The bill amends Arkansas law regarding municipal regulations to establish clear guidelines for the regulation of accessory dwelling units (ADUs). It introduces a new section, 14-56-205, which defines key terms related to ADUs, such as "accessory dwelling unit," "by right," and "regulatory requirements." The bill prohibits municipalities from adopting policies that restrict or regulate the use of at least one ADU by right on a lot containing a single-family dwelling. It specifies that an ADU can be attached, detached, or internal to the primary dwelling and sets limitations on size, stating that it cannot exceed 75% of the gross floor area of the single-family dwelling or 1,000 square feet, whichever is less.

Additionally, the bill outlines various restrictions that municipalities cannot impose on ADUs, including requirements for additional parking, matching exterior designs, or occupancy by the owner. It also limits development impact fees to a maximum of $250 and prohibits more stringent development standards than those applicable to the primary dwelling. Municipalities are allowed to regulate short-term rentals and can charge application fees for ADUs, but these fees are also capped at $250. The bill ensures that any existing regulations conflicting with these provisions will be invalidated after January 1, 2026, while still allowing municipalities to adopt more permissive regulations if desired.