Tennessee Hourly Paycheck Calculator
Residents and visitors to The Volunteer State enjoy the mountains in the east, great food in the west, and wonderful music everywhere. Also, businesses enjoy minimal payroll taxes in Tennessee! Tennessee is one of a few states without a state income tax. And with only one Tennessee payroll tax, that’s music to every employer’s ears.
Only one Tennessee payroll tax
Tennessee collects an unemployment tax from most companies. The total balance in the Unemployment Insurance Trust Fund, along with your historic wages and amount of benefits paid to your former workers, help dictate your rate.
As of July 1, 2022, rates for Tennessee’s unemployment tax range from 0.01% to 10%. The rates are reviewed, and adjusted, every six months on January 1 and July 1.
Only the first $7,000 of each employee’s wages is taxable for state unemployment.
Quarterly Wage and Premium Reports are due within one month of the end of a calendar quarter and Tennessee requires that the reports be filed electronically.
The Tennessee Department of Labor and Workforce Development has a helpful employer handbook available here. It covers topics such as what to do if you have employees in more than one state, how your rate is calculated, and which types of employee wages are taxable.
Other Tennessee payroll rules
Paid time off (PTO): There is no law in Tennessee that requires employers to provide PTO but they can voluntarily provide it as a fringe benefit. And unless the company has a written policy that says earned but unused PTO is paid out upon an employee’s separation, Tennessee doesn’t require employers to pay out unused PTO.
Final paychecks: You have until the next regularly scheduled pay date or 21 days after an employee leaves, whichever is later, to pay final wages.
Pay schedule: Tennessee law requires all employees to be paid at least once per month.
New hire reporting: New or rehired employees need to be reported to the Tennessee Department of Labor and Workforce Development within 20 days of hire.
Minimum wage: In 2022, Tennessee has no state minimum wage law. Instead, it follows the US Fair Labor Standard Act requiring employers to pay a minimum of $7.25 per hour.
Overtime: Non-exempt employees in Tennessee must be paid at least 1.5 times their regular hourly rate for any time worked in excess of 40 hours in a workweek.
Workers’ Compensation: Requirements to obtain Workers’ Compensation vary by state, this table outlines some of these requirements.
If you determine that your company is required to purchase Workers’ Compensation insurance in your state, learn how to sign up for this insurance with Gusto.
Sometimes, companies get a request for a workers’ comp audit. Head to this article and click the workers’ comp audit reports dropdown for more information.
Federal payroll taxes
As an employer, you have the responsibility to withhold some payroll taxes from your employees’ paychecks including federal income tax (FICA), and possibly the Additional Medicare tax.
And as an employer, you’ll also have to pay a portion of the FICA tax along with the federal unemployment tax.
| Federal Payroll Taxes for Tennessee Employers | |
| Employee-paid | Employer-paid |
| FICA | FICA |
| Federal income tax | Federal unemployment tax |
| Additional Medicare tax |
Federal income tax
Since the US tax system is a pay-as-you-go program, taxpayers need to pay their income tax throughout the year instead of waiting to pay it on April 15 each year.
This is why you’ll withhold federal income tax from paychecks and ultimately send it to the IRS.
Knowing how much to withhold largely comes down to information on Form W-4. Employees complete this form when they start working for you. It includes basic identifying information like name and Social Security Number and also notes some tax-specific items like filing status and the number of dependents.
Some employees may be exempt from having tax withheld. If so, they will note it on Form W-4.
With the information from Form W-4 along with some lengthy tax tables, you’ll be able to calculate the tax you need to withhold. Fortunately, payroll software can help with this calculation to minimize the hassle.
The W-4 forms become a part of your payroll files. These don’t need to be filed with the IRS.
FICA tax
FICA taxes fund Social Security and Medicare and are shared equally among employees and employers.
Social Security tax
In 2022, employees and employers each pay 6.2% of wages for the Social Security tax. But only the first $147,000 of wages is taxed in 2022.
Medicare tax
Both the employer and employee contribute 1.45% of wages for the Medicare tax. Unlike the Social Security tax, the Medicare tax has no wage limit. All wages are subject to Medicare tax.
Additional Medicare tax
You may have employees who must pay the Additional Medicare tax. Although you won’t know who has to paYou may have employees who must pay the Additional Medicare tax. Although you won’t know who has to pay it because it’s partly based on tax filing status, you’ll need to withhold it from an employee earning over $200,000 in a year. The tax rate for 2022 is 0.9%.
Federal unemployment tax
Employers are responsible for contributing to a fund to provide temporary wages for unemployed workers. This is where the unemployment tax comes in.
Federal unemployment tax is collected on the first $7,000 of each employee’s wages each year. In 2022, the tax rate is 6% but if you pay your state unemployment tax on time, you may be able to reduce your rate to 0.6%.
Paying federal payroll taxes
Now that you’ve withheld the correct taxes from your employees and know how much tax you owe, you’ll need to send the money to the IRS.
The most common payment frequency is semi-weekly or monthly although the federal unemployment tax can be paid annually. Your payment frequency depends on how much tax is due.
Even though you are required to pay your tax more frequently, you need to file quarterly payroll tax returns. These returns are a summary of your wages paid, taxes due, and payments made.
And if you pay your unemployment tax annually, you’ll need to file your return by January 31 for the previous calendar year.
Use the Gusto Tennessee Hourly Paycheck Calculator to input wages and withholding information to learn more about how much tax is due for a paycheck. You’ll see how using the right payroll software can make processing payroll painless.
Disclaimer
The information provided by the Employer Tax Calculator is for general information and estimation. All of the taxes or fees that apply to your business may not be accounted for, or fully up to date. Gusto, Inc. (dba “Gusto”) does not promise or guarantee that the information in the Employer Tax Calculator is accurate or complete, and Gusto expressly disclaims all liability, loss or risk incurred by employers or employees as a direct result or an indirect consequence of its use. By using the Employer Tax Calculator, you waive any rights or claims you may have against Gusto in connection with its use.