Paycheck Calculator Tennessee - TN

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Tennessee - TN Paycheck Calculator: Hourly and Salary

Tennessee, the 16th most populous but the 36th largest state, located in the southeastern region of the United States.

The state is landlocked with eight states, with Virginia to the northeast, Alabama, Georgia, and Mississippi to the south, Kentucky to the north, North Carolina to the east, Missouri to the northwest, and Arkansas to the west.

Nashville is the largest city and the Capital of Tennessee. Moreover, Greater Nashville is the largest metro.

From gorgeous scenery to fantastic music, from the low cost of living to a very low tax burden, the great state of Tennessee offers many reasons to settle. So if you are planning to move in here, for the purposes mentioned above, or due to appealing job offers or business opportunities, this guide is just for you.

Our experts have worked days and nights to bring you a one-of-its-guide that covers the following topics:

  • The thing you must know before moving to Tennessee
  • Tennessee Payroll Facts
  • How to Calculate Paycheck in Tennessee? – This section would benefit both employers and employees in the following ways:
    • Help job seekers to compare several job offers in terms of take-home pay and choose the best one.
    • Help entrepreneurs to compare different business opportunities in terms of employment cost.
    • Help employees of Tennessee to calculate their upcoming Paycheck amount for verifying and budgeting.
    • Help employers in Tennessee to calculate Paycheck amounts for multiple employees instantly using our Tennessee Paycheck Calculator.
  • Federal and Tennessee Payroll Laws to ensure your paycheck complies with the law.
  • Frequently Asked Questions

We hope these topics will help you make a better decision that you won't regret later. So let's get started.


Things You Must Know Before Moving To Tennessee

Cost of Living

The cost of living index in Tennessee is 87.6, which is significantly lower than the national average of 100 points. It means that you can afford more for yourself and your family while living in Tennessee.

This low living cost is due to cheaper housing costs, while other factors like grocery, health, utilities, transportations, and miscellaneous expenses are almost similar to the rest of the nation.

Cost of Housing

As discussed earlier, owning or renting a house in Tennessee state is a lot cheaper than most of the states. The current median home value for the TN is $159,400, whereas the median home rent is $1,315/month. Moreover, renting a house in cities like Knoxville, Memphis, and Chattanooga would even cost you significantly lower than the rest of the state.

Education

Tennessee is rich in private, public, and specialized facilities and gives you access to some elite schools and educational institutions. Moreover, the state also has a fantastic program for high school graduates, which provides them with the opportunity to attend a Tennessee community college at zero cost. Some of the renowned schools, colleges, and universities include Clarksville Academy, Christian Academy Knoxville, University of Tennessee, and Tennessee Technological University.

Business and Job Opportunities

Tennessee has a relatively low unemployment rate at 3.4%, which is definitely a piece of good news for job seekers, especially in Nashville, where the average salary is $51,000. Some of the fastest-growing jobs in the state (According to zippia.com) include medical sonographers, medical sonographers, nurse practitioners, and physical therapists. Moreover, few high paying jobs here include pediatricians, psychiatrists, and surgeons.

Moreover, the state is also a hotspot for aspiring entrepreneurs, due to endless business opportunities, fast internet, low cost of living.

Outdoor Activities

Tennessee is a heaven on earth for nature lovers. The state is full of beautiful landscapes, including mountains, waterfalls, 9000+ caves, and wildflowers. You can even view all of them at Great Smoky Mountains National Park and enjoy your moments while staying in cabins, camp, or hotels nearby.

The state is also famous for its thriving food, beer, and coffee scene. You can plan your weekends with your friends & family to enjoy the outstanding southern food and hospitality.

Moreover, the state also houses some of the biggest attractions that are well worth the time and drive like Ruby Falls: In Chattanooga, Sun Studio: The recording studio, The Sunsphere: An iconic landmark in Knoxville, and Titanic Museum: Located in Pigeon Forge.

Weather

Tennessee has a favorable climate for those who don't like colder winters. Winters here are usually mild, and summers are hot and humid, especially in cities like Memphis. However, mountainous areas, like in some parts of Appalachians, have a mountain temperate or humid continental climate with colder winters. Unfortunately, the land also features frequent, strong hurricanes and tornadoes.


