The calculation necessary to separate the GET and TAT is required because the GET is based on gross income including the GET and the TAT is a straight pass-thru from the guest to the State. Assuming that the gross income from a vacation rental is $10,000/year, the separation of the two taxes would be done as follows:
$10,000.00 Gross base rental income charged to guest
416.60 Add GET tax at the maximum rate of 4.166%
925.00 Add TAT tax at 9.25%
$11,341.60 Total paid by guest
( 925.00) Subtract the TAT.
$10,416.60 Total gross income subject to GET x 4.0% GET tax rate
$ $416.66 GET owed to the State*
Please note that the TAT is $925.00 ($10,000 x 9.25%). Some would argue that the GET is a tax on a tax. It is not by virtue of the fact that the GET is not a sales tax (imposed on the consumer) but an excise tax (imposed on the business’ gross income).