The Alabama vacation rental tax rate starts with a state lodgings tax of either 4% or 5%, and county and city lodgings taxes stack on top. In the coastal markets where most short-term rentals operate, the combined rate commonly lands between 11% and 16%. Every stay shorter than 180 continuous days is covered.
The State Rate: 4% or 5%
Alabama Code Section 40-26-1 sets two tiers for the state lodgings tax. The default is 4% of the total rental charge. A 5% rate applies in the 16 counties that make up the Alabama Mountain Lakes region: Blount, Cherokee, Colbert, Cullman, DeKalb, Etowah, Franklin, Jackson, Lauderdale, Lawrence, Limestone, Madison, Marion, Marshall, Morgan, and Winston.1Alabama Legislature. Alabama Code 40-26-1 – Tax Imposed; Exemptions; Definitions If your property sits in one of those counties, the state portion is 5%. Everywhere else in Alabama, it’s 4%.
What the Rate Applies To
Lodgings tax covers more than the nightly room charge. Any fee tied to the guest’s right to occupy the space is taxable, including charges for personal property provided in the room and maid or janitorial services. A separate cleaning fee is part of the taxable total. Charges for laundry, dry cleaning, and telephone services are not subject to lodgings tax.2Alabama Administrative Code. Alabama Administrative Code Rule 810-6-5-.13 – Persons, Firms, and Corporations Subject to Lodgings Tax
Lodgings tax and sales tax don’t double up on the same charges. You don’t add sales tax to the accommodation bill. You do owe sales or use tax on the furniture, linens, and cleaning supplies you buy to run the property.
County and City Lodgings Taxes Stack on Top
The state rate is only the first layer. Counties and municipalities impose their own lodgings taxes, and in the tourist markets those local taxes dwarf the state portion. What you actually charge the guest is the state rate plus every applicable local rate for the property’s exact location.
Gulf Shores is the clearest example of how high this goes. A rental inside the city’s corporate limits owes 4% to the state, 2% to Baldwin County, and 10% to the city, for a combined lodgings tax of 16%. Properties in the city’s police jurisdiction pay a lower city share of 5%, for a combined 11%.3Gulf Shores, AL. Lodging Tax Other coastal destinations run similarly high. Before you set your listing’s tax collection, pull the local rate table from the Alabama Department of Revenue for your property’s address. Getting the local portion wrong is the most common filing error.
When the Platform Collects the Tax for You
If you list on a major booking platform, it may already be collecting and remitting Alabama lodgings tax on your bookings. Vrbo collects both the state lodgings tax and state-administered local lodgings tax on all Alabama reservations under 180 nights.4Vrbo. US (A-E): Where Vrbo Collects and Remits Taxes and Lodging Taxes Airbnb runs a similar collection program in Alabama.
If the platform already collects and remits a tax, don’t also charge the guest for it. Double-collecting generates refund disputes fast. Check your platform’s Alabama-specific tax page and confirm which layers it handles. A platform may cover the state and state-administered local taxes while leaving non-state-administered local taxes for you to collect and remit yourself.
The 180-Day Rule and Other Exemptions
Lodgings tax only applies to stays shorter than 180 continuous days. Once a guest reaches 180 continuous days in the same property, the occupancy is treated as residential, and the entire stay is exempt from state, county, and municipal lodgings tax.1Alabama Legislature. Alabama Code 40-26-1 – Tax Imposed; Exemptions; Definitions The word “continuous” controls. If the guest checks out and checks back in, the day count restarts at zero.
A few narrower exemptions exist:
- Stays billed directly to and paid for with U.S. federal government funds. A federal employee paying with a personal card and seeking reimbursement does not qualify.2Alabama Administrative Code. Alabama Administrative Code Rule 810-6-5-.13 – Persons, Firms, and Corporations Subject to Lodgings Tax
- Federal credit unions, under federal law.
- Certain foreign diplomats, under U.S. treaties.
- Nonprofit camps and conference centers operated by 501(c)(3) organizations primarily serving children, students, or members of other nonprofits. A standard vacation rental owned by a nonprofit does not automatically qualify.1Alabama Legislature. Alabama Code 40-26-1 – Tax Imposed; Exemptions; Definitions
Alabama state government, county governments, municipal governments, other states, and their agencies are all subject to lodgings tax. A guest with a state government ID is not exempt.2Alabama Administrative Code. Alabama Administrative Code Rule 810-6-5-.13 – Persons, Firms, and Corporations Subject to Lodgings Tax
Registering Your Rental for Lodgings Tax
Before you collect, you need a lodgings tax account with the Alabama Department of Revenue. Registration goes through the state’s combined business tax application. You’ll provide your Social Security Number or Federal Employer Identification Number, the legal name you operate under, and the physical address of the rental property. An individual host without employees or a formal entity can use a Social Security Number. The application assigns the property a location code, which is how the state routes your local tax payments to the right county and city. You’ll also give a business start date and an estimated monthly rental volume; the state uses that estimate to set your filing frequency.5Alabama Department of Revenue. Lodgings Tax
Filing and Paying Through My Alabama Taxes
Lodgings tax returns are due on or before the 20th of the month following the reporting period. The default schedule is monthly; the Department of Revenue may allow quarterly filing for lower-volume operations.2Alabama Administrative Code. Alabama Administrative Code Rule 810-6-5-.13 – Persons, Firms, and Corporations Subject to Lodgings Tax Filing and payment both go through the My Alabama Taxes portal.
ONE SPOT for State and Local Taxes
Alabama’s ONE SPOT system lets you file and pay state lodgings tax and local lodgings taxes through a single return in My Alabama Taxes. It covers both state-administered and non-state-administered local taxes, so you don’t file separate returns with individual counties and cities.6Alabama Department of Revenue. ONE SPOT
Early-Payment Discount and Late Penalties
Pay before the 20th and you receive a discount of 5% on the first $100 of tax owed and 2% on any amount above that.7Alabama Department of Revenue. Lodgings Tax FAQs
Miss the deadline and Alabama imposes a 10% penalty on any lodgings tax not paid by the due date. If you fail to pay within 30 days of a formal notice and demand from the Department, an additional 10% penalty applies to the outstanding balance.8Alabama Administrative Code. Alabama Administrative Code Rule 810-14-1-.30 – Penalty for Failure to Timely Pay Tax The penalty applies to the state, county, and municipal portions alike. The Department can waive penalties for reasonable cause, but that isn’t a plan.