Ala. Code § 11-51-90.3 § 11-51-90.3
Limitation on Imposition of Business License Tax on Rental of Residential Real Estate.
Operative Text
(a) Notwithstanding anything in this chapter to the contrary, a municipality may not impose a business license tax on the rental of residential real estate on a per unit basis unless the municipality was imposing a business license tax on residential real estate on a per unit basis prior to January 1, 2014. (b) As used in this section, the term “business license tax” does not include a privilege or license tax in the nature of a lodging tax. This section shall not be construed to prohibit a municipality or related municipal board or entity from imposing fees on commercial or residential developments or projects within the jurisdiction of the municipality. This section shall not apply to an Alabama improvement district organized pursuant to Chapter 99A of this title, a capital improvement cooperative district organized pursuant to Chapter 99B of this title, an industrial development board, or a water and sewer board.
Alabama Code § 11-51-90.3 restricts when a municipality can impose a business license tax on residential rental property calculated on a per-unit basis. Only municipalities that were already using a per-unit business license tax on residential real estate before January 1, 2014, are permitted to continue doing so; newer municipalities cannot adopt this structure. The provision also clarifies that lodging taxes, development fees, and taxes imposed by certain special districts such as improvement districts and industrial development boards are not affected by this limitation.
Plain English — not legal advice.
Under Ala. Code § 11-51-90.3, residential rental property owners should be aware that most Alabama municipalities are prohibited from billing a business license tax on a per-unit basis unless that practice was in place before January 1, 2014. Compliant operators generally verify whether their municipality qualifies under this grandfather provision before paying or disputing any per-unit business license tax assessment. Fees tied to development projects or lodging-style taxes are treated separately and are not shielded by this section.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Ala. Code § 11-51-90.3 is primarily a constraint on municipal taxing authority rather than a direct tenant-protection measure, but it can affect the cost structure landlords face, which may in turn influence rental pricing. Tenants who believe a landlord is passing through an unlawfully imposed per-unit business license tax may find it useful to contact their local municipality's revenue or finance office to confirm whether the tax is legally authorized under this provision. Tenant-rights organizations in Alabama can also help residents understand how local tax structures interact with their rental agreements.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated October 16, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
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