Merced Short Term Rental Regulation: A Guide For Airbnb Hosts

Do you own a place in Merced and you're weighing whether to put it on Airbnb or Vrbo? Well, the good news is, nothing in the city's own zoning code stops you outright. Merced, the Merced County seat out in California's Central Valley, has never adopted a dedicated short-term rental ordinance, unlike plenty of nearby cities that cap permits or require an owner to live on site.

That's not the same as a free pass, mind you. Merced still treats a nightly rental as a taxable "hotel" under its own municipal code, so you owe a 10% transient occupancy tax on every stay and you need a standard city business license to operate legally. A fair amount of what circulates online about a special "short-term rental permit" here doesn't hold up against the actual ordinance, and I'll get into exactly why below.

So this guide walks through what Merced's zoning code says, and doesn't say, about short-term rentals in 2026, what the business license and tax process involves, what it costs, how enforcement works in practice, and who to call when you get stuck. Every figure below comes from the city's own ordinance text or an archived copy of its own pages, checked in July 2026. Run the property itself through BNBCalc first, since none of the regulatory picture matters much if the numbers don't work.

Starting a Short Term Rental Business in Merced

Assuming the numbers already look decent on a spreadsheet, you still need to know whether Merced lets you build a business around this at all. The honest answer is: mostly, by default, rather than by any explicit yes.

I went through every part of Merced Municipal Code Title 20 (Zoning), chapter by chapter, looking for a short-term rental or vacation rental use category.

There isn't one.

No chapter defines it, no zoning district lists it as a permitted or conditional use, and the glossary of definitions doesn't mention it either.

The closest thing on the books is Bed and Breakfast. It needs a conditional use permit in every zoning district, requires the owner to live on the property with separate quarters, caps guest rooms at twelve, and only lets you serve meals to people already staying there. That's a hosted-inn business, not a whole-home Airbnb.

Here's why that matters. Several rental-management and vacation-rental blogs describe Merced as requiring "an Administrative Permit specifically for short-term rentals" issued by the Planning Department. I looked for that permit in the actual code and on the city's own Planning pages and couldn't find it anywhere.

It isn't in Title 20, it isn't listed as a service on the Planning Division's page, and nobody at the city references it in anything I could read. Do treat that claim skeptically if you see it repeated elsewhere, since it seems to be aggregator content copying itself rather than anything sourced from Merced's own ordinance.

What the city does require is more mundane, and it applies to you whether or not zoning ever mentions short-term rentals by name. The business license page states plainly that "all businesses conducting business in the City need a business license, even temporary businesses," and it names "apartment owners" specifically among who that covers. A nightly rental clears that bar easily.

On top of the license, the transient occupancy tax ordinance defines "hotel" broadly enough to catch a rented house, so you're an "operator" under that chapter too, with a registration and a tax bill to go with it. More on both below.

If you're weighing Merced against a market with a more codified STR regime, it's worth a look at how the neighboring Stanislaus County guide handles it, since Modesto sits just up Highway 99 and draws a similar mix of Central Valley affordability and university-adjacent demand. UC Merced and the Yosemite gateway are the two things that move bookings here, so a property near either one is doing most of the work for you before regulation even enters the picture.

Short Term Rental Licensing Requirement in Merced

Since zoning doesn't gate you here, the real licensing requirement is the pair the last section flagged: a business license and a Transient Occupancy Registration Certificate. Neither one is optional, and skipping either is where hosts get into trouble.

The business license itself runs through the city's Finance Department. Merced describes it as "a form of taxation" rather than a flat permit fee, and as of July 2026 I could not confirm an exact dollar amount from any official page. What is confirmed: since January 1, 2018, the city has added a $4.00 disability access fee to every business license application and renewal, under state Senate Bill 1186.

Call the Business License Division directly at (209) 385-6843 for the actual rate that applies to your listing. Keep in mind the exact figure depends on how the city classifies a short-term rental for tax purposes, which isn't published in a simple table anywhere I could read.

