This drove me nuts for about an hour, until I found this stackoverflow post.

getting htaccess to work

Having problems getting .htaccess to work? I had the same issue and hopefully this will help you.

vi /etc/apache2/sites-available/example or whatever your sites-available file is called.

<Directory /var/www/example/>
  Options Indexes FollowSymLinks MultiViews
  AllowOverride None
  Order allow,deny
  allow from all
</Directory>

Look for the “AllowOverride” line and change it from None to All:

<Directory /var/www/example/>
  Options Indexes FollowSymLinks MultiViews
  AllowOverride all
  Order allow,deny
  allow from all
</Directory>

and then restarting apache with

sudo service apache2 restart

Now apache should read your .htaccess file in the example directory.