Montgomery Short-Term Rental Regulations: A 2026 Guide For Airbnb Hosts

Do you own a place in Montgomery and you're weighing whether to put it on Airbnb or Vrbo? Well, the good news is that, for now, you can list it without any dedicated short-term rental license at all, because Montgomery, Alabama hasn't passed one yet. You'll still need a regular city business license and a lodging tax account, the same as any small business here, and you'll owe roughly 15% in combined city, county and state lodging tax on top of that. But there's no permit cap, no zoning carve-out, and no registration number to display anywhere.

That's likely to change soon, and probably not in your favor. Montgomery's City Council has been drafting a full short-term rental ordinance since September 2025. City officials say the town already has around 587 short-term rentals, most of them unlicensed, clustered in neighborhoods like Capitol Heights, Old Cloverdale and the Garden District. A public hearing and council vote were expected within days of this guide's last research pass. So treat everything below labeled "proposed" as exactly that: drafted, debated, and not yet law.

So let's walk through what applies in Montgomery right now: the business license you need today, the taxes that stack on every booking, what the pending ordinance would add if it passes, and how seriously the city currently polices any of it. Every figure below comes from the City of Montgomery's own forms and pages, Montgomery County's tax office, or Alabama's own statutes, checked in July 2026. If you're deciding whether a Montgomery property is worth the trouble compared to somewhere with clearer rules, run the numbers through BNBCalc first.

Starting a Short Term Rental Business in Montgomery

Starting one here is unusually simple, at least by the standards of a mid-size Southern city. Montgomery treats a short-term rental the same way it treats any other small business: you register it, you pay the license and taxes, and you're operating. There's no separate short-term rental category, no cap on how many you can run, and no zoning district that excludes them. That's exactly what's drawing scrutiny. The format has grown with almost nothing standing in its way.

You can see that growth in the numbers. Montgomery officials told local station WAKA 8 in November 2025 that the city already had roughly 587 short-term rentals operating, most of them unlicensed. Complaints have concentrated in a handful of historic, walkable neighborhoods: Capitol Heights, Cottage Hill, Old Cloverdale, and the Garden District among them, where a single converted house can bring far more turnover than the block is used to.

One Garden District resident told WAKA 8 in September 2025 that she discovered she "lived across the street from a hotel" after a neighboring home started hosting up to 14 guests at a time. Another described golf balls from the rental's backyard mini-golf course landing in his driveway. That's the backdrop the pending ordinance is responding to. The rules Montgomery ends up with are being shaped by specific, named complaints, not abstract policy.

Nothing in Montgomery's current code stops you from starting today, whether that's a whole house, a converted duplex unit, or a spare room. Do check your own property's deed restrictions or HOA covenants first, though, since those can bar short-term rentals even where the city doesn't. Assuming your title is clean and you're comfortable with a regulatory picture that's actively moving, the practical path is a business license, the tax accounts below, and a plan for the paperwork the new ordinance is likely to add.

If you're comparing Montgomery against Alabama's bigger short-term rental markets, Birmingham and Huntsville are both worth a look. Each is further along its own regulatory path than Montgomery is right now.

Short Term Rental Licensing Requirement in Montgomery

Since there's no dedicated short-term rental license today, the "licensing requirement" here is Montgomery's ordinary business license, applied through the License and Revenue Division. You'll pick one of two forms depending on whether your rental has a fixed physical address you're registering. That's either the Business License Application for a Commercial Address if the property itself is the business location, or the No Physical Location application if you're running it from elsewhere. A property-based application also needs a Certificate of Occupancy, which the Inspections Department issues only after inspecting the unit for code compliance. Keep in mind that you'll need to call Inspections at 334-625-2073 if you're not sure whether your property already has one on file.

Here's the part that surprised me going through the forms: Montgomery doesn't publish a flat license fee anywhere. Both applications calculate the amount off your estimated gross receipts, against a schedule the License and Revenue office keeps in-house. The forms themselves say plainly to call 334-625-2036 for the correct amount due. So don't guess at what you'll owe. Ring the office before you budget for it, because a fee based on projected revenue is exactly the kind of number that's easy to get wrong from the outside.

• Address: 25 Washington Avenue, 3rd Floor, Montgomery, AL 36104
• Phone: 334-625-2036 | Fax: 334-625-2994
• Office hours: Monday-Friday, 7:30 a.m.-4:30 p.m.
• Mailing address: P.O. Box 5070, Montgomery, AL 36103-5070

You'll also need to register for lodging tax separately, and that account runs through Alabama's state revenue system rather than through the city office. The Taxes section below covers it in full.

If the pending ordinance passes as drafted, licensing gets considerably more specific. WAKA 8's reporting on the draft describes a $250 annual fee (as of the July 2026 draft), a two-year Short-Term Rental certificate with its own registration number, and a public city registry listing every licensed address. None of that exists yet, mind you. Don't pay a fee you haven't been billed for, and don't apply for a certificate the city doesn't currently issue. Watch for the council's own announcement once, or if, the ordinance passes.

