Theory suggests tropical cyclone maximum potential intensity increases with increasing ocean temperature. However, most tropical cyclones fail to achieve this maximum intensity. Instead, empirical studies suggest that tropical cyclone intensities are uniformly distributed between this maximum potential intensity and an intensity that marks the transition between tropical storm and hurricane scaling regimes. Here it is shown that this transition shifts significantly on interannual to interdecadal time scales in both the North Atlantic and Western North Pacific basins. The intensity at which this transition occurs effectively determines the fraction of tropical cyclones entering the hurricane scaling regime, and as such, strongly impacts the fraction of tropical cyclones that become intense. The increase in the fraction of intense tropical cyclones in recent decades results primarily from a shift in this scaling transition toward weaker winds rather than an increase in the maximum potential intensity directly attributable to rising sea surface temperatures. This scaling transition is shown to vary with sea surface temperature (SST) anomalies in the tropical cyclone main development regions relative to tropical mean SST anomalies, in contrast to the maximum potential intensity which varies with the SST itself.