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Municipal Technical Advisory Service (MTAS)

Hotel/Motel Tax

Reference Number: MTAS-541
Reviewed Date: 12/01/2022

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. 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.

Hotel/Motel Taxes Levied before July 1, 2021
Any valid levy of hotel/motel tax or any authorization to levy hotel/motel tax that existed prior to July 1, 2021, remains in full force and effect. A municipality with an authorized preexisting hotel/motel tax before July 1, 2021, shall not change the initial use of the revenue except in accordance with T.C.A. § 67-4-1403.