The Transient Occupancy Registration Certificate is the second piece, and its rules are spelled out in plain terms. Merced Municipal Code §3.08.050 gives you thirty days from the date you start renting to register with the city's finance officer and get the certificate, which then has to stay posted somewhere visible on the property.

The certificate itself carries a warning worth reading twice: it "does not constitute a permit" and doesn't authorize you to operate any business unlawfully or without whatever other approvals apply. In Merced's case, since no STR-specific approval exists, that mostly means keeping your business license current too.

Neither of these has a renewal clock in the way a big-city STR permit usually does. There's no annual STR relicensing, no unit cap, and no lottery. That's a tradeoff, though, since you're leaning on ordinances written for hotels and business taxpayers generally. Watch out for the fact that the city can update either one without much notice to short-term rental hosts as a group.

Required Documents for Merced Short Term Rentals

Because Merced runs this through ordinary business licensing rather than a dedicated STR application, there's no single official checklist naming exact documents for a short-term rental. What you're assembling is the paperwork for two separate, generic city processes.

For the business license, expect the standard package any small business owner in Merced provides: your legal name and any DBA, the property address, proof you own or have the right to rent out the unit, and payment for the license itself plus that $4 disability-access fee. The application process now runs partly through the city's Civic Access portal, with downloadable paper applications still available from Finance if you'd rather not use the online system.

For the Transient Occupancy Registration Certificate, the ordinance itself only specifies what the certificate has to display once issued: your name as operator, the property address, and the date it was issued. It doesn't list required attachments beyond registering with the finance officer within that thirty-day window.

Do check with the Finance Department directly before you apply, since a phone call up front is cheaper than a returned application. Keep records too: §3.08.100 of the ordinance requires operators to preserve tax records for three years, and the city can inspect them.

One more document worth having ready even though nothing in Merced's code demands it by name: your platform's help-center confirmation of whether it collects and remits TOT on your behalf. As the next section covers, Merced isn't one of the jurisdictions where that happens automatically, so you'll want proof either way if a question ever comes up.

Merced Short Term Rental Taxes

That platform-collection question is where the tax story starts, so let's take it head-on. Merced's transient occupancy tax runs at a flat 10% of the rent charged, set by Merced Municipal Code §3.08.030, and it applies to every guest who stays fewer than thirty consecutive days. California itself levies no statewide occupancy tax of its own; state law under Revenue and Taxation Code §7280 authorizes cities and counties to set their own rate, with no cap, which is exactly what Merced has done.

Charge	Rate	Collected by
Transient Occupancy Tax	10% of rent	City of Merced Finance Department
California Tourism Assessment	roughly 0.195% of qualifying travel revenue	California Office of Tourism
State and federal income tax	ordinary rates	Franchise Tax Board / IRS

Airbnb does not collect or remit this tax on your behalf here. I checked Airbnb's own list of California jurisdictions where it handles occupancy tax automatically, and Merced isn't on it.

That means the 10% is entirely on you to collect from guests and remit yourself, quarterly, with the return due on the last day of the month following the close of each calendar quarter under §3.08.060.

Miss that window and the penalties compound fast: an initial 10% penalty on the unpaid tax, another 10% if you're still delinquent thirty days later, a possible 25% penalty on top of both if the city finds fraud, and 1% interest per month on the unpaid balance until it's cleared.

From what I can tell going through local coverage, Merced considered raising this rate. A Merced County Times report from July 2024 described a City Council plan to ask voters for a rate as high as 12%, paired with a new fee on hotel owners to fund a Yosemite-focused tourism district.

I couldn't find any record that measure appeared on a ballot or passed, and the ordinance's own text still shows 10% with no amendment since 1996. Treat 12% as a proposal that stalled rather than the current rate, but do keep an eye on it since a council can bring a tax measure back.

Beyond the local tax, California's Tourism Marketing Act layers on a statewide self-assessment for the accommodations sector, worth roughly $1,950 per $1 million in qualifying travel-and-tourism revenue, filed directly with the state's Office of Tourism rather than through Merced. And whatever a rental earns you is ordinary taxable income to the Franchise Tax Board at the state level and to the IRS federally, same as any other rental property.

