Business License Taxes & Fees
October 26, 2026
With business license renewal season upon us, it’s a good time for real estate companies to take a closer look at where they are paying business license fees and taxes. Recent changes to Alabama law have expanded the options available to businesses disputing certain county or municipal business license charges. Understanding your licensing obligations and how to respond to an improper demand can help your company avoid unnecessary costs and protect its right to appeal.
This article is for information only and is not intended as legal advice. If you need legal advice, please seek guidance from retained counsel.
2026 Deadline: For 2026, Alabama’s state and county business privilege license renewal deadline has been extended to November 2, 2026 because the typical October 31 deadline falls on a weekend. Renewals postmarked by November 2 will be considered timely, and delinquency penalties will not apply until November 3. Municipal renewal deadlines may vary. For more information, click here.
Overview
Alabama real estate companies may be subject to business license fees and taxes at the state, county, and municipal levels. These requirements vary depending on where a company maintains an office and the laws applicable to that location. Understanding which licenses your company needs and where it’s required to pay fees and taxes can help you avoid unnecessary charges.
Municipal Business License Taxes
In general, Alabama municipalities may impose business license taxes on businesses operating within their limits.[1] For real estate companies, however, the company’s office location is key. Municipalities in Alabama generally can’t require a real estate company to obtain a business license or pay a municipal business privilege tax unless the company maintains a place of business within that municipality.[2] Simply showing or selling property in a municipality generally does not require your company to obtain an additional municipal business license or pay that city’s business license tax.
Municipalities have some flexibility in calculating business license taxes. Depending on the applicable ordinance, the tax may be based on gross receipts, a flat amount, or a combination of both.[3] State law also places certain limits on these taxes. For example, a municipality generally cannot impose a business license tax on residential rental property on a per unit basis unless it was already doing so prior to January 1, 2014.[4] Additional restrictions and exceptions may apply under local laws, as discussed below.
State and County Business License Fees
Alabama real estate companies are subject to state and county business license fees for buying, selling, or renting real estate for compensation. The following tables show the state fee, county fee, and combined total under the applicable Alabama statutes.
State Business License Fees
Any person who buys, sells, or rents real estate for pay in Alabama must pay the following state business license fee (Ala. Code § 40-12-149): | |
Cities and towns of 10,000 inhabitants and over | $15.00 |
Cities and towns of less than 10,000 and more than 5,000 inhabitants | $10.00 |
In all other places | $5.00 |
County Business License Fees
In addition to the state license fee, the county charges its own fee equal to 50% of the state amount to be paid to the county where the license is issued (Ala. Code § 40-12-2(e)). | |
In cities and towns of 10,000 inhabitants and over | $7.50 |
In cities and towns of less than 10,000 and more than 5,000 inhabitants | $5.00 |
In all other places | $2.50 |
Total of Both State and County Business License Fees
The following amounts represent the total combined state and county business license fees (Ala. Code §§ 40-12-149 and 40-12-2(e)) | |
In cities and towns of 10,000 inhabitants and over | $22.50 |
In cities and towns of less than 10,000 and more than 5,000 inhabitants | $15.00 |
In all other places | $7.50 |
Local Variations
Some counties have local laws that affect business license taxes, including restrictions on using gross receipts to calculate taxes for certain occupations. These include Cullman, DeKalb, Jackson, Lawrence, Limestone, Madison, Morgan, and Tuscaloosa. Additionally, Jefferson, Etowah, and Shelby counties have specific provisions that permit additional business license taxes on certain real estate activities.[5] Real estate companies should consult with retained legal counsel to confirm any applicable local licensing requirements.
What Happens If You Need to Dispute a Business License Charge
If your real estate company receives a business license demand from a municipality that you believe is incorrect, you should first review the charge and determine whether your company is subject to that municipality’s licensing requirements. Again, in general, a municipality can only require a real estate company to obtain a business license or pay a business license tax if it has an office in the municipality, but there is some local variation.
If you believe the demand is in error, there may be several options for disputing the charge depending on your specific circumstances. These may include requesting a review directly with a municipality, appealing to the municipal administrative hearing officer or circuit court, or appealing certain county or municipal business license taxes and fees to the Alabama Tax Tribunal under the Business License Tax Reporting and Appeals Act, effective October 1, 2025.
To file an appeal with the Alabama Tax Tribunal, you may use its County/Municipality Notice of Appeal (Form ATT-2) or send a written notice explaining why you disagree with your assessment. Include a copy of the assessment and any supporting documents. Appeals must be submitted by mail, delivery service, or in person to the Alabama Tax Tribunal at 7515 Halcyon Summit Drive, Suite 103, Montgomery, Alabama 36117. Appeals cannot be submitted by email or fax, and there is no filing fee. For additional information about the appeal process, FAQs, forms, and guidance, visit the Alabama Tax Tribunal’s page or contact the Tribunal directly at (334) 954-7195.
Each option has its own requirements and deadlines, and not every option will apply to every dispute. Because missing a deadline could affect your ability to challenge a charge, AAR recommends consulting retained counsel promptly to determine which options are available and how to proceed.
Takeaways
- For most real estate companies, business license obligations follow the office, not the transactions.
- If your company does not have a physical place of business within a city, that city generally cannot require you to pay a business license tax.
- If you receive a business license charge that you believe is incorrect, there may be several options for disputing it. Consult retained counsel promptly to determine which options are available and avoid missing important deadlines.
[1]Ala. Code§ 11-51-90
[2]Ala. Code§ 11-51-132
[3]Ala. Code§ 11-51-90.2
[4]Ala. Code § 11-51-90.3
[5]Ala. Code§ 45-37-244; Ala. Code § 45-28-200.01; Ala. Code § 45-58 (local laws applicable to Shelby County)