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Grandfathering Protection Related to a Municipality’s Levying of a Hotel Occupancy Privilege Tax

Posted by: Stacey Shrader Joslin on Jan 14, 2026

Hearing Date: 12/19/2025

Opinion Number: 21

Question 1: Is a municipality’s levying of an occupancy tax subject to the caps set out in Tenn. Code Ann. § 67-4-1402(a)(2) if the municipality collects the occupancy tax pursuant to a private act that existed on or before July 1, 2021, and authorizes the municipality to “levy and collect” an
occupancy tax “in an amount not to exceed 5%,” but the municipality’s governing body did not vote to levy the full 5% until after July 1, 2021?

Opinion 1: No.

Question 2: If the answer to Question 1 is yes, does Tenn. Code Ann. § 67-4-1402(a)(3) exempt the municipality from the caps in subdivision (a)(2) if the municipality’s private act, effective before May 1, 2025, authorizes the municipality to “levy and collect” an occupancy tax “in an amount
not to exceed 5%,” but the municipality’s governing body did not vote to levy the full 5% until after May 1, 2025?

Opinion 2: Because of the answer to Question 1, the question as posed is moot.

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