With the help of our free Tennesse paycheck calculator, you can determine your take-home pay or net pay by entering your monthly, yearly, or other period earnings together with the required federal, state, and local W4 data. Income taxes are not levied in Tennessee. Although, before 2021, the state imposed a flat-rate tax on all interest and dividend income.
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:
We hope these topics will help you make a better decision that you won't regret later. So let's get started.
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.
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.
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.
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.
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.
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.
Here is the quick round-up for both good and less good about Tennessee:
As we are done with relocation to Tennessee and its payroll facts, now it's time to calculate paycheck.
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:
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.
To calculate gross wage for an hourly 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:
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.
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:
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:
Filing Status | Standard Deduction Amount |
---|---|
Single Filers | $12,200 |
Married, Filing Jointly | $24,400 |
Married, Filing Separately | $12,200 |
Head of Household | $18,350 |
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:
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% |
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% |
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% |
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% |
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:
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 2024.
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 |
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.
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:
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.
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%.
No city or county in Tennessee levies Local Income Tax
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.
Answer: Following taxes are taken out of employee's paycheck while working in Tennessee:
Answer: Following are the Payroll taxes charged on both employers and employees while working in Tennessee:
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.