply come from two directions. Chapter 64.37 RCW's posting requirements (floor plan, occupancy limit, emergency contacts) apply inside every unit, and Federal Way's own noise ordinance sets real hours a guest can get cited for: yelling, shouting, or singing near public streets between 10:00 p.m. and 8:00 a.m. counts as a public disturbance noise violation, the same standard that applies to any late-night house party. Federal Way's Home Occupations chapter, written for businesses run out of a residence, caps outside visitor traffic at four people a day and bars outdoor signage or storage. I couldn't confirm whether that chapter has ever actually been applied to a rental listing rather than a home-based business, so don't assume either way without asking the city directly. And remember that none of this touches your HOA. A private covenant against short-term rentals still holds even where the city itself stays silent.

Does Federal Way strictly enforce STR rules?” Is Federal Way Airbnb friendly?

Given how light the rulebook is, enforcement here is complaint-driven rather than proactive, and that's really the whole answer. Federal Way's Code Compliance division works violations one report at a time through its "Eyes on Federal Way" portal or an automated line, not through an inspection schedule or a registry the way Seattle runs its short-term rental program. If nobody complains about noise, parking, or trash, there's genuinely little for the city to chase.

That doesn't mean zero risk. Skip the business registration and you're looking at a misdemeanor plus that escalating $100-to-$500 civil penalty ladder, and the state's own enforcement under RCW 64.37 starts with a warning letter but turns into a class 2 civil infraction on a repeat violation. Neither track moves fast, and neither one looks anything like New York City's platform-level booking block or Los Angeles's registration-number requirement. So yes, on balance, Federal Way reads as Airbnb-friendly relative to its bigger neighbors: no permit cap, no owner-occupancy rule, and a business registration fee that tops out around $80 a year. Just make sure you don't mistake "lightly enforced" for "unregulated," because the underlying duties, insurance, tax, and safety postings, are all still real state law, and the state's insurance requirement in particular doesn't care whether the city ever comes looking.

How to Start a Short Term Rental Business in Federal Way

Given everything above, the order below is the sequence that avoids paying twice or registering something you can't legally run.

1. Confirm your property and your lease or HOA covenants allow it. The city has no zoning restriction to clear, but your own private agreement might.
2. Register the business with Federal Way's city clerk, paying the $80 general fee or the $50 home-occupation rate, through the Business License page.
3. Apply for your Washington state business license (UBI number) through the Department of Revenue's Business Licensing Service, which also issues the Federal Way city endorsement in the same application.
4. Line up $1,000,000 in primary liability insurance, or confirm your platform's coverage meets that threshold, before your first guest checks in.
5. Install carbon monoxide alarms that meet state code, and post the required floor plan, occupancy limit, and emergency contact information inside the unit.
6. Register with DOR for sales tax and B&O tax reporting, so you can claim credit for whatever your platform already collects on your behalf.
7. Check your noise and nuisance exposure, especially the 10:00 p.m. to 8:00 a.m. quiet hours, before your first booking rather than after a neighbor calls.
8. Diarize your annual business registration renewal, due by January 1st every year, so you don't trigger the late penalty by accident.

Who to contact in Federal Way about Short Term Rental Regulations and Zoning?

If a question doesn't fit neatly into any of the steps above, four Federal Way offices split the work between them.

Current Planning, inside the Community Development Department, handles zoning questions and can confirm whether a specific property or use is allowed.

• Email: [email protected]
• Phone: 253-835-2655

The Finance Department handles business registration, renewals, and the city's Transient Lodging Tax.

• Email: [email protected]
• Phone: 253-835-2526
• Address: 33325 8th Avenue South, 2nd Floor, Federal Way, WA 98003
• Hours: Monday through Friday, 8:00 a.m. to 5:00 p.m.

Code Compliance takes nuisance and noise complaints against an existing rental, and is where a neighbor's report would land.

• Phone: 253-835-2617
• Online: "Eyes on Federal Way" complaint portal

Washington's Department of Revenue runs the state business license, the city endorsement, and the sales/B&O tax registration that sits above all of the city-level requirements.