Pros and Cons

Here is the quick round-up for both good and less good about Tennessee:

Pros:
  • No income tax
  • Best place for music lovers
  • Free community college
  • Low cost of living
  • Delicious food and fantastic hospitality
  • Favorable weather
  • Stunning landscape
Cons:
  • Landlocked state so no beaches
  • Frequent Tornados
  • Horrible traffic problems
  • Violent crimes in major cities

Tennessee Payroll Facts

  • Employers of Tennessee withhold Federal Income tax from their employee's paycheck. It is charged at the rate ranging between 0% and 37%, distributed in seven tax brackets, dependent on filing status and income level.
  • Both employers and employees of Tennessee pay FICA Taxes. This tax consist of Social Security and Medicare tax. Each employee pays social Security tax at 6.2% of their taxable wages up to $137,700 (in 2020), and the employer pays an equal amount for each employee. Moreover, employees pay 1.45% of Medicare tax on taxable wages up to $200,000 (in 2020), and the employer pays an equal amount for each employee. However, only employees are required to pay 0.9% of Additional Medicare surtax if their taxable wages exceed $200,000 threshold.
  • Only TN's employers pay FUTA taxes, at the rate of 6% of the first $7,000 of each employee's taxable income. Moreover, they also pay State Unemployment Insurance (SUI) Tax at the rate ranging between 0.08 and 9.69% on the first taxable earnings of $37,900. However, new employers pay at a flat rate of 1.02%. Fortunately, if the employers pay State Unemployment Insurance tax in full and on time, they are eligible to claim a tax credit of up to 5.4% for SUI tax.
  • Luckily, Tennessee State doesn't levy State income tax on its residents. However, interest and dividends over $1,250 ($2500 for joint filers) are charged at a flat rate of 1%.
  • No city or county in Tennessee state charges local income tax.
  • The Minimum wage rate in Tennessee is similar to the Federal Minimum wage rate of $7.25 per hour for non-exempted employees. However, the Cash Minimum wage rate of Tipped employees is $4.86 per hour, with a maximum tip credit of $2.39 per hour.
  • Non-resident employees working in Tennessee have to pay taxes in TN, as the state has no reciprocal agreement with any state.
  • Tennessee follows FLSA law for overtime, where non-exempted employees are paid at time and half of their regular hourly rate for each hour worked after forty hours in a workweek.
  • The livable wage for an adult living in Tennessee is $10.97, and for a couple (one working) with two children is $24.22, according to the Massachusetts Institute of Technology.
  • The average salary for a Male working in Tennessee is $60,607, and for a Female is $44,237, according to io.
  • The median household income of a Tennessee resident is $50,972, as reported by the U.S. Census Bureau.

How to Calculate Paycheck in Tennessee?

As we are done with relocation to Tennessee and its payroll facts, now it's time to calculate paycheck.


Step 1 - Calculating Gross Pay:

The very first step to calculating the paycheck amount is to determine Gross Pay. It is a wage that an employee earned in the last pay period.


Gross Pay is calculated differently for both hourly and salary-based employees, which is discussed in detail as follow:


Gross Pay for Hourly Employee

Hourly Employees are paid at a mutually agreed pay rate for each hour they work in a pay period. Usually, Pay periods for Hourly employees are Hourly, Daily, Weekly, and Bi-Weekly. However, the Federal, State, and Local Wage law requires the employers to set the pay rate equals to or more than the defined Minimum Wage Law for the non-exempted employees.

Hourly employees are also entitled to receive overtime, for each excess hour worked after regular hours in a workday or a workweek. Remember, like Minimum wage, the employers are also required to follow Overtime wage law provided by the federal, state, and local authorities.


Note: All the relevant laws are discussed in detail ahead.

To calculate gross wage for an hourly employee:

  1. Calculate total hours worked in a Pay Period using the data from Timesheet or Timecard.
  2. Multiply Total Hours worked with the Hourly Rate (Pay Rate).
  3. Add overtime hours (if any) worked by the employee.

Quick Tip: You can also use our Timecard with overtime Calculator to calculate Gross Wage for Hourly Employee instantly.

Gross Pay for Salaried Employee

Salaried Employees are paid at the flat amount rather than on an hourly basis. The amount is usually mutually agreed as an Annual Salary, which is then paid in Semi-monthly or Monthly Pay periods.

Salaried employees are mostly exempted from overtime law. However, their salaries must be according to Federal and State Minimum Wage law.

To calculate Gross Pay for Salaried Employees:

  • Divide the "employee's salary" by "number of pay periods." For example: If the employee's annual salary is $25000 and is paid on a semi-monthly pay period, then the employee's Gross Pay would be: $25000 / 24 = $1042.

Don't forget that Supplemental Wages like Bonuses, commissions, tips, paid leaves, fringe benefits, or other taxable wages earned by the employee must be added into the Gross wages.


Step 2 – Subtracting Pre-Tax Deductions (If Any):

Once you are done with Gross Wages, it's time to subtract any Pre-Tax deductions from the gross wage to get taxable wages as Pre-tax deductions are not taxable for federal payroll taxes.

Pre-tax deductions are offered to the employees as benefits like fringe benefits, HSA plans, etc., to reduce their taxable income, hence, increasing their take-home pay amount. Remember, not all benefits are exempted from taxes, so choose the pre-tax deductions wisely.