Required Documents for Montgomery Short Term Rentals

Getting that business license application together doesn't take much, which is part of why Montgomery's short-term rental count grew as fast as it did. You'll need your business name and structure (sole proprietor, partnership, corporation or LLC), your federal EIN, and your Alabama state tax number. Add an estimate of gross receipts through the end of the current year, too. If the application covers a physical address, include proof you either own or rent the property and, once it's inspected, your Certificate of Occupancy.

Separately, you'll need a lodgings tax account with the Alabama Department of Revenue, registered free through My Alabama Taxes (MAT). That account typically takes three to five business days to activate. Don't leave it until the week you plan to list. This account is what lets you file and remit the city, county and state lodging tax layers described next, so it's worth setting up before your first booking rather than after.

That's the whole document list for today's rules. If the proposed ordinance passes, expect real paperwork on top: a signed certification for the two-year STR certificate, proof of a 24-hour local contact able to respond within 15 minutes, and, for single-room or PadSplit-style rentals, proof that the host lives on-site. None of that is required yet. Still, it's worth gathering the basics now if you're already assembling a Montgomery listing, since a host who's already organized won't be scrambling if the council votes yes.

Montgomery Short Term Rental Taxes

Assuming you clear the license step and are able to start hosting, there's still tax to work out, and Montgomery stacks three separate layers on top of each other. Here's how they break down, and who collects each one.

Charge	Rate	Collected by
City of Montgomery lodging tax	11% (in corporate limits)	City of Montgomery, or platform
Police jurisdiction lodging tax	5.5% (outside city limits, within PJ)	City of Montgomery, or platform
Montgomery County lodging fee	$2.25 per room, per day (flat)	Montgomery County Tax & Audit
Alabama state lodgings tax	4%	Alabama Dept. of Revenue, or platform

Which city rate applies depends entirely on where your property sits. A listing inside Montgomery's actual corporate limits owes the 11% lodging tax, filed through MAT and due the 20th of the month following the stay. One right outside the city line, in Montgomery's police jurisdiction, the roughly three-mile ring the city still patrols and taxes, owes the lower 5.5% rate instead. That's exactly half the in-city figure. Either way, a stay of 180 consecutive days or more to the same guest is exempt, since that's Alabama's usual dividing line between a short-term rental and a long-term tenancy.

Montgomery County adds its own charge on top, and it's structured differently: not a percentage, but a flat $2.25 per room, per day, also due the 20th of the following month. Going through the county's own tax page, that fee reads as county-wide rather than limited to unincorporated areas. My read is that it stacks on every Montgomery listing regardless of which city rate applies, though the county doesn't spell out the incorporated/unincorporated split in so many words. Alabama's own state lodgings tax adds 4% on top of all that, under Ala. Code § 40-26-1, since Montgomery County isn't one of the sixteen counties that pay the higher 5% rate.

Add it up and an in-city Montgomery listing is looking at roughly 15% in combined percentage-based tax, plus the flat $2.25-per-room county fee on every night booked. Late filing on any of these draws a penalty of the greater of $50 or 10% of the tax due. Late payment adds another 10% in the first 30 days, plus ongoing interest. Don't let a filing slip past the 20th if you can help it.

The good news is you probably won't file most of this yourself. Airbnb has voluntarily collected and remitted Alabama's state lodgings tax, plus assigned local lodgings taxes, since March 2016. A 2024 state law now requires any platform that charges a booking fee to do the same, from January 1, 2025 forward. That obligation looks clearly established for Airbnb, from what I can tell going through the available reporting. I'd still confirm directly with Vrbo, Booking.com or any smaller platform you use whether they're collecting the full city, county and state stack for a Montgomery address specifically. State law creates the duty; it doesn't guarantee every platform has wired it up correctly for every jurisdiction.

Montgomery-wide Short Term Rental Rules

None of that tax stack changes the more basic question of what the city lets you do with the property, and on that front Alabama gives Montgomery an unusually free hand. No state statute limits a city's power to zone out, cap, or even ban short-term rentals outright. The Alabama Supreme Court confirmed exactly that in Dixon v. City of Auburn, upholding a city's outright ban on short-term rentals in a residential zoning district back in 2023. Whatever Montgomery decides to do here, state law isn't going to stop it.

What Montgomery has done with that freedom, so far, is nothing. Going through the council's own committee record, the city currently applies no zoning restriction, no occupancy cap, and no neighbor-notification requirement to short-term rentals of any kind. A whole-house rental and a hosted spare room get treated identically today. Get the business license, pay the tax, operate. That's the entire playbook.

