Table of Contents
Lodging Tax Collection and Remittance in the State of Alabama
Traditionally, the lodgings tax was levied only for guests who book a reservation using professional managers, such as hotels. The state recently updates its laws so that lodging taxes now apply to any property owner who rents transiently. For the purposes of the state of Alabama, a transient rental is one that is about 6 months or less (specifically 179 days or less).
Also, we should point out that Tuscaloosa has regulation on where short term rentals may occur. As well, there is extensive documentation required for this city to file before you take your first rental. We will walk you through this with specific city information. These individual pages will describe what you need to be able to setup your short term rental.
The takeaway is that you should first properly file all required documentation (if required) as well as setup an account to file your taxes. Do this before you start renting your vacation property out.
Statewide Tax Rate
The statewide tax rate in Alabama for short term rentals depends on what county your property is located in. Counties in the Mountain Lakes area have specific tax rate the is 1% higher than all other state counties.
- Alabama Mountain Lakes Area Tax Rate: 5% (Includes the following Counties: Blount, Cherokee, Colbert, Cullman, DeKalb, Etowah, Franklin, Jackson, Lauderdale, Lawrence, Limestone, Madison, Marion, Marshall, Morgan and Winston).
- All Other Alabama Counties Tax Rate: 4%
Do I Need To Pay?
All rental activity is covered. If you use any online service that charges payments on your behalf you are likely good. If you are unsure, contact the company. These companies are required to charge and submit the payments on your behalf. These services include companies such as Airbnb and Booking.com.
Exempt Rental Activity – Do not submit taxes
AirbnbBooking.comMost other sites that charge guest on your behalf
What if you obtain rentals on your own and you charge the guest directly? Then you would need to charge the guest the taxes. Also, you would need to register and submit the payments to the state as well as any city/county that requires it. These are the situations where this might occur:
- The guest is a friend.
- A guest rented your property from an ad.
- Some guests rented your property from an online site that charges only subscription fees for your listing.
- Guest rented the property from your own website.
How Do I Register My Property?
There is fairly extensive and well documented site called ONE SPOT (Optional Network Election for Single Point Online Transactions). ONE SPOT will properly file your taxes that are required for the state, county and city.
The state registration is not tied to the property but the taxpayer. This means that if you have multiple properties you would combine the tax payments together.
Tuscaloosa also requires property registration. See below in the next sections for details.
The advantage of ONE SPOT is that you would not need to register and file taxes with the local city or county. This state administered site will take care of it.
Taxes that need to be collected by individual cities or counties may or may not be administered by the state. These are called state-administered collection or non-state administered collection. This is confusing, but there is good news. If you use ONE SPOT and pay using direct debit from a bank, the state will even take care of payments to non-state administered cities.
The ONE SPOT web site can handle all your payments for the state, county and city. Even if the city/county isn’t administered by the state. The requirement for this however is that you must use a direct debit from a bank.
The other major payment option available by ONE SPOT is bank ACH (automated clearing house). Bank ACH is an electronic check payment from your bank. However, Bank ACH is only available for use by state administered cities and counties.
If you use Bank ACH or paper checks you would need to register and pay to any county that is not state administered.
How Do I Pay?
There is a state website where you can submit your payments called MAT (My Alabama Taxes):
Before you can submit your payments, register as explained above.
The MAT application has all the information you need to file your taxes. If you have filed your taxes with MAT already, you can upload a spreadsheet instead. When used, the spreadsheet saves time since you don’t need to enter your codes. Once you have filed with MAT directly and have gotten comfortable, consider this time saving feature.
More information about the spreadsheet can be found on the ONE SPOT page linked to above.
Alabama expects you to file your taxes every month, they are due on the 20th of the month. This applies if you have rental activity the preceding month. All the cities that may also require a tax also adhere this schedule.
Cities That Require Registration
The following city requires a registration for each property you own:
- Tuscaloosa
Note that this requirement does not depend on who collects the tax. Even if a third party or marketplace collects taxes on your behalf, you still need to register with the city. Check in the next section for links to the city website for more information.
Counties That Have Their Own Taxes
Most counties in Alabama assess their own tax rate for lodgings. Alabama has an online tool that provides this information. Also, there is a spreadsheet that you can download that has this information. Use the following link: Alabama Sales and Use Tax Rates.
When looking for the county rates, select records that contain the lodging tax: “LL”.
Cities That Have Their Own Taxes
The following cities are known to assess their own lodging taxes in addition to the state level taxes. Alabama has an online tool that provides this information. Also, there is a spreadsheet that you can download that has this information. Use the following link to find this information: Alabama Sales and Use Tax Rates.
When looking for the city rates, select records that contain the lodging tax: “LL”.
Alabama Cities w/Lodging Tax
| Auburn Birmingham Gulf Shores | Opelika Orange Beach Tuscaloosa |
Detail information about each city. These cities are self-adminstered, use the link in the table to find out how to register/file taxes.
| City | Tax Rate | State Administered Taxes? | Regulation Complexity | Where to Find Information |
|---|---|---|---|---|
| Auburn | 7% | No | Low | Auburn Website |
| Birmingham | 6.5% | No | Low | Birmingham Tax Site |
| Gulf Shores | 7% (3.5% in Police Jurisdiction) | No | Low | Gulf Shores Lodging Tax |
| Opelika | 7% | No | Low | Opelika Taxes |
| Orange Beach | 7% | No | Low | Orange Beach Taxes |
| Tuscaloosa | 11% | No | High | Tuscaloosa Page |
Tuscaloosa requires a registration and an extensive set of documentation, inspection and insurance. Also, there are specific rules as to which properties can qualify (by location).
