Tennessee Hourly Paycheck and Payroll Calculator

Need help calculating paychecks? Use Gusto’s hourly paycheck calculator to determine withholdings and calculate take-home pay for your hourly employees in Tennessee.

Simply enter their federal and state W-4 information as well as their pay rate, deductions and benefits, and we’ll crunch the numbers for you.

The information provided by the Paycheck Calculator provides general information regarding the calculation of taxes on wages for Tennessee residents only. It is not a substitute for the advice of an accountant or other tax professional. The Paycheck Calculator may not account for every tax or fee that applies to you or your employer at any time. ZenPayroll, Inc., dba Gusto ("Gusto") does not warrant, promise or guarantee that the information in the Paycheck Calculator is accurate or complete, and Gusto expressly disclaims all liability, loss or risk incurred by employers or employees as a direct or indirect consequence of its use. By using the Paycheck Calculator, you waive any rights or claims you may have against Gusto in connection with its use.

Tennessee Hourly Paycheck Calculator

The country music capital of the world and Elvis Presley’s Graceland make Tennessee a mecca for music lovers. 

Residents and visitors to The Volunteer State enjoy the mountains in the east and great food in the west, while businesses enjoy minimal payroll taxes and rules 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. 

For the first six months of 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 wage 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 20221, 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

Construction and mining companies must provide workers’ compensation insurance when they have at least one employee.

Most other Tennessee businesses will need it when they have at least five employees. Count both your part-time and full-time employees towards this total.

Although Tennessee is light on state payroll taxes, you’ll still need to collect and pay federal payroll taxes. If you’re not familiar with them, keep reading and we’ll spell it out for you.

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-paidEmployer-paid
FICAFICA
Federal income taxFederal 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

Portions of the FICA tax have been around for nearly 100 years. It was enacted to fund Social Security and Medicare and is 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 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 find out how much tax is due for a paycheck. You’ll see how using the right payroll software can make processing payroll painless.

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