• City endorsement page: https://dor.wa.gov/manage-business/city-endorsements/federal-way
• Business licensing: https://dor.wa.gov/open-business/apply-business-license

For anything general, City Hall's main line, 253-835-7000, routes to the right department.

What do Airbnb hosts in Federal Way on Reddit and Bigger Pockets think about local regulations?

Since Federal Way doesn't generate the enforcement drama that Seattle or New York City do, it also doesn't generate much dedicated discussion. Reddit blocked automated access when I went looking, and I couldn't find a BiggerPockets thread that discussed Federal Way specifically rather than King County or the Puget Sound region broadly, so I'm not going to invent quotes from threads I never read.

What I can report, from BiggerPockets discussion on Washington State's short-term rental law generally, is one consistent pattern. Hosts flag the $1,000,000 insurance requirement under RCW 64.37 as the compliance item that catches new operators off guard, since a standard homeowner's policy simply doesn't cover it, and a specialty endorsement or platform-provided coverage has to be confirmed before the first booking. The broader regional theme, echoed across South King County threads more than Federal Way ones specifically, is that suburbs along the Auburn-Kent-Federal Way corridor get discussed as a lower-cost alternative to Seattle's much heavier short-term rental program, because none of them have followed Seattle into a registration-and-cap system. Take that as a general pattern rather than Federal Way-specific testimony, since that's genuinely what the sourcing supports. Our Auburn guide covers the neighboring city most often mentioned in that same conversation.

If the numbers matter more to you than the sentiment, run the market itself. Federal Way sits inside the greater Tacoma market, and pulling the occupancy and rate data there gives you a real basis for comparison instead of secondhand impressions from a forum thread.

Frequently Asked Questions

Can you legally run an Airbnb in Federal Way in 2026?

Yes. Federal Way has no dedicated short-term rental ordinance, no permit cap, and no owner-occupancy requirement. You need a citywide business registration (about $80 a year, or $50 for a qualifying home occupation), Washington's statewide business license once your gross income clears $12,000, and compliance with the state's insurance and safety law under Chapter 64.37 RCW. Private HOA or lease restrictions can still override all of this on a specific property.

How much does it cost to register a short-term rental as a business in Federal Way?

The city's business registration runs $80 a year for a general business, or $50 a year if it qualifies as a home occupation, per the 2026 Fee Schedule. Washington's Department of Revenue processes the same registration as a "city endorsement" for $81 or $51, the extra dollar covering Federal Way's own IT fee. It renews annually every January 1st, with a penalty starting at 5% or $5 for late payment.

What taxes do you have to pay on a Federal Way short-term rental?

Three layers apply: the state and local retail sales tax, Federal Way's own city lodging tax, and King County's convention and trade center tax. DOR reports those together as a 12.5% total lodging tax rate for Federal Way. Airbnb collects and remits the sales and special lodging taxes automatically, but hosts still owe the state's 0.471% Retailing B&O tax directly and must register with DOR to claim credit for what the platform already collected.

Does Federal Way require a special short-term rental permit or limit how many nights you can host?

No. Federal Way has not adopted a short-term rental ordinance, so there's no dedicated permit, no cap on nights hosted, and no limit on the number of listings one owner can run. The requirements that do apply come from the citywide business registration and from Washington's statewide Chapter 64.37 RCW, which sets insurance, safety-posting, and tax-remittance duties regardless of city rules.

What happens if you operate an unregistered short-term rental in Federal Way?

Operating without the required business registration is a misdemeanor under FWRC 12.05, plus an escalating civil penalty of $100, $200, $300, or $500 for repeat violations. Separately, failing to meet Washington's Chapter 64.37 RCW duties (insurance, safety postings, carbon monoxide compliance) starts with a warning letter from the city or county attorney, with a class 2 civil infraction following any violation after that warning.

Last verified: July 2026. Every ordinance, tax rate, state law, and contact detail in this guide links to or comes from its official source.