Tennessee paycheck guide
Why Tennessee paychecks have no state tax line
Tennessee does not tax wages, and a 2014 constitutional amendment prohibits the state and local governments from levying a tax on payroll or earned personal income. The Hall income tax, which once reached interest and dividends, was phased down and fully repealed starting with 2021. Today a Tennessee resident files no state income tax return at all.
The state funds its budget mainly through sales tax, which applies to groceries at a reduced rate and stacks with local option sales taxes set by counties and cities, plus franchise and excise taxes on businesses. A few licensed professions, including attorneys, still pay an annual professional privilege tax, but it is a flat license fee rather than a tax withheld from pay.
Worked example: $75,000 in Tennessee
A single filer earning $75,000 in Nashville, Memphis, Knoxville, or Chattanooga pays only federal tax and FICA. Federal tax starts by subtracting the $16,100 standard deduction, leaving $58,900 taxable, which is taxed $12,400 at 10%, $38,000 at 12%, and $8,500 at 22%, for $7,670.
Payroll taxes add $4,650 for Social Security and $1,088 for Medicare, so a Tennessee worