Montgomery Short-Term Rental Regulations

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Permit & Licensing

Business License

This permit type does not require primary residence.

Application Process

Apply for a City of Montgomery business license through the License and Revenue Division (application forms for a commercial address or for a residential/no-physical-location business are on the city website). Short-term/vacation rental hosts (e.g., Airbnb-type listings) are classified under NAICS 721199 'All Other Traveler Accommodation' and billed on the gross-receipts-tiered Schedule E fee table — distinct from the flat-fee Schedule AJ for traditional rooming/boarding houses, which explicitly excludes Airbnb hosts. The application must include a statement that the premises is properly zoned and in full compliance with city building codes. Licenses run on the calendar year and must be renewed before February 2. Note: as of early 2026 the city has a dedicated short-term rental ordinance in public-comment draft form (not yet adopted); until it takes effect, the general business-license/lodging-tax mechanism described here is what applies.

Tax Obligations

Combined rate: 15% of gross rental income.

Collection: Filed and paid online via My Alabama Taxes (MAT), or by mail to the City of Montgomery Revenue Department

Filing: Monthly

Rental Limits

Montgomery does not impose an annual cap on the number of nights you can rent.

Zoning & Restrictions

• No STR-specific zoning ordinance.
• Montgomery's 1963 zoning code does not define a 'short-term rental' or 'vacation rental' use.
• Its 'home occupation' definition treats the taking of boarders and the leasing/renting of rooms by a resident as a permitted accessory use inside a dwelling, while the code's 'dwelling' definition excludes structures used primarily for transient residents (which instead read as hotel/boarding-house/rooming-house type uses, restricted to certain districts and, within the city's SmartCode overlay areas, permitted only by right/exception/warrant depending on the transect zone).

Insurance & Safety

Insurance

Montgomery does not require short-term rental operators to carry specific insurance. Standard homeowner policies often exclude short-term rental activity, so many hosts obtain dedicated short-term rental or landlord liability coverage.

Penalties for Non-Compliance

Late filing: minimum $50 or 10% of tax due, whichever is greater. Late payment: additional 10% of tax due. Plus interest on unpaid tax.

Market Snapshot

Demand context for Montgomery from official government and tourism statistics — the latest published annual figures, not a projection of rental income.

Figures are the latest annual statistics published by the linked official sources (retrieved 2026-07-13). Visitor counts cover the geography stated by each source, which can be wider than the city itself. Regulations above — not market conditions — determine whether and how you may operate.

Compliance Checklist

Follow these steps to legally operate a short-term rental in Montgomery:

1. Apply for Business License. Submit application + $120 fee.
2. Register for tax accounts. Set up lodging tax accounts with City of Montgomery Revenue Department / Alabama Department of Revenue.
3. Collect and remit taxes. 15% on all bookings.
4. Renew annually. $120 renewal fee.

Frequently Asked Questions

Do you need a permit to run an Airbnb in Montgomery?

Yes. Operating a short-term rental — including an Airbnb or Vrbo — in Montgomery requires a Business License.

How much does a short-term rental permit cost in Montgomery?

A Business License in Montgomery costs $120 per year.

Does Montgomery require a short-term rental to be your primary residence?

No. Montgomery allows non-owner-occupied short-term rentals, so investment properties can qualify provided you hold the required permit.

How many days a year can you short-term rent in Montgomery?

Montgomery does not cap the number of nights per year you can short-term rent, though permitting, zoning, and occupancy rules still apply.

What taxes do you pay on a short-term rental in Montgomery?

Short-term rental stays in Montgomery are subject to a combined 15% in lodging taxes. This combines 4% Alabama State Lodgings Tax + 11% City of Montgomery Lodging Tax. Hosts are legally responsible; many booking platforms collect and remit them automatically on the host's behalf.

What are the penalties for short-term rental violations in Montgomery?

Late filing: minimum $50 or 10% of tax due, whichever is greater.