STR Laws by State · Updated July 22, 2026
Tennessee Short-Term Rental Laws: State Overview (2026)
Tennessee has no statewide short-term rental ban and no statewide STR license. Whether you can legally run an Airbnb or Vrbo here — and what it takes — is decided by your city or county. But a 2018 state law, the Short-Term Rental Unit Act, sets the outer limits on what local governments may do, and it gives real protection to rentals that were already operating before a local crackdown. This page explains the statewide rules that apply everywhere in Tennessee: the state law, the tax stack, and how the biggest markets differ.
| Statewide STR ban? | No — short-term rentals are regulated locally (by city and county), not banned by the state |
|---|---|
| Statewide license/permit? | None — permits are issued by individual cities and counties |
| Governing state law | Short-Term Rental Unit Act, Tenn. Code Ann. § 13-7-601 et seq. (Public Chapter 972, Acts of 2018; effective May 17, 2018) |
| Owner-occupancy required statewide? | No — depends entirely on the local ordinance (Nashville requires it for one permit type; Gatlinburg does not) |
| State sales tax on STR stays | 7% state + 1.50%–2.75% local option tax (applies to rentals of fewer than 90 continuous days) |
| Local occupancy (lodging) tax | Varies by city/county; platforms (Airbnb/Vrbo) collect it on stays under 30 days |
| Business tax | Applies to rentals under 180 days if annual taxable gross sales reach $100,000 in a jurisdiction |
| Last verified | 2026-07-21 |
This page is a plain-language summary of public Tennessee law, not legal advice. State statutes and local ordinances change — confirm the current rules with the Tennessee Department of Revenue and your city or county before operating.
Is short-term rental legal in Tennessee?
Yes. Nothing in Tennessee state law prohibits short-term rentals, and the state does not issue a statewide STR permit. Instead, Tennessee leaves licensing, zoning, and permitting to local governments — so the binding rules for your property come from your city (for example, Nashville’s Metro Code Chapter 6.28 or Gatlinburg’s overnight-rental ordinance) or your county.
What the state does do is cap how far a local government can go. The Short-Term Rental Unit Act of 2018 (Tenn. Code Ann. § 13-7-601 through § 13-7-606) tells cities and counties what they may and may not do when they regulate short-term rentals — and, critically, it protects rentals that were already operating before a new local rule took effect.
The Short-Term Rental Unit Act: the “legacy” protection
The Act’s centerpiece is the legacy clause in Tenn. Code Ann. § 13-7-603(a). In plain terms: a local ordinance, resolution, or rule that prohibits, effectively prohibits, or otherwise regulates the use of property as a short-term rental unit does not apply to a property that was already being used as a short-term rental unit before that ordinance was enacted. If you were legally operating first, a later local ban generally cannot shut you down.
That protection is not permanent. Under the Act, legacy status is lost when any of the following happens:
- the property is sold or transferred to a new owner;
- the property goes 30 continuous months without being used as a short-term rental; or
- the owner commits three separate violations of the local government’s generally applicable ordinances (noise, occupancy, safety, and similar rules that apply to everyone).
Because legacy status ends on sale, a grandfathered STR is a personal protection, not a feature that automatically passes to a buyer — something worth understanding before you buy a Tennessee STR on the assumption it is “grandfathered in.”
The pre-2014 (Brentwood) exception
Tenn. Code Ann. § 13-7-603(b) carves out an exception: an ordinance enacted before January 1, 2014 that expressly limits the period of time a residential dwelling may be rented may apply to property regardless of its existing use. This provision was written for a specific municipality (Brentwood) that already restricted rental durations before the cutoff, and it is narrow — it does not give every city a way around the legacy clause.
What cities and counties can still do
The Act does not stop local regulation; it channels it. Local governments may still adopt reasonable permit and application requirements (Tenn. Code Ann. § 13-7-604), and the Act expressly preserves the ability of homeowners’ associations and lessors to restrict or prohibit short-term rentals (§ 13-7-605) — so an HOA covenant or a lease clause can ban an STR even where the city allows it. Section § 13-7-606 addresses preemption. The takeaway: Tennessee cities can license, tax, zone, and set operating standards for STRs; they generally cannot retroactively ban a property that was already operating legally.
Do you need a permit in Tennessee?
There is no state permit, but nearly every populated Tennessee market requires a local one. Requirements differ sharply from city to city:
- Nashville (Metro/Davidson County) requires a Short Term Rental Property (STRP) permit, splits permits into owner-occupied (Type 1) and non-owner-occupied (Type 2), and has closed new Type 2 permits in most residential zones.
- Gatlinburg (Sevier County) is a purpose-built tourism town: it requires an overnight-rental permit and a fire/safety inspection but imposes no owner-occupancy rule, and whole-home investor cabins are the norm.
- Other markets — Memphis, Chattanooga, Knoxville, Pigeon Forge, and county governments — each set their own permit, zoning, and inspection rules. Always confirm the ordinance for the exact jurisdiction your property sits in, since city limits and county rules can both apply.
Tennessee short-term rental taxes
Tennessee’s tax treatment of short-term rentals is a stack of separate taxes, and each uses a different day threshold — the single most common source of host confusion. The figures below come from the Tennessee Department of Revenue’s Taxation of Short-Term Rental Units manual.
Sales and use tax (under 90 days)
Renting a home, cabin, condo, or room for fewer than 90 continuous days is subject to Tennessee sales tax: the 7% state rate plus a local option sales tax of 1.50% to 2.75%, depending on the county or municipality. For example, in Franklin the local rate is 2.75%, for a combined 9.75%. The taxable “sales price” includes cleaning fees, booking fees, pet fees, and damage-protection charges — not just the nightly rate.
Local occupancy (lodging) tax (under 30 days)
Many Tennessee cities and counties add a local occupancy tax on stays of less than 30 continuous days. These come in a few forms: a Tourist Accommodation Tax (Tenn. Code Ann. Title 7, Chapter 4, Parts 1–2), a Hotel Occupancy Tax (Title 67, Chapter 4, Part 14), and privilege taxes imposed by private act. Rates and whether the tax exists at all vary by locality, so this is the line item you must check against your specific city and county.
Since January 1, 2021, short-term rental marketplaces (Airbnb, Vrbo) are required to collect and remit the local occupancy tax on the host’s behalf for stays under 30 days, at the local rate where the unit sits, under the Short-Term Rental Unit Marketplace law (Tenn. Code Ann. Title 67, Chapter 4, Part 15, §§ 67-4-1501 through 67-4-1509). If you rent directly (off-platform), you generally remit the local occupancy tax to your city or county yourself.
Business tax (under 180 days)
Renting real property for less than 180 continuous days — the category that covers vacation lodging — is subject to Tennessee business tax. Individual property owners owe it only if their annual taxable gross sales reach $100,000 or more in a jurisdiction. Renting to a single person for 180 days or more is not subject to business tax.
Franchise and excise tax (entity owners)
Individuals and general partnerships are not subject to Tennessee franchise and excise tax. If you hold your STR in an LLC, LP, or corporation, that entity is generally subject to franchise and excise tax unless a specific exemption (such as the obligated-member-entity or family-owned non-corporate entity exemption) applies — a reason to weigh the tax cost of an entity against its liability benefits.
| Tax | Applies to stays of… | Rate / threshold |
|---|---|---|
| State & local sales tax | Fewer than 90 continuous days | 7% state + 1.50%–2.75% local |
| Local occupancy tax | Fewer than 30 continuous days | Varies by city/county; platform-collected since 1/1/2021 |
| Business tax | Fewer than 180 continuous days | Owed if gross sales ≥ $100,000 in a jurisdiction |
Pending and changing rules
Short-term rental preemption is a recurring subject in the Tennessee General Assembly, and bills that would adjust local authority or the Short-Term Rental Unit Act are introduced in many legislative sessions. Nothing on this page should be treated as the final word: before you rely on legacy protection or a specific tax threshold, check the current statutory text and your local ordinance, both of which can change between our verification dates.
Sources & verification
Every rule above is drawn from Tennessee state government sources. Verified 2026-07-21:
- University of Tennessee MTAS — Summary of the Short-Term Rental Unit Act (statute sections, legacy clause, and pre-2014 exception)
- University of Tennessee CTAS — Short-Term Rental Unit Act of 2018
- Tennessee Department of Revenue — Taxation of Short-Term Rental Units (PDF) (sales tax, local occupancy tax, business tax, marketplace collection, and the 90/30/180-day thresholds)
Regulations change — verify with the Tennessee Department of Revenue and your city or county before operating.
Compare short-term rental rules in Tennessee cities
- Short-term rental laws by city (lookup hub)
- Florida state overview — partial preemption with a June 1, 2011 grandfather line that lets pre-2011 cities like Miami Beach still ban STRs.
- Nashville, TN — owner-occupied vs. non-owner-occupied permits, with new investor permits closed in most residential zones.
- Gatlinburg, TN — one of the most STR-friendly markets in the country, with no owner-occupancy rule.
- Texas state overview — compare Tennessee’s STR-protection statute with a state that has no preemption at all, where the courts set the limits.
- California state overview — the coastal-zone overlay, a third way a state shapes local STR rules.
- Arizona state overview — the mirror image of Texas: a strong “no ban” preemption statute, walked back by SB 1168 (2022).
Frequently asked questions
Does Tennessee require a state license for Airbnb?
No. Tennessee does not issue a statewide short-term rental license or permit. You register and pay taxes with the Tennessee Department of Revenue, but the operating permit itself comes from your city or county.
Can a Tennessee city ban my short-term rental?
A city can regulate and, going forward, prohibit STRs in certain zones. But under the Short-Term Rental Unit Act’s legacy clause (Tenn. Code Ann. § 13-7-603(a)), a property that was already operating as an STR before the local ban is generally protected — until it is sold, sits unused as an STR for 30 continuous months, or racks up three violations of the local government’s generally applicable rules.
Do Airbnb and Vrbo collect Tennessee taxes for me?
Largely, yes. Since January 1, 2021, short-term rental marketplaces must collect and remit the local occupancy tax on stays under 30 days, and marketplace facilitator rules cover sales tax. If you rent directly to guests without a platform, you are responsible for collecting and remitting those taxes yourself.
Is grandfathered STR status transferable when I sell?
No. Legacy protection under the Act ends when the property is sold or transferred. A buyer cannot assume the previous owner’s grandfathered status carries over — confirm the current local ordinance before purchasing.
Last verified: 2026-07-21. Rules change — confirm current requirements with the Tennessee Department of Revenue and your local city or county government before operating.