Overview
Tennessee is one of nine states that does not levy a state income tax on earned wages. Tennessee does not levy a state income tax on earned wages. Historically, the state had a tax on interest and dividend income (the Hall Income Tax), but this was fully phased out as of January 1, 2021. Employers only need to manage federal withholdings and the state unemployment insurance contribution.
What Makes Tennessee Unique: Tennessee does not tax earned wages. It previously taxed investment income (the Hall Income Tax), but that was fully repealed in 2021. Tennessee employers owe only SUTA and FUTA.
State Income Tax (SIT)
Tennessee does not impose a state income tax on individual wages. This means employers do not need to withhold any state income tax from employee paychecks. Employees get to keep more of their gross pay, and payroll administrators have one fewer withholding calculation to manage.
Setup Note: Even though there is no state income tax, if you have employees who work in multiple states, you may still need to set up Tennessee in your payroll system to ensure multi-state withholding calculations work correctly.
Employer State Unemployment Tax (SUTA)
Even without a state income tax, Tennessee employers are still required to pay into the state’s unemployment insurance fund.
Your specific SUTA rate will be assigned by the state based on your company’s history with unemployment claims. New employers typically start at the default rate until they build enough experience for an individualized rate.
| Tax Type | Employer-paid (not deducted from employee wages) |
| Default New Employer Rate | 2.7% |
| Rate Assignment | Experience-rated; assigned annually by the state based on unemployment claims history |
How to Set Up Tennessee Payroll Withholding
Follow these steps to begin withholding Tennessee payroll taxes for your employees:
- Obtain your Federal EIN at irs.gov
- Register for SUTA with the Tennessee Department of Labor and Workforce Development at tn.gov/workforce
- No state income tax withholding registration required
- Submit a Netchex tax team request to enable Tennessee SUTA
- Have each employee complete their tax forms with an automated onboarding task in Netchex, digitally storing tax forms
- Configure any additional tax settings in the employee profile
Once setup is complete in Netchex, the system will automatically calculate, withhold, and remit all Tennessee payroll taxes on your behalf.
Tennessee Payroll Tax Filing Deadlines
The following are general filing and deposit deadlines for Tennessee payroll taxes. Deadlines may vary based on your employer size and deposit frequency. Always verify current schedules at Tennessee Department of Labor and Workforce Development.
| Tax | Deposit Frequency | Typical Due Date |
| SUTA | Quarterly | April 30, July 31, Oct 31, Jan 31 |
Note: Deadlines are subject to change. Always confirm current requirements directly with Tennessee Department of Labor and Workforce Development at https://www.tn.gov/workforce/employers/tax-and-insurance-redirect/unemployment-insurance-tax.html.
Resources & Links
The following official resources will help you stay current on Tennessee payroll tax requirements:
Frequently Asked Questions: Tennessee Payroll Taxes
Does Tennessee tax wages?
No. Tennessee does not impose a tax on earned wages or salaries. The Hall Income Tax on investment income was repealed effective 2021.
What is Tennessee’s SUTA wage base?
Tennessee’s SUTA wage base is $7,000 per employee per year. Verify at tn.gov/workforce.
Does Tennessee have local payroll taxes?
No. Tennessee does not have local payroll taxes.
What payroll taxes are required for Tennessee employers?
Tennessee employers owe FUTA and SUTA only. No state income tax withholding is required.
Historical Note
Tennessee historically taxed interest and dividend income through the Hall Income Tax. This tax was fully phased out as of January 1, 2021. There is now no state-level income tax of any kind on wages or investment income in Tennessee.
Federal Taxes That Apply
While Tennessee keeps things simple at the state level, all standard federal payroll taxes still apply:
| Federal Income Tax (FIT) | Based on W-4 – Employee (withheld by employer) |
| Social Security (FICA) | 6.2% each – Employee and Employer |
| Medicare | 1.45% each – Employee and Employer |
| Additional Medicare | 0.9% – Employee only (wages over $200K) |
| FUTA | 6.0% (typically 0.6% after credit) – Employer only |
What This Means for Your Payroll
Running payroll in Tennessee is relatively straightforward. Without a state income tax, you’ll primarily focus on federal withholdings and the employer-paid SUTA contribution. The key things to stay on top of are making sure your SUTA rate is current each year and that federal withholdings are calculated correctly based on each employee’s W-4.
Disclaimer: This content is provided for general informational purposes only and does not constitute legal, tax, or accounting advice. Netchex does not provide tax or legal guidance and makes no representations regarding the accuracy or applicability of this information. Laws and regulations may change. The information on this page reflects payroll tax guidelines as of March 2026.
Let Netchex Handle the Complexity
Staying compliant with payroll taxes doesn’t have to be stressful. Netchex automatically calculates, withholds, and files your payroll taxes so you can focus on what matters most — your people.
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