Tennessee short-term rental taxes — sales tax, Nashville hotel tax, and no state income tax

State-level registration and permitting — no statewide license, local rules vary

Tennessee has no statewide STR license program — permits and registrations are handled entirely at the local level. What the state does require is registration with the Tennessee Dept of Revenue to collect sales tax on rental income. Register through TNTAP (Tennessee Taxpayer Access Point) at tntap.tn.gov before collecting your first rental payment. Once registered, you receive a sales tax account number and begin filing state sales tax returns.

At the city and county level, requirements differ significantly. Nashville (Metro Nashville-Davidson County) requires an STR permit with two categories: owner-occupied (primary residence) and non-owner-occupied. Non-owner-occupied STRs in certain residential zones require additional zoning approval and face more restrictions. Nashville's STR ordinance has been amended multiple times since 2019 — if you registered under an older version, verify your permit is still valid under current rules. Memphis-Shelby County has its own STR registration process. Knoxville has an STR permit requirement through the City. Sevier County (covering Gatlinburg, Pigeon Forge, and surrounding Smoky Mountains communities) requires local registration and HOT compliance — the county actively monitors unregistered properties given the enormous volume of STR activity in that market. Pigeon Forge has similar obligations within the same county system.

Tennessee's SB 388/HB 487 (2023) was enacted to limit local governments' ability to ban STRs outright, though cities retain substantial regulatory authority over permitting, zoning, and operational requirements. Verify the current scope of this preemption with a Tennessee attorney if your city has enacted restrictions that seem to conflict with state law.

State-level taxes — 7% sales tax and zero income tax

Tennessee charges a 7% state sales tax on short-term rental income (typically stays under 90 days). Tennessee taxes accommodations under its sales tax code — this is not a separate hotel/occupancy tax, it's the standard sales tax system applied to transient lodging. Counties add up to 2.75% on top of the 7% state rate, and some cities add additional fractions. The combined state-and-local rate runs 9.25% to 9.75% across most Tennessee markets (Sevier County, at 2.75% local add-on, is at the higher end). All state and county sales tax is collected and remitted on the same Tennessee sales tax return through TNTAP.

Tennessee has no state income tax. The Hall Income Tax — Tennessee's last remaining income tax — was eliminated entirely as of January 1, 2022. Tennessee now has zero state income tax on all income including rental income, wages, and business profits. Your entire rental profit is subject only to federal income tax, reported on Schedule E of Form 1040. This is a significant advantage that attracts real estate investors to Tennessee — no state income tax regardless of how much your rental earns, and no state tax return to file for income purposes. Tennessee has no state-level equivalent of the federal self-employment tax either.

Common city and county taxes — Nashville HOT, Sevier County, and other markets

Beyond the 7% state sales tax and county add-ons, some Tennessee jurisdictions impose a separate Metro or county hotel occupancy tax on top. Nashville-Davidson County has been aggressive in collecting its Metro Occupancy Tax from STR hosts — this tax is handled by the Metro Finance Dept separately from state DOR, and Nashville hosts must register with both. Sevier County (Gatlinburg, Pigeon Forge) adds a 5% county hotel tax on top of state and county sales tax, making it one of the higher-rate markets in Tennessee — verify the current rate and registration process directly with the Sevier County Finance office before listing.

Nashville and Sevier County both require separate registrations from state sales tax. Don't assume that registering with the Tennessee DOR satisfies your Nashville Metro or Sevier County hotel tax obligations — they are distinct registration and filing systems with different accounts, forms, and deadlines. Nashville's Metro Finance Dept has an online portal; Sevier County operates through its Finance office directly.

What Airbnb and Vrbo collect automatically in Tennessee

Airbnb collects and remits Tennessee state sales tax (7% plus local county add-ons) for all Tennessee bookings. For Nashville bookings specifically, Airbnb also collects and remits the Metro Hotel Occupancy Tax. For Sevier County (Gatlinburg/Pigeon Forge) — verify current Airbnb coverage for county-specific hotel taxes on Airbnb's tax collection help page, as coverage can vary and the county's specific tax may require separate handling. Vrbo has strong Tennessee coverage given the size of the Gatlinburg market (one of Vrbo's strongest Southeast markets) — verify current specifics at Vrbo's tax collection page. Direct bookings are always fully the host's responsibility.

Even when Airbnb collects and remits all applicable taxes, you must maintain your Tennessee DOR sales tax registration and file as directed — including zero-liability returns as required by your assigned filing frequency. Nashville hosts also need their Metro Finance registration active and current. In the Smoky Mountains market, both Airbnb and Vrbo require registration numbers in listings — platform-required compliance makes enforcement more visible and targeted in that market.

Filing schedule and where to file

Tennessee state sales tax: file monthly if annual liability exceeds approximately $200/month average, quarterly, or annually for low-volume operators. File through TNTAP at tntap.tn.gov. Returns are due on the 20th of the month following the close of the reporting period. Nashville Metro hotel occupancy tax must be filed separately with Nashville's Metro Finance Dept — Nashville has online filing available, and most active STR hosts file monthly. Sevier County hotel tax is filed directly with the Sevier County Finance office, also monthly for active STR hosts. There is no unified Tennessee STR tax portal.

Federal income tax: annual, Schedule E on Form 1040. No Tennessee state income tax return is required — Tennessee eliminated its income tax entirely in 2022. STR permit renewal is annual in Nashville, Memphis, and most Tennessee cities. Most cities that require STR permits also require a current permit number to be displayed in listings — keep your permit renewed and your listing updated with the current number to avoid platform-enforced removal.

Penalties for non-compliance

The Tennessee DOR imposes penalties of 5% of unpaid sales tax per month, up to a 25% maximum, plus interest at 1% per month. Willful non-collection or non-remittance can trigger criminal charges under Tennessee tax law. The DOR actively cross-references platform data in markets like Nashville and Sevier County — compliance gaps that would have gone undetected a few years ago are increasingly visible to state tax authorities.

Nashville STR permit violations can result in fines and potential revocation of the STR permit. Nashville's codes enforcement actively investigates complaints and cross-references listing platforms for unregistered properties. In Sevier County, given the enormous volume of STR activity, the county finance office audits actively — the high concentration of STRs in the Gatlinburg and Pigeon Forge areas makes non-compliant operators relatively easy to identify. Airbnb removes listings in markets where permit numbers are required if valid numbers are not posted.

Recent rule changes — 2024–2026

Hall Income Tax full elimination (effective January 1, 2022): Tennessee now has zero state income tax. While this isn't a change from 2024–2026, many out-of-state investors purchasing Tennessee STR properties are still unaware of the full scope of this elimination — there is truly no Tennessee income tax on rental profit. Tennessee STR preemption (SB 388/HB 487, 2023): Limited local governments' authority to ban STRs outright in most circumstances. Cities may regulate but may not completely prohibit STR operations — tracking a similar trend to Arizona and Florida preemption laws. Local permit requirements remain fully enforceable under this framework.

Nashville STR ordinance updates (2023–2024): Nashville continued modifying its STR permit system, particularly around non-owner-occupied permits in residential zones. Verify current Nashville permit requirements and zone restrictions before listing or adding a new property in Davidson County. Smoky Mountains market growth (2023–2025): Sevier County's STR market continued explosive growth post-pandemic. The county has increased enforcement focus to ensure all new listings are registered and compliant — if listing in Sevier County, ensure registration is complete before your first booking.

Frequently asked questions