Tennessee Wage and Payroll Tax Facts
February 02, 2024
Having to comply with unique state taxes and wage laws can make processing payroll doubly daunting. Here’s everything you need to know about these rates and laws for the state of Tennessee.
Select a state or federal tax guide
Skip to end of table of contents
Table of Contents
The Volunteer State doesn't have a specific minimum wage requirement or law for its businesses. Instead, it applies the rates required by the federal government in the Fair Labor Standards Act (FLSA) where appropriate.
When it comes to processing payroll, Tennessee-based organizations must handle the following taxes in addition to those required by the federal government:
The below information was last updated January 30, 2024. It is not intended as legal or tax advice.
Tennessee Minimum Wage Rates
|
Wage Type |
Tennessee Rates* |
Federal Rates |
|
Minimum Wage |
N/A |
$7.25 |
|
Tipped Minimum Wage |
N/A |
$2.13 |
|
Actual Tip Credit |
N/A |
$5.12 |
*The state doesn't have a minimum wage law, so the federal rates under the FLSA are used when applicable.
Tennessee State Income Tax (SIT) Rates
Tennessee is one of the few states that doesn't impose or collect a personal income tax.
Tennessee State Unemployment Insurance (SUI) Rates
SUI provides unemployment benefits to eligible workers who are unemployed through no fault of their own (as determined by state law) and meet the state’s eligibility requirements.
|
Tennessee SUI Tax Details |
|
|
Taxable Wage Base |
$7,000 |
|
Employee Subject to Tax |
No |
|
Rates for Experienced Employers |
0.01% - 10.00% |
|
Rates for New Employers |
2.70% |
|
Effective Period |
Fiscal Year (July 1 - June 30) |
|
Voluntary Contributions Allowed |
No |
Tennessee State Disability Insurance (SDI) Rates
SDI benefits are funded by employees through mandatory payroll deductions from each paycheck. Tennessee, however, doesn't require employers to collect an SDI tax.
Miscellaneous Tennessee Tax Information
Reciprocal Agreement(s)
Reciprocal agreements are when workers who live and work in different states are only required to pay taxes to the state where they live. Tennessee currently has no reciprocal agreements with any other states.
This doesn’t mean, however, that interstate workers living in Tennessee pay double. It’s federally illegal for two states to tax the same income. In most cases, the employee’s work state will credit or refund them at tax time based on the taxes they owe their home state. If the tax rates differ, the employee must cover the difference.
Paid Sick Leave (PSL) Taxes
The state of Tennessee doesn’t require employers to collect PSL taxes, nor does the state have a program providing such leave to employees.
Paid Family and Medical Leave (PFML) Taxes
The state of Tennessee doesn’t require employers to collect PFML taxes, nor does the state have a program providing such leave to employees.
Tennessee Employer Registration
Contact the Department of Labor & Workforce Development for help with your state-based employer registration, including best practices, account numbers, and unemployment information.
|
Registration Details |
Department of Labor & Workforce Development |
|
Phone |
(844) 224-5818 |
|
Registration Form |
Form LB-0441 |
|
Registration Instructions |
Paper registration is available. Account numbers will be issued in 5-10 days. |
Additional Tennessee Payroll Tax Resources
- Department of Labor & Workforce Development Jobs Site
- Department of Revenue Tax Page
- Department of Revenue Tax Resources
This information is provided as a courtesy and may be updated at any time. It is not intended as legal or tax guidance. If you have questions or concerns, we encourage you to seek the advice of a qualified CPA, tax attorney, or advisor.
Get Taxes Done Right, Without the Stress
We know there's a lot that goes into preparing and filing payroll tax forms. Save time and get support from our expert team. As a Registered Reporting Agent with the IRS, we can help prepare and file all the necessary forms you need to remain compliant - even in the face of changing legislation. Learn more here.