Hotel/Motel Taxes

As of July 1, 2021, every municipality in Tennessee is authorized to levy hotel/ motel or occupancy tax by ordinance. However, pursuant to T.C.A. § 67-4-1402, hotel/motel tax levied by a municipality in accordance with this new authorization must not exceed four percent (4%) of the amount charged by the hotel operator, provided that on or after May 5, 2025 a municipality shall not increase the tax in an amount such that the cumulative tax in an incorporated area of a county exceeds eight percent. Revenues generated by the hotel/motel tax must be designated and used for the promotion of tourism and tourism development. See T.C.A. § 67-4-1403. A monthly tax return shall be filed by the operator of the hotel/motel with the tax collector of the municipality. Tax on certain short-term rental units secured through a short-term rental unit market place must be collected and remitted to the Department of Revenue.

Annual Hotel/Motel Report

Not later than 90 days after the end of the a municipality's fiscal year, each municipality that levies a tax upon the privilege of occupancy, whether pursuant to TCA, private act, ordinance, or resolution, shall provide an annual written report to the commissioner of the department of tourist development. The annual written report must detail the amount of revenues spent by the municipality, and its subordinate contractors, and how those expenditures have been designated and used for tourism promotion and tourism development.

Hotel/Motel Taxes Levied before May 1, 2025

Any valid levy of hotel/motel tax or any authorization to levy hotel/motel tax that existed prior to May 1, 2025, remains in full force and effect. A municipality with an authorized preexisting hotel/motel tax before May 1, 2025, shall not change the initial use of the revenue except in accordance with T.C.A. § 67-4-1403.