Woodbury imposes a 3% local lodging tax on most hotel stays, effective April 2023, on top of Minnesota's 6.875% state sales tax on lodging under 30 days. The single-dwelling rental license costs $80 per unit for 2026. Sub-30-day non-primary STRs remain prohibited regardless of tax status.
Two distinct money items apply. First, taxes on lodging. Minnesota authorizes cities to impose a local lodging tax of up to 3% under Minn. Stat. 469.190, exempting any rental 'for a continuous period of 30 days or more,' with 95% of proceeds dedicated to a local convention or tourism bureau. Woodbury's City Council enacted a 3% lodging tax that began in April 2023 on most Woodbury hotel stays; the city notes 'per state law, these resources can be used only for attracting visitors,' and the Minnesota Department of Revenue collects it. Separately, Minnesota's 6.875% state general sales tax applies to lodging rentals shorter than 30 days, and Revenue Notice 17-06 confirms residential short-term rentals are taxable lodging — accommodations intermediaries such as Airbnb and VRBO must register and remit the full sales price. Second, license fees. For conventional 30-day-plus rentals, the 2026 single-dwelling rental license is $80 per unit, pro-rated quarterly when added outside the renewal period; late renewals incur late fees. Note: the city's 3% lodging tax does not legalize sub-30-day non-primary-residence STRs, which the city states do not conform to City Code.
Collecting lodging revenue without remitting the 3% city lodging tax or the 6.875% state sales tax exposes operators to back taxes, penalties, and interest assessed by the Minnesota Department of Revenue. Running a sub-30-day non-primary rental is independently a non-conforming use. Letting a long-term rental license lapse triggers late fees under the rental-licensing ordinance.
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