For an ordinary short stay within Chattanooga city limits, budget for both occupancy tax and sales tax on your accommodation charge. Compulsory accommodation fees can also be taxable, so the advertised nightly rate is not necessarily the amount you will pay. Establish whether your quote includes taxes and fees before comparing it with another property’s total.
Hotel tax and sales tax
- Hamilton County occupancy tax
- 4%
- Chattanooga city occupancy tax
- 4%
- Tennessee state sales tax
- 7%
- Local sales tax
- 2.25%
- Combined short-stay tax
- 17.25% when all components apply to the same taxable accommodation charge
The city levy depends on the property being within Chattanooga’s corporate city limits, not on a Chattanooga postal address or the name used to market it. Establish the property’s municipality with the accommodation provider before applying the combined rate. A property outside the city limits does not incur this city levy, although other applicable taxes still matter.
Occupancy tax and sales tax are separate charges, even if your quote groups them under a single “taxes” line. The local occupancy levies apply to the full consideration charged for occupancy, without deductions. That includes payment in money or other value, such as credits or services, whether or not the charge has yet been collected.
Sales tax applies to the accommodation’s room charge. For a straightforward short stay where every component taxes the same amount, you can use the combined percentage to estimate the bill. Apply it to the taxable accommodation subtotal, rather than automatically to every item on the invoice. Longer stays and qualifying government travel have separate conditions, explained below.
Working out the final room bill
A compulsory accommodation fee is a property charge, but it can still attract tax. Mandatory occupancy-related fees enter the local occupancy-tax base. Required cleaning, booking and property-damage-protection fees also enter the accommodation’s sales-tax price.
For a hypothetical two-night short stay inside Chattanooga city limits, assume a room rate of $150 per night and one compulsory accommodation fee. All accommodation charges in this example share the same taxable base, with no exemption or optional purchases.
| Bill item | Amount |
|---|---|
| Room subtotal, two nights | $300 |
| Compulsory accommodation fee | $20 |
| Taxable accommodation subtotal | $320 |
| Combined accommodation tax | $55.20 |
| Final stay total | $375.20 |
Optional parking or breakfast purchases are extras, not government accommodation taxes. A refundable card authorisation temporarily reserves funds rather than becoming final spending, unless an actual charge is subsequently applied.
Do
- Read whether the quote includes taxes and compulsory fees.
- Compare full totals for the same dates, room terms and extras.
- Distinguish a card hold from settled charges.
Don’t
- Add accommodation tax again to a tax-inclusive total.
- Treat a compulsory property fee as a government tax.
- Count a refundable authorisation as a completed purchase.
Short-term rentals, longer stays and exemptions
Choosing a vacation rental rather than a hotel does not remove occupancy tax. The levies cover transient stays in hotels and motels, as well as short-term vacation rentals, including homes and other residential dwellings.
Sales tax has a separate rule: accommodation furnished to the same person for 90 or more continuous days is exempt from sales tax. A cancellation breaks the continuous-day count. Do not use the local occupancy-tax cut-off to decide whether sales tax applies.
Federal government and State of Tennessee employees may qualify for occupancy-tax relief on official business. Ask the accommodation provider for the exemption with the relevant payment and eligibility evidence, because the operator may grant it and relief is not automatic. Direct government billing or payment with a government credit card may qualify.
If you pay with cash, a personal cheque or a personal credit card, the operator must obtain a copy of your government identification and a signed, dated statement from the government entity confirming official-business travel and reimbursement of the room cost. Employment status alone is not enough for this personal-payment route.
Questioning a tax charge
- Keep the itemised invoice and your stay dates.
- Identify the disputed tax component, distinguishing occupancy tax from sales tax or a property fee.
- Give the accommodation provider the dates and any relevant exemption evidence.
- Request a corrected bill or reimbursement, and retain the resulting correspondence.
The Hamilton County Trustee administers the county and Chattanooga city occupancy levies. Start a billing correction with the accommodation provider, rather than treating it as a property-owner tax payment or an operator’s routine tax remittance.
For occupancy tax already collected and remitted, the hotel operator may file the refund claim. You cannot file that claim directly as a non-transient guest. The operator must show that it reimbursed you for tax collected from you, and any approved refund must be paid to you or credited to your account. Keep the corrected invoice or credit record alongside the original bill.
Sources & fact-checking
Checks against the sources below cover: fares and charges, as well as services.
- Hamilton County and the City of Chattanooga Hotel/Motel Occupancy Privilege Tax — Explanations and Definitions
- SUT-47 – Short-Term Rentals Are Subject to Sales Tax
- Hamilton County — fares and charges
- City of Chattanooga — fares and charges
- Tennessee Department of Revenue — fares and charges
- Tennessee Department of Revenue (local sales tax rate); City of Chattanooga and Hamilton County (hotel-motel occupancy taxes) — fares and charges
- City of Chattanooga — service
- Sales and Use Tax Guide
- Trustee, Hamilton County Government
- Refund Hotel / Motel Tax Form
- Hamilton County Auditor’s Office; Tennessee Department of Revenue — service
- Occupancy Tax Notice #25-07: Short-Term Rental Unit – 30 Day Occupancy
- Tennessee General Assembly — service