Some of the common pre-tax deductible benefits are:

  • FSA - Flexible Spending Accounts
  • HSA - Health Savings Accounts
  • Retirement savings accounts like a traditional 401(k)
  • Some of the Fringe Benefits
  • health insurance
  • accident insurance
  • dental and vision insurance
  • Commuter Benefits
  • Short-Term Disability

Note: Pre-Tax deduction rate, contribution limits, special tax withholding rules change from year to year, according to inflation and costs of living by the federal government. Therefore, you must keep yourself updated with all rates before making any deductions.

Many Taxpayers find it hard to itemize their deductions to calculate taxable wages, for which they go for standard deductions, that varies according to the filing status, as shown in the table below:

All Filers(Updated Dec 2019)
Filing Status Standard Deduction Amount
Single Filers $12,200
Married, Filing Jointly $24,400
Married, Filing Separately $12,200
Head of Household $18,350

Step 3 – Calculate and Subtract Federal Taxes:

Once you have determined the taxable wages, it's time to deduct Federal Income taxes for the Taxable wages.

IRS requires the employers to withhold federal income tax from the employee's paycheck, according to the details provided by the employee on Form W-4. The employee fills this form at the start of the job. The form includes all the necessary information, including income, number of allowances to claim, number of dependents, amount of additional taxes to deduct, and much more.

The employees are required to keep their Form W-4 up to date with all their current information, especially marriage, divorce, or child's birth.


The federal income tax is charged according to the tax brackets in which the taxpayer's income falls. The latest income tax brackets and rates are as follow:

Single Filers
Taxable Income Rate
$0 - $9,700 10%
$9,700 - $39,475 12%
$39,475 - $84,200 22%
$84,200 - $160,725 24%
$160,725 - $204,100 32%
$204,100 - $510,300 35%
$510,300+ 37%

Married, Filing Jointly
Taxable Income Rate
$0 - $19,400 10%
$19,400 - $78,950 12%
$78,950 - $168,400 22%
$168,400 - $321,450 24%
$321,450 - $408,200 32%
$408,200 - $612,350 35%
$612,350+ 37%

Married, Filing Separately
Taxable Income Rate
$0 - $9,700 10%
$9,700 - $39,475 12%
$39,475 - $84,200 22%
$84,200 - $160,725 24%
$160,725 - $204,100 32%
$204,100 - $306,175 35%
$306,175+ 37%

Head of Household
Taxable Income Rate
$0 - $13,850 10%
$13,850 - $52,850 12%
$52,850 - $84,200 22%
$84,200 - $160,700 24%
$160,700 - $204,100 32%
$204,100 - $510,300 35%
$510,300+ 37%

Step 4 – Deduct FICA Taxes:

Besides, Federal Income Tax, the IRS also requires the employer to withhold FICA tax (15.3%) for the employee's paycheck and also requires the employer to pay an equal amount for each employee.


Federal Insurance Contributions Act (FICA) Taxes comprises of two types of taxes which are as follow:


  1. Social Security:

A total of 12.4% of social security tax is charged from which 6.2% is withheld from the employee's gross, and the employer pays the matching 6.2%. However, Social Security is only charged on the maximum taxable earnings of $137,700 for 2020.


  1. Medicare:

A total of 2.9% of Medicare is charged, from which 1.45% is withheld from the employee's gross, and the employer pays the matching 1.45%. Unlike Social Security, there is no maximum table earning limit for this tax. However, an additional surtax of 0.9% is charged as Additional Medicare Surtax on the employees having income over the specified level along with filing status, which is as follow:

Income Over Filing Status
$250,000 Married Filing Jointly
$125,000 Married Filing Separately
$200,000 Single

Note: Employers are not required to pay an equal amount for Additional Medicare Surtax.

Step 5 – Payment of FUTA Taxes

IRS requires the employer to pay another tax, known as The Federal Unemployment Tax Act (FUTA) Tax. This tax is paid at the rate of 6% on the first $7000 earned by each employee in a year. However, the IRS doesn't require the employees to contribute to it.

The employers who pay State Unemployment Insurance (SUI) tax in full and on time are given relieving FUTA tax credit of up to 5.4%, which saves a whopping 90% from FUTA Tax.


Step 6 – Subtract Post-Tax Deductions (If any):

Post-tax deductions (after-tax deductions) is an amount the employer takes out from the employee's paycheck after taxes. Therefore, it does not affect taxable wages and the amount of tax payable.

Here are some of the types of post-tax deductions that employee may voluntarily choose:

  • Charitable contributions
  • Disability insurance
  • Garnishments
  • Specific Retirement Plans like Roth 401(k)
  • Life Insurance

Step 7 – Withhold State Payroll Taxes:

As you are done with Federal Payroll Taxes, now it's time to discuss State Payroll Taxes. The Tennessee State doesn't charge State Income Tax on the employees, except for interest and dividends over $1,250 ($2500 for joint filers), which are charged at a flat rate of 1%. Moreover, employers are required to pay State Unemployment Insurance Tax.