Merced-wide Short Term Rental Rules

All three of those tax layers assume you're already operating legally, which loops back to the zoning question this guide opened with.

California itself sets remarkably few statewide rules for short-term rentals. Nearly everything that gets enforced lives at the city or county level, and Merced's own code is where the real answer sits.

A few state-level guardrails still apply on top of whatever Merced does or doesn't say. If your property sits inside a homeowners association, Civil Code §4741(c) lets that association prohibit rentals of thirty days or less even though it can't touch longer-term leases, so check your HOA rules separately from anything the city requires.

If you're hoping to rent out an ADU short-term, Government Code §66323(e) requires any rental of an ADU approved under that section to run longer than thirty days. An accessory unit doesn't give you a nightly-rental workaround.

And if Merced ever does adopt an STR-specific ordinance with its own fines, state law caps those civil penalties at $1,500 for a first violation, $3,000 for a second within a year, and $5,000 after that, under Government Code §36900(d). Since Merced hasn't adopted such an ordinance yet, that cap isn't the one you'd run into today; general business-license and tax penalties are.

One newer state law is worth flagging even though it doesn't change anything for Merced hosts directly right now. Senate Bill 346, effective January 1, 2026, lets a city or county opt into a framework requiring booking platforms to report each rental's address and include local license numbers in listings.

It's opt-in, and I found no evidence Merced has adopted it, so from what I can tell it doesn't apply here yet. Keep an eye on it anyway, since a small city adopting it later wouldn't be unusual once neighboring jurisdictions do.

For the fuller picture of how California's state-level rules interact with local ones, our California statewide guide walks through the whole framework, including the coastal-zone rules that don't apply to inland Merced but matter a great deal if you're comparing markets closer to the coast.

How to Start a Short Term Rental Business in Merced

Given how much of the above depends on process rather than approval, the sequence you follow matters more than it might in a city with a single obvious permit to chase. Here's the order that avoids wasted trips to City Hall.

1. Confirm the zoning fits before you buy or convert anything. Call the Planning Division to confirm your property isn't zoned in a way that excludes residential rental use altogether, and ask directly whether anything has changed since this guide was researched.
2. Check your HOA or lease terms, if either applies. State law lets an HOA ban short-term rentals outright, and that ban would override anything the city allows.
3. Apply for a City of Merced business license through the Civic Access portal or Finance Department, budgeting for the license itself plus the $4 disability-access fee.
4. Register for your Transient Occupancy Registration Certificate within thirty days of taking your first booking, and post it somewhere visible in the unit once issued.
5. Set up quarterly TOT collection and filing. Since Airbnb won't collect the 10% for you here, build it into your pricing or a separate line item, and calendar the last day of the month following each quarter's end.
6. Keep three years of records on hand, covering rent charged and tax collected, in case the finance officer asks to see them.
7. Run the actual numbers through BNBCalc before you commit serious capital, since Merced's light regulatory touch only pays off if the property performs.

Who to contact in Merced about Short Term Rental Regulations and Zoning

Whichever step trips you up, four city offices cover almost everything above between them, and it's worth knowing which one owns your particular question before you start dialing.

Planning Division handles zoning questions, including whether your specific parcel or zoning district raises any issue with residential rental use.

• Address: 678 West 18th Street, 2nd Floor, Merced Civic Center, Merced, CA 95340
• Phone: (209) 385-6858
• Email: [email protected]
• Hours: Monday through Friday, 9:00 a.m. to 12:00 p.m. and 1:00 p.m. to 5:00 p.m.

Finance Department, Business License Division issues the business license every short-term rental operator needs.

• Address: 678 West 18th Street, Merced, CA 95340
• Phone: (209) 385-6843
• General city switchboard: (209) 388-7000

Finance Department, Transient Occupancy Tax handles TOT registration certificates, quarterly returns, and payment questions.

• Same address and general phone as above; ask to be routed to Transient Occupancy Tax when you call.
• Ordinance reference: Merced Municipal Code §3.08

Code Enforcement is who a neighbor would call about a noisy or poorly run rental, and it's also who you'd call to report a property maintenance issue yourself.

