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Source: Home rule in the United States

Home rule in the United States relates to the authority of a constituent part of a U.S. state to exercise powers of governance; i.e.: whether such powers must be specifically delegated to it by the state (typically by legislative action) or are generally implicitly allowed unless specifically denied by state-level action. Forty of the 50 states apply some form of the principle known as Dillon's Rule, which says that local governments may exercise only powers that the state specifically grants to them, to determine the bounds of a municipal government's legal authority.
In some states, known as home rule states, the state's constitution grants municipalities and/or counties the ability to pass various types of laws to govern themselves (so long as the laws do not conflict with the state and federal constitutions). In other states, known as Dillon's Rule states, only limited authority has been granted to local governments by passage of statutes in the state legislature. In these states, a city or county must obtain permission from the state legislature if it wishes to pass a law or ordinance not specifically permitted under existing state legislation. Most states have a mix; for example, allowing home rule for municipalities with a minimum number of residents.
The National League of Cities identifies 31 Dillon's Rule states, 10 home rule states, 8 states that apply Dillon's Rule only to certain municipalities, and one state (Florida) that applies home rule to everything except taxation. Each state defines for itself what powers it will grant to local governments. Within the local sphere, there are four categories in which the state may allow discretionary authority:

Structural – power to choose the form of government, charter and enact charter revisions,
Functional – power to exercise local self government in a broad or limited manner,
Fiscal – authority to determine revenue sources, set tax rates, borrow funds and other related financial activities,
Personnel – authority to set employment rules, remuneration rates, employment conditions and collective bargaining.
Many states have different provisions regarding home rule for counties than for municipalities. The National Association of Counties says in 14 states all counties (or county equivalents) operate under Dillon's Rule, while 13 states allow all counties home rule authority and 21 states have a mix of home rule and Dillon's Rule. Connecticut and Rhode Island do not have independent county governments.