Tennessee Short-Term Rental Laws by City (2026)
Short-term rental rules in Tennessee are set city by city — a property that is legal to rent nightly in one town can be prohibited a few miles away. The table below covers 7 Tennessee cities (7 human-verified against official sources), with each city's legal status, permit cost, and last-verified date.
Statewide short-term rental rules in Tennessee
Tennessee has no statewide short-term rental license or permit; regulation is left to cities and counties, but the 2018 Short-Term Rental Unit Act (T.C.A. 13-7-601 to 13-7-606) partially preempts local governments by grandfathering STRs that were operating before a local ban or restriction was enacted (protection ends on sale, transfer, 30 continuous months of non-use, or three violations of generally applicable local law). Hosts owe the 7% state sales tax (plus a 1.50%-2.75% local sales tax) on stays under 90 days, and since January 1, 2021 state law requires platforms like Airbnb and Vrbo to collect and remit both sales tax and local occupancy taxes on marketplace bookings. There is no statewide insurance mandate or STR-specific state safety code. City and county rules apply on top of state law — check your local market's page.
Full statewide rules: permits, taxes & enforcement
Tennessee has no statewide short-term rental license or permit; regulation is left to cities and counties, but the 2018 Short-Term Rental Unit Act (T.C.A. 13-7-601 to 13-7-606) partially preempts local governments by grandfathering STRs that were operating before a local ban or restriction was enacted (protection ends on sale, transfer, 30 continuous months of non-use, or three violations of generally applicable local law). Hosts owe the 7% state sales tax (plus a 1.50%-2.75% local sales tax) on stays under 90 days, and since January 1, 2021 state law requires platforms like Airbnb and Vrbo to collect and remit both sales tax and local occupancy taxes on marketplace bookings. There is no statewide insurance mandate or STR-specific state safety code. City and county rules apply on top of state law — check your local market's page.
Reviewed by the STR Rule Watch research team against 8 official sources. How we verify data
Tennessee statewide STR rules at a glance
| Legal status | Allowed, no permit required |
|---|---|
| Permit required | No |
| Renewal | No renewal required |
| Total occupancy taxes | ~9.75% of gross revenue |
| Insurance | No statewide insurance mandate. A $500,000 liability-insurance requirement (proposed T.C.A. 66-38-103(a)) appeared in the introduced 2017-18 bill (SB 1086) but was stripped before passage; enacted Public Chapter 972 contains no insurance, smoke-alarm, or CO-alarm provisions. (Some industry blogs still incorrectly cite the $500k requirement as law.) Local ordinances and platform terms may still require coverage. |
| Enforcement | There is no state STR enforcement agency; enforcement is local. |
| Current rules effective | 2018-05-17 |
State law & local authority
Partial preemption via the Short-Term Rental Unit Act (Public Chapter 972, 2018; T.C.A. 13-7-601 to 13-7-606). Local governments remain free to zone, permit, cap, or even ban STRs prospectively, but any ordinance that 'prohibits, effectively prohibits, or otherwise regulates' STR use does not apply to property already being used as an STR by its owner before enactment (grandfathering/legacy clause, 13-7-603(a)). Legacy protection ends if the property is sold or transferred, ceases STR use for 30 continuous months, or violates a generally applicable local law three or more times (13-7-604). An exception (13-7-603(b), in practice the 'Brentwood exception') lets pre-January 1, 2014 ordinances that expressly limit rental periods apply regardless of existing use. Local permitting processes are expressly authorized (13-7-604(b)); the Act supersedes conflicting local requirements (13-7-606) but does not override HOA/condo governing documents, lease terms, or restrictive covenants (13-7-605). Providers may challenge conflicting local action in circuit or chancery court with de novo review (13-7-604(d)).