• Phone: (209) 385-6237, weekdays 8:00 a.m. to 4:00 p.m.
• For an active emergency, call the Merced Police Department non-emergency line at (209) 385-6912 instead.

Don't be shy about calling more than one of these, either. Because Merced doesn't run a dedicated STR desk, your question sometimes genuinely belongs to two departments at once, and a five-minute call beats guessing.

What do Airbnb hosts in Merced on Reddit and Bigger Pockets think about local regulations?

Given how scattered the official picture is, it's worth checking what actual hosts and investors say once they've been through it. I read two active BiggerPockets threads specifically about investing in Merced, and neither one gets into short-term rental regulation at all. Both stay focused on long-term buy-and-hold advice: which neighborhoods to avoid south of Highway 99, which streets around UC Merced are worth targeting, and how the university's planned downtown administration building might pull renters into the area.

That's a real gap. Investors are clearly active in this market, but the regulatory conversation specific to Airbnb and Vrbo in Merced is thin compared to bigger California markets.

What I can say with more confidence is that the aggregator confusion this guide has already flagged, the widely repeated claim about a Planning Department "Administrative Permit," is itself a useful signal. It suggests plenty of would-be hosts are researching Merced through secondary sites rather than the actual ordinance, which is exactly how bad information about a permit that doesn't exist ends up shaping expectations.

If you're weighing Merced against other Central Valley markets, the San Joaquin County guide is a useful comparison, since Stockton's STR rules are considerably more codified and give you a sense of what a stricter version of this same region looks like.

None of that changes the underlying math, though. Merced's appeal as an Airbnb market comes down to UC Merced and Yosemite tourism, and BNBCalc Markets is where you'd check what comparable Central Valley and Yosemite-gateway listings are pulling in before you commit to a property here.

Frequently Asked Questions

Can you legally run a short-term rental in Merced in 2026?

Yes, in the sense that nothing in the city's zoning code bans it. Merced has no dedicated short-term rental ordinance, no permit cap, and no owner-occupancy requirement written into its zoning code. You do still need a standard city business license and a Transient Occupancy Registration Certificate, and you owe 10% occupancy tax on every stay. Confirm your specific parcel's zoning with the Planning Division before you commit, since general silence in the code isn't the same as a guaranteed yes for every property.

Do you need a special permit for an Airbnb in Merced?

No dedicated short-term rental permit exists in Merced's municipal code, despite claims to the contrary on several vacation-rental blogs. What you actually need is a general city business license, which applies to any business operating in Merced, plus a Transient Occupancy Registration Certificate for tax purposes. If you're planning something closer to a bed and breakfast, with the owner living on site and meals served to guests, that does require a conditional use permit under a separate zoning chapter.

How much is the transient occupancy tax in Merced?

Merced charges a flat 10% transient occupancy tax on the rent for any stay of fewer than thirty consecutive days, set under Merced Municipal Code §3.08.030. The city considered raising that to as high as 12% in 2024 to fund a tourism district, but the ordinance's own text still shows 10% with no rate change since 1996. Returns and payment are due quarterly, on the last day of the month following the close of each calendar quarter.

Does Airbnb collect and remit Merced's occupancy tax for you?

No. Merced doesn't appear on Airbnb's list of California jurisdictions where the platform automatically collects and remits local occupancy tax. That leaves the entire 10% transient occupancy tax as your responsibility to collect from guests and remit directly to the city's Finance Department every quarter. Make sure you build the tax into your pricing or list it as a separate charge, since guests won't see it handled automatically the way they might in a bigger California city.

What happens if you don't register or pay Merced's transient occupancy tax?

The penalties compound quickly. An operator who misses a payment owes an initial 10% penalty on top of the unpaid tax, then another 10% if the remittance is still late after thirty days, plus 1% interest per month until it's paid. If the city determines the nonpayment involved fraud, it can add a further 25% penalty. Records have to be kept for three years, and the finance officer can request them at any time.

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