Tennessee Short-Term Rental Tax Overview
Tennessee imposes no state income tax on net rental income, combined with Sales Tax + State Privilege Tax at 12.25-17%+ on gross rental receipts. 7% state sales tax + 5% state privilege tax on lodging + local taxes. The total tax burden for Airbnb hosts in Tennessee varies by location, ranging from approximately 18%+ in Nashville to 16.25% in Chattanooga. Understanding the layered structure of federal, state, and local taxes is essential for compliance and accurate pricing.
This guide covers the 2026 tax year. Tax rates and rules change frequently — always verify current rates with the Tennessee Department of Revenue and consult a qualified tax professional for advice specific to your situation. Federal tax obligations (Schedule E, Form 1099-K, the 14-day rule) apply in addition to all state and local taxes described below. See IRS Publication 527 for federal rental income rules.
Income Tax on Rental Income
Rate: 0%
Tennessee has NO state income tax on wages or rental income
- No state income tax return required for rental income
- Federal Schedule E (or Schedule C if substantial services provided) is required regardless of state tax
- The 14-day rule: if you rent your primary residence 14 days or fewer per year, federal rental income is tax-free (IRS Publication 527)
- Federal self-employment tax may apply if you provide substantial services to guests
Sales Tax + State Privilege Tax
Rate: 12.25-17%+
7% state sales tax + 5% state privilege tax on lodging + local taxes
What Airbnb Collects Automatically
- State sales tax (7%)
- State privilege tax (5%)
- Most city/county taxes
What Hosts Must Collect and Remit
- Some local taxes where Airbnb has no agreement
Local Tax Rates by City in Tennessee
Combined estimated occupancy/lodging tax rates including state + local components (income tax not included):
| City / Area | Local Tax Rate | Combined Rate | Registration Required? |
|---|---|---|---|
| Nashville | 6% city | 18%+ | Yes - STR permit required |
| Memphis | 4.5% city | 16.5% | Yes |
| Gatlinburg | 5% city | 17% | Yes |
| Pigeon Forge | 4% city | 16% | Yes |
| Chattanooga | 4.25% city | 16.25% | Yes |
Deductions for Tennessee Airbnb Hosts
Because Tennessee has no state income tax, state-level deductions for rental expenses are irrelevant. All standard federal deductions apply to your federal return: depreciation over 27.5 years (IRS Publication 946), mortgage interest, property taxes (proportional to rental use), insurance, cleaning and maintenance costs, guest supplies, utilities, Airbnb platform fees (typically 3%), professional photography, and property management fees. The absence of state income tax means Tennessee hosts keep 100% of net rental income after federal taxes, making it one of the most tax-friendly states for Airbnb operators. See IRS Publication 527 for the complete list of deductible rental expenses.
Common Deductible Expenses
- Depreciation — Building cost over 27.5 years (IRS Publication 946); often the largest single deduction
- Mortgage interest — Deductible in proportion to rental use percentage
- Property taxes — Proportional to rental use days vs. personal use days
- Insurance — STR-specific or landlord insurance premiums
- Cleaning and maintenance — All turnover cleaning fees, repairs, and upkeep
- Supplies — Linens, toiletries, coffee, kitchen supplies for guests
- Platform fees — Airbnb host service fees (typically 3%) are fully deductible
- Utilities — Electricity, internet, water, gas proportional to rental use
- Professional fees — CPA, tax preparer, attorney fees related to the rental business
Filing Requirements and Deadlines
Registration
Required: Tax Registration / Business License
Cost: Varies by jurisdiction
Register at: Tennessee Department of Revenue
Filing Schedule
Monthly or quarterly for lodging/sales tax; annually for income tax
Key Resources
Common Tennessee Tax Mistakes for Airbnb Hosts
Mistake #1
Assuming no taxes apply because Tennessee has no income tax — the Sales Tax + State Privilege Tax still applies to gross rental receipts and must be collected from guests and remitted to the appropriate authority.
Mistake #2
Not registering with local tax authorities — even in states without income tax, hosts must register for sales/lodging tax collection and may need local business licenses or STR permits.
Mistake #3
Failing to report rental income on the federal return — Tennessee's lack of state income tax does not eliminate the federal obligation. All rental income must be reported on Schedule E (or Schedule C if providing substantial services).
Tennessee Short-Term Rental Regulations Beyond Tax
Tennessee does not have comprehensive statewide short-term rental legislation. Regulations are primarily set at the city and county level, with tourist-heavy areas generally having more specific STR ordinances. Hosts should check with their local municipality for zoning compliance, business licensing requirements, safety inspection mandates, and any occupancy or night-cap limits. Some Tennessee cities have begun requiring STR-specific permits and registration in response to housing affordability concerns. Always verify current local requirements before listing.
Calculate Your Tennessee Airbnb Tax
Enter your income, expenses, and select Tennessee to get an instant federal + state estimate.
Frequently Asked Questions
Does Tennessee tax Airbnb income?
Tennessee has no state income tax, making it tax-friendly for rental income. Additionally, Tennessee imposes Sales Tax + State Privilege Tax at a combined rate of approximately 12.25-17%+. Local taxes may add more depending on your city or county. All net rental income must also be reported on your federal tax return (Schedule E). See the Tennessee Department of Revenue and IRS Publication 527 for details.
Does Airbnb collect Tennessee taxes?
Airbnb collects State sales tax (7%) and State privilege tax (5%) in Tennessee. However, some local taxes where airbnb has no agreement may still be the host's responsibility. Always verify your specific jurisdiction on Airbnb's "Occupancy Tax Collection" page and with the Tennessee Department of Revenue.
Do I need a permit to Airbnb in Tennessee?
Requirements vary by locality. At minimum, you typically need to register with the Tennessee Department of Revenue for tax collection purposes. Many cities and counties require additional business licenses, STR permits, or zoning approvals. Tourist-heavy areas tend to have stricter requirements. Check with your local municipality before listing.
What can Tennessee Airbnb hosts deduct?
Since Tennessee has no state income tax, deductions apply only to your federal return. Standard deductible expenses include: depreciation (27.5 years MACRS), mortgage interest (proportional to rental use), property taxes, insurance, cleaning, supplies, utilities, Airbnb fees, and professional services. See IRS Publication 527 for the complete list.
When are Tennessee tax returns due?
There is no state income tax return. Sales Tax + State Privilege Tax returns are usually due monthly or quarterly depending on your tax liability. File through the Tennessee Department of Revenue online portal at https://www.tn.gov/revenue.html. Federal income tax returns (including Schedule E for rental income) are due April 15 annually.