Tennessee Salary Paycheck Calculator
The Great Smoky Mountains in Tennessee are full of peaks and valleys. And Nashville and Memphis fill Tennessee with the sounds of country music. Tennessee residents have many things to be thankful for with the beauty and splendor their state offers. But they can also be grateful for the small number of payroll taxes they pay to live in the Volunteer State. Below are the answers to your top questions about Tennessee payroll taxes and payroll laws.
Tennessee payroll tax FAQs
Does Tennessee have an income tax?
No. Tennessee does not have state income tax.
Does an employer have to withhold tax from a Tennessee employee’s paycheck?
There are no Tennessee payroll taxes employers will withhold. However, there are federal payroll taxes that employees must pay via paycheck withholding. Keep reading; we’ll get to those details a bit later.
Does Tennessee have an unemployment tax?
Yes. Tennessee requires most employers to pay unemployment tax to help compensate workers who are out of work through no fault of their own.
Tennessee reviews its unemployment tax rates every six months starting on January 1 and makes adjustments, if necessary.
Tax rates vary, and for the second half of of 2022, employer rates range from 0.01% at the low end up to 10% at the high end. Your business’s rate is generally driven by your history of claims paid to former employees and your payroll history.
Tennessee set the wage base for 2022 at $7,000. That means employers only pay unemployment tax on the first $7,000 of each employee’s pay each year.
Each calendar quarter, you’ll need to calculate your unemployment tax and submit the Quarterly Wage and Premium Report to the Tennessee Department of Labor and Workforce Development. You’ll list wages paid during the quarter by employee name and social security number. For additional information on Tennessee’s unemployment tax, check out their employer handbook.
FAQs about Tennessee payroll and employment rules
What’s the salary threshold in Tennessee?
Because the state of Tennessee doesn’t have its own salary threshold, it adheres to the federal salary threshold, which is now $684 per week (equivalent to $35,568 per year for a full-year worker). The Department of Labor permits employers to count some bonuses, commissions, and other incentive payments toward meeting the standard salary level (up to 10%). Employees who earn at least $107,432 per year may qualify as “highly compensated.” See this Department of Labor fact sheet for details.
Are employers required to provide paid time off (PTO) to Tennessee employees?
No. There are no laws in Tennessee that mandate employers provide paid time off to employees.
Also, if paid time off is voluntarily provided, unused PTO doesn’t have to be paid out when an employee leaves—unless the employer has a written policy that states differently.
How often do employers need to pay Tennessee employees?
At a minimum, Tennessee employers must pay employees at least once a month.
When do final paychecks need to be given to Tennessee employees who resign or are let go?
Final paychecks must be provided by the next regularly scheduled pay date or 21 days after the employee leaves—whichever is later.
Does Tennessee require employers to report new employees to the state?
Yes. You have 20 days to report newly hired or rehired employees to the Tennessee Department of Labor and Workforce Development.
Is Workers’ Compensation insurance required in Tennessee?
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 tax FAQs
Which federal payroll taxes are employers responsible for paying and withholding?
There are four key federal payroll that employers need to pay or withhold from employee wages.
|Federal Payroll Taxes for Tennessee Employers|
|Federal income tax||Federal unemployment tax|
|Additional Medicare tax|
How is FICA tax calculated?
The Federal Insurance Contributions Act, or FICA tax, is made up of the Medicare tax and the Social Security tax. In 2022, the Social Security tax requires employers and employees to each contribute 6.2% of wages up to $147,000. The Medicare tax requires each to contribute 1.45% of all wages. See the IRS webpage for details, like maximum thresholds.
How does a Tennessee employee pay federal income tax?
Federal income tax is paid throughout the year via payroll deductions. The employer sends this tax withholding to the IRS on the employee’s behalf.
Calculating how much to withhold largely depends on Form W-4. Employees complete this form when they start work. Employers use the information provided on this form, along with federal tax tables, to calculate the amount to withhold. That said, using payroll software eliminates the need to do the math yourself and can free up some of your time.
Note that some of your employees may be exempt from having federal income tax withheld from their pay. You’ll know this because they will include it on Form W-4.
How does a Tennessee employee pay Additional Medicare tax?
Not all employees will be subject to the Additional Medicare tax. It depends on their tax filing status and income. As an employer, you’ll need to withhold the Additional Medicare tax from employees who earn more than $200,000 in a year. The tax rate for 2022 is 0.9%.
How is the federal unemployment tax calculated?
Like the state, the federal government also has an unemployment tax. It’s called FUTA and it’s an annual tax employers pay on the first $7,000 of each employee’s wages. The FUTA rate for 2022 is 6%, but many employers only have to pay 0.6% each year.
As a final note: if you don’t want to spend your time doing payroll manually, Gusto can do it for you.