Reference Number: 
CTAS-1639

The hotel/motel tax is a tax on the privilege of occupancy of hotel and motel rooms and similar spaces. Counties levy the hotel/motel tax by private act (with the exception of Davidson County which uses a general law, T.C.A. § 7-4-101 et seq., applicable only to counties with a metropolitan form of government).  The distribution of the tax is set forth in the private act.  Rates vary according to the terms of the private act.  There is no statutory limit on the rate that may be imposed by the general assembly in the private act (Op. Tenn. Att'y Gen. 01-141).

Under T.C.A. § 67-4-1425, any private act enacted after May 12, 1988, that authorizes a city or county (with exceptions noted in the statute) to levy a hotel/motel tax must limit its application as follows:

  1. A city shall only levy such tax on occupancy of hotels located within its municipal boundaries.
  2. A city shall not be authorized to levy such tax on occupancy of hotels if the county in which such city is located has levied such tax prior to the adoption of the tax by the city; and
  3. A county shall only levy such tax on occupancy of hotels within its boundaries but outside of the boundaries of any municipality that has levied a tax on such occupancy prior to the adoption of such tax by the county.

These limitations only apply prospectively and all private acts levying taxes on the privilege of occupancy of hotels enacted prior to May 12, 1988, shall remain in full force and effect. Note that home rule municipalities have separate general law authority to levy hotel/motel taxes. As these taxes are not levied by private act, the limitations listed above do not apply to hotel/motel taxes levied by a home rule municipality.

Current rates and distributions of county hotel/motel taxes are shown in Hotel/Motel Tax Rates and Distribution FY 2017.