State-level taxes
| Tax | Rate | Who collects |
|---|---|---|
| Tennessee state sales tax (accommodations under 90 days)Applies to all rentals of less than 90 continuous days, including all mandatory fees (cleaning, pet, booking). Marketplace facilitators (Airbnb, Vrbo, etc.) with $100k+ in TN sales must collect and remit under state marketplace-facilitator law; hosts collect and remit via TNTAP for direct bookings. Returns monthly, due the 20th. | 7% | varies |
| Local option sales tax (state-administered, rate set locally)1.50%-2.75% depending on county/municipality (2.75% is the maximum), collected together with the 7% state sales tax on the same base. Separately, local occupancy (hotel/motel) taxes are levied by cities/counties at locally set rates, but state law (effective Jan 1, 2021, from 2019-20 SB 1778) requires short-term rental unit marketplaces to collect them and remit to the Department of Revenue for distribution; hosts remit occupancy tax directly to the locality only for off-platform bookings. 2025 Public Chapter 372 caps new municipal occupancy levies at 4% and cumulative municipal rates at 8%. | 2.75% | varies |
Enforcement & penalties
There is no state STR enforcement agency; enforcement is local. State-level compliance is tax compliance administered by the Department of Revenue (sales tax, marketplace-collected local occupancy tax, business tax for hosts grossing $100,000+ per jurisdiction, franchise/excise tax for LLC-owned units). Property tax: under T.C.A. 67-5-801(b)(2)-(3) (added by 2020 Public Chapter 787, Section 11, effective Jan 1, 2021) an STR that is the owner's principal residence with no more than one rental unit is presumed residential (25% assessment), and the same owner may request the presumption for one additional qualifying parcel; non-owner-occupied STRs can be classified commercial (40% assessment), as applied to investor cabins in Sevier County. The TN Supreme Court held in Pandharipande v. FSD Corp. (Oct 17, 2023) that generic 'residential purposes' covenants do not bar STRs, but covenant amendments imposing 30-day minimum lease terms do.
No statewide STR-specific penalty scheme. Under T.C.A. 13-7-604(a), a local government may terminate a grandfathered STR's continued use only after three separate final violations of a generally applicable local law directly resulting from the STR's operation, with the burden of proof on the local government; false complaints against STR providers are punishable as perjury (13-7-604(c)). Standard state tax penalties and interest apply to unremitted sales/occupancy taxes.
Statewide sources
- Public Chapter 972 (2018) — Short-Term Rental Unit Act (enacted text, HB 1020)retrieved July 10, 2026
- Tennessee Department of Revenue — Taxation of Short-Term Rental Units manual (May 2023)retrieved July 10, 2026
- Tennessee Department of Revenue — 2025 Legislative Summaries (PC 355, 364, 372)retrieved July 10, 2026
- MTAS (University of Tennessee) — Summary of the Short-Term Rental Unit Actretrieved July 10, 2026
- Tennessee Courts — Pandharipande v. FSD Corporation (Tenn. Oct. 17, 2023)retrieved July 10, 2026
- T.C.A. 13-7-603 — Effect of ordinance prohibiting or regulating short-term rental units (FindLaw)retrieved July 10, 2026
- SB 1086 (110th GA, introduced version — source of the never-enacted $500k insurance provision)retrieved July 12, 2026
- Public Chapter 787 (2020) — SB 1778: marketplace occupancy-tax collection (T.C.A. 67-4-3301 et seq.) and STR property-tax classification (67-5-801(b)(2)-(3))retrieved July 12, 2026
| City | Status | Permit fee | Last verified |
|---|---|---|---|
| Chattanooga | Restricted | $250 | July 21, 2026 |
| Gatlinburg | Permit required | $200 | July 10, 2026 |
| Knoxville | Restricted | $70 | July 21, 2026 |
| Memphis | Permit required | $300 | July 21, 2026 |
| Nashville | Permit required | $313 | July 12, 2026 |
| Pigeon Forge | Permit required | $300 | July 10, 2026 |
| Sevier County | Permit required | $250 | July 12, 2026 |
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This page is informational only and is not legal, tax, or financial advice. Regulations change frequently — verify current requirements with each jurisdiction before operating. HOA and condo rules may prohibit short-term rentals regardless of city law.