State Unemployment Insurance (SUI) Tax

The State Unemployment Insurance (SUI) Tax is an employer-funded program that provides temporary income to unemployed workers who have lost their job without fault of their own.

The state doesn't charge in Tennessee State Disability Insurance (SDI) tax on employers. However, it does require the employers to pay Tennessee State Unemployment Insurance (SUI) tax, at the rate ranging from 0.1% to 10% on a first $7,000 earned in wages by each employee in a year. However, new employers are given relief as they only have to pay a flat rate of 2.7%.


Note: SUI Rates for Tennessee Employers change with time. Therefore, you are required to keep a check on notices to make sure you have paid the right amount.

Step 8 – Withhold Local Payroll Taxes:

No city or county in Tennessee levies Local Income Tax


Step 9 – Calculate Pay Check:

Now that you are done with all payroll taxes and calculated the net take-home pay of an employee, it's time to cut the paycheck. Moreover, you, as an employer, must pay your portion of FICA tax along with FUTA and SUI tax in full and on time regularly.


Federal and Tennessee Payroll Laws

  • Tennessee State law requires employers to pay at least twice a month (semi-monthly pay frequency) to their non-exempted employees. Moreover, paydays for the last pay period must not be longer than 20 days.
  • Both Federal and State law requires employers to pay at least the minimum wage of $7.25 per hour to their employees unless or otherwise exempted. Moreover, they also need the employers to pay overtime to their non-exempted employees at one and half of the employee's regular hourly rate for each hour worked over 40 hours in a workweek. Employees that are exempted from overtime and minimum wage law include:
    • Executive Employees
    • Administrative Employees
    • Professional Employees
    • Outside salespersons and a few more.
  • Employers are required by state law to provide at least 30 minutes of UNPAID rest break to their employees who are scheduled to work for six or more consecutive hours.
  • Employees in Tennessee are not required to receive either paid or unpaid vacation benefits, sick leave benefits, holiday leaves, or bereavement leave. However, certain employers are required to pay voting leave, and jury duty leaves to their employees or specific conditions.

FAQs

Answer: Following taxes are taken out of employee's paycheck while working in Tennessee:

  • Federal Income Tax: This tax is withheld at the rate range between 10% and 37%, distributed in seven tax brackets dependent on filing status and income level.
  • FICA Tax: This tax consist of Social Security Tax and Medicare Tax. Social Security Tax is charged at the rate of 6.2% on the maximum taxable earnings of $137,700 for 2020. Whereas, the Medicare tax is charged at the rate of 1.45%, on the taxable wages up to $200,000. However, if the annual earning of an employee exceeds $200,000 (Single Filer), then an additional Medicare Surtax of 0.9% is charged.
  • Missouri State Income Tax: Only interest and dividends over $1,250 ($2500 for joint filers) are charged at a flat rate of 1%.

Answer: Following are the Payroll taxes charged on both employers and employees while working in Tennessee:

  1. Federal Income Tax: This tax is charged on employees at the rates ranging from 10% to 37%, having seven tax brackets depending on the filing status and income level.
  2. FICA Tax: This is another tax charged by the federal on both employers and employees. This tax comprises of two taxes, charged on the employees, and the employer pays the equal amount for each employee. The employee's portion comprises of 6.2% of Social Security tax on the taxable wages up to $137,700 (in 2020) and 1.45% of Medicare Tax on the taxable wages up to $200,000. Moreover, if the employee's income exceeds the defined threshold, they are also charged with the additional Medicare tax of 0.9%.
  3. FUTA Tax: Only TN's employers pay FUTA taxes, at the rate of 6% of the first $7,000 of each employee's taxable income.
  4. State Income Tax: Only interest and dividends over $1,250 ($2500 for joint filers) are charged at a flat rate of 1%.
  5. State Unemployment Insurance (SUI) Tax: Only employers in Tennessee are required to pay State Unemployment Insurance (SUI) Tax at the rates ranging from rates range from 0.1% to 10% on the first $7,000 earned by each employee. However, new employers are only required to pay at a flat rate of 2.7%.

Answer: No, Luckily, Tennessee State doesn't levy State income tax on its residents. However, interest and dividends over $1,250 ($2500 for joint filers) are charged at a flat rate of 1%.

Answer: The livable wage for an adult living in Tennessee is $10.97, and for a couple (one working) with two children is $24.22, according to the Massachusetts Institute of Technology.

Answer: Tennessee State doesn't regulate minimum wage, so employers are required to pay at least the federal minimum wage rate of $7.25 per hour to their non-exempted employees.

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