The Complete Alabama STR Lodging Tax Guide: Airbnb and VRBO Alabama Occupancy Tax Breakdown

Running a successful Airbnb in Alabama requires more than just a welcoming property and great hospitality. It also requires a thorough understanding of your tax obligations. Understanding your tax obligations is essential for running a successful and compliant short-term rental business. Our guide breaks down Alabama's tax landscape involving state, county, and city taxes, each with its own set of rules and rates.

State-Wide Tax Requirements for Alabama Airbnb Hosts

All short-term rental operators in Alabama must be aware of the baseline tax requirements that apply throughout the state. These taxes apply to the listing price, cleaning fees, and any rental period shorter than 180 consecutive days.

The state lodging tax rate is:

• 4% for most counties.
• 5% for counties in the Mountain Lakes area (Blount, Cherokee, Colbert, Cullman, DeKalb, Etowah, Franklin, Jackson, Lauderdale, Lawrence, Limestone, Madison, Marion, Marshall, Morgan, and Winston).
• County Lodging Tax: In addition to the state lodging tax, Local governments can impose their own lodging taxes, typically ranging from 1% to 6%.

The good news? If you host through Airbnb, the platform automatically collects and remits this state-level tax on your behalf. However, you'll still need to understand how it affects your pricing strategy. Here's a simple breakdown of what you can expect to pay if you aren't affected by any additional specific county or city taxes:

For a 3-night stay at $150/night with a $50 cleaning fee in DeKalb County:

1. Airbnb rental revenue: $450 ($150 × 3 nights)
2. Cleaning fee: $50
3. Taxable amount: $500 ($450 + $50)
4. State lodging tax (5%): $25 (500 x 0.05)
5. Total Charge: $525

Cit and County-Specific Tax Requirements

As we've mentioned, some cities and counties impose their own lodging taxes that apply to Airbnb hosts and short-term rental owners. These additional lodging taxes can range from 1% to 10%, depending on the location. However, some counties also charge a flat per-room fee instead of a percentage-based model.

Montgomery County

Montgomery County imposes a unique tax structure that makes use of the flat per-room fee I mentioned earlier. They charge a lodging fee of $2.25 per room per day or a portion of the day that such room is rented.

This means a 2-bedroom property rented for 3 nights would incur a county tax of $13.50 ($2.25 × 2 rooms × 3 nights).

Lee County

Lee County requires a 2% lodging tax rate of the listing price, including any cleaning fees for reservations 179 nights or shorter.

A 2-night stay at $100/night with a $25 cleaning fee in Lee County will cost $132.5 ($125 x 4% to Alabama and $125 x 2% to Lee County).

Baldwin County

Baldwin County requires a 2% lodging tax rate of the listing price, including any cleaning fees for reservations 179 nights or shorter.

A 2-night stay at $150/night with a $50 cleaning fee in Baldwin County will cost $371 ($350 x 4% to Alabama and $350 x 2% to Baldwin County).

Montgomery City

Montgomery hosts face a slightly expensive city lodging tax:

1. 11% for properties within city limits
2. 5.5% for properties within police jurisdiction (outside city limits but within police service area)

For a 2-bedroom property in Montgomery city limits rented for 3 nights at $150/night with a $50 cleaning fee:

1. Rental revenue: $450
2. Cleaning fee: $50
3. Taxable amount: $500
4. State lodging tax (5%): $25
5. Montgomery County tax: $13.50 ($2.25 × 2 rooms × 3 nights)
6. City of Montgomery tax (11%): $55
7. Total taxes: $93.50
8. Total guest charge: $593.50

Mobile City

Mobile imposes different tax rates based on property location:

1. 8% within corporate limits
2. 3% within police jurisdiction

For a property in Mobile rented for 2 nights at $100/night with a $25 cleaning fee:

1. Rental revenue: $200
2. Cleaning fee: $25
3. Taxable amount: $225
4. State lodging tax (5%): $11.25
5. City of Mobile tax (8% or 3%): $18 for corporate limits or $6.75 within police jurisdiction
6. Total taxes: $29.25 or $18
7. Total guest charge: $254.25 or $243

Birmingham City

In Birmingham, short-term rental operators must collect and remit:

City Lodging Tax: 6.5% of the listing price (including cleaning fees) for stays less than 180 nights.

Example: If your nightly rate is $150 with a $50 cleaning fee for a three-night stay:

1. Total listing price: $500
2. State tax (4%): $20
3. City tax (6.5%): $32.50
4. Total taxes: $52.50
5. Total guest charge: $552.50

Gulf Shores

Airbnb automatically collects Gulf Shores' 7% lodging tax on behalf of hosts. However, since Gulf Shores is located in Baldwin County, guests are required to pay an additional 2% lodging tax.

Example: For a one-night stay at $100 per night with a $20 cleaning fee:

1. Listing Price: $100
2. Cleaning Fee: $20
3. Taxable Amount: $120
4. State Lodging Tax (4%): $4.80
5. Baldwin County Lodging Tax (2%): $2.40
6. City of Gulf Shores Lodging Tax (7%): $8.40
7. Total Taxes: $15.60
8. Total Cost for Guest: $135.60

Orange Beach

The total lodging tax rate in Orange Beach is 16%, which includes the city, state, and Baldwin County lodging taxes.

1. City of Orange Beach: 10%
2. Alabama State: 4%
3. Baldwin County: 2%

Example: For a one-night stay at $100 per night with a $20 cleaning fee:

1. Listing Price: $100
2. Cleaning Fee: $20
3. Taxable Amount: $120
4. City of Orange Beach Lodging Tax (10%): $12
5. State Lodging Tax (4%): $4.80
6. Baldwin County Lodging Tax (2%): $2.40
7. Total Taxes: $19.20
8. Total Cost for Guest: $139.20

Tuscaloosa City

Tuscaloosa has a total of 15% lodging tax that applies to stays of less than 29 days.

1. City of Tuscaloosa: 11%
2. Alabama State: 4%

Example: For a one-night stay at $100 per night with a $25 cleaning fee:

1. Listing Price: $100
2. Cleaning Fee: $25
3. Taxable Amount: $125
4. City of Tuscaloosa Lodging Tax (11%): $13.75
5. State Lodging Tax (4%): $5
6. Total Taxes: $18.75
7. Total Cost for Guest: $143.75

Wrapping Things Up

Hosts should familiarize themselves with both state and local lodging tax rates and ensure timely filing to avoid penalties or fines. By understanding these requirements and leveraging platforms like Airbnb's automatic collection system where applicable, hosts can streamline their operations while staying compliant.

For more detailed information about your specific location's lodging tax rates, consult the Alabama Department of Revenue or your local government's finance department.