The draft ordinance working through the Commerce and Industry Committee would change nearly all of that, and it's worth knowing the shape of it even before it passes, since it tells you where the city is heading. Under the version reported by WAKA 8 in November 2025, a licensed short-term rental would face real operational limits:

• No more than two guests per room
• A limit on how many days per year the property can be rented (the exact cap wasn't specified in the reporting available)
• No street parking and no commercial vehicles on-site
• A 24-hour local contact who answers within 15 minutes
• Trash cans kept out of public view
• No more than one short-term rental permitted per block
• No weddings, receptions, or large private events
• Any pool fenced to at least four feet with a self-latching, lockable gate

Single-room and PadSplit-style rentals would get their own narrower rule: the host has to live in the property, and the rental is capped at 90 nights a year. Councilwoman Marche Johnson, who's leading the effort, put the goal plainly: "We need permanent housing, not neighborhoods filled with Airbnbs." That's a fair summary of where this is headed, even if the exact final language is still moving.

None of those bullet points are enforceable today. Don't treat this list as a compliance checklist yet. Do keep an eye on it, though, because a public hearing and council vote were expected within days of this guide's last research pass in late July 2026. Check the Montgomery City Council's own page before you finalize a listing strategy that assumes today's wide-open rules will still apply next month.

For the bigger picture of how Alabama's other cities are handling this, our Alabama statewide guide walks through the framework state law leaves every city to fill in on its own.

Does Montgomery strictly enforce STR rules?

Given how little there currently is to enforce, "strictly" isn't the right word for it yet. That doesn't mean nothing happens if you skip the business license, though. Operating without one is still a licensing violation the city can pursue, and it's the one real lever Montgomery has been using while the new ordinance works its way through committee. With 587 known listings and most of them unlicensed, per the city's own November 2025 count, the honest read is that enforcement so far has been light relative to the scale of the market.

That's the gap the pending ordinance is explicitly built to close. Council President CC Calhoun told WAKA 8 in July 2026 that the goal is to give the city real teeth: "If you're an out-of-town landlord and you're doing these things and causing those problems, we know what short-term rentals are. It's for people to come in if you're on vacation to use those. It's not a party house. We're trying to get that message out, so we'll be able to fine and vacate those properties." Once a registry and certificate system exist, an unregistered or non-compliant listing becomes far easier to spot than it is today, when there's no public list to check against.

In the meantime, neighbor complaints route through the city's 311 service. Call 334-625-INFO (4636), text HELLO to 844-748-4867, or email [email protected]; customer service reps are available Monday-Friday from 7 a.m. to 5 p.m. That's also the channel generating the complaints driving this whole process. So if you're running a listing here, it's worth being a good neighbor now, well ahead of any formal requirement to be one.

Remember, the political pressure behind this ordinance came from specific, named residents describing specific problems, not a hypothetical concern. That tells you enforcement priorities once the ordinance passes are likely to start with exactly those complaint-heavy blocks. If Montgomery's regulatory uncertainty gives you pause, BNBCalc Markets can show you how the numbers compare across the rest of the Alabama market before you commit to a specific address here.

Frequently Asked Questions

Can you legally run a short-term rental in Montgomery, Alabama in 2026?

Yes, as of mid-2026. Montgomery has no dedicated short-term rental ordinance yet, so operating one requires only a standard city business license, a Certificate of Occupancy if the rental is a fixed address, and active state and local lodging tax accounts. A full ordinance with fees, registration and occupancy limits was in front of the City Council for a public hearing and vote as this guide was researched, so confirm the current status before relying on today's lighter rules.

Does Montgomery require a special permit for Airbnb or Vrbo listings?

Not currently. Montgomery treats a short-term rental the same as any other small business, requiring only the standard business license from the License and Revenue Division and a Certificate of Occupancy for a physical address. There's no short-term-rental-specific permit, registration number, or occupancy cap in effect today, though a draft ordinance would add a $250 annual fee and a two-year STR certificate if the City Council passes it.

How much tax does a Montgomery, Alabama short-term rental owe?

Roughly 15% combined, plus a flat fee. Inside city limits, that's 11% city lodging tax and 4% Alabama state lodgings tax; right outside the city in the police jurisdiction, the city portion drops to 5.5%. Montgomery County adds a separate flat charge of $2.25 per room, per day, on top of either rate. Airbnb collects and remits the state and Alabama-assigned local portions automatically; confirm directly with other platforms.

Is Montgomery about to ban or limit short-term rentals?

Not a ban, but real limits are pending. A draft ordinance moving through the City Council's Commerce and Industry Committee would cap guests at two per room, limit street parking, require a 24-hour contact, ban large events, and allow only one short-term rental per block. It had not passed as of this guide's last research pass in July 2026, so it isn't enforceable yet, but a vote was expected imminently.

What happens if you run a short-term rental in Montgomery without a business license?

It's a licensing violation the city can pursue, though enforcement has been light so far relative to the roughly 587 short-term rentals officials say are already operating, most of them unlicensed. That's expected to tighten once the pending ordinance creates a public registry and certificate system, which city leaders have said will make it far easier to identify and fine non-compliant properties.

Last verified: July 2026. Every ordinance, tax rate, state law, and contact detail in this guide links to or comes from its official source.