Short-Term Rental Laws in Duluth, Minnesota

Duluth operates a Vacation Dwelling Unit (VDU) license program with an explicit citywide cap that has shaped the market since 2018. Two license types: Interior (operator's primary residence; broadly available) and Exterior (non-owner-occupied; capped citywide at ~60 active licenses with a wait-list lottery when slots become available). The Exterior cap has been at-cap continuously since 2019 — new investor entry is gated by the waitlist. Existing Exterior licenses are tied to the parcel and convey with the property on sale.

Duluth Code Ch 31 + Ch 47 govern VDUs. Interior VDU (primary residence) allowed in all residential zones (R-1, R-2, MU-N, MU-C, MU-I) subject to the standard license. Exterior VDU (non-owner-occupied) is capped citywide AND subject to zoning eligibility — generally allowed in MU-N, MU-C, MU-I, and certain higher-density residential overlays, with single-family zones (R-1) being the most constrained. Confirm parcel zoning AND current cap availability via Duluth Business Licensing before any offer — buying a property hoping to get a new Exterior VDU when the cap is full is the most common Duluth investor mistake.

Operators must hold a short-term rental permit before listing. See the official permit portal.

Duluth Business Licensing + Life Safety Division jointly enforce. $311 annual VDU license fee. Application requires proof of insurance, designated 24/7 local responsible-party contact, life-safety inspection (smoke + CO + fire extinguisher + posted occupancy + parking plan), and HOA acknowledgment where applicable. Operating without a VDU license: $500+ per violation + stop-rental order + ineligibility for future application. Persistent complaints accumulating against a licensed VDU can trigger revocation, which then opens the slot to the waitlist (a key dynamic to track if pursuing the Exterior cap).

Combined short-term lodging tax in Duluth is approximately 16.375% of gross nightly revenue (state sales + state TRT + local TRT + applicable resort/city options).

Minnesota State sales 6.875% + Saint Louis County 0.5% + Duluth city sales 1.5% + Duluth Tourism Tax 5.5% + Lodging Tax 2.0% — combined ~16.4% on transient lodging (one of MN's highest stacks)

Verify the current combined rate via the Utah State Tax Commission before remitting — rates drift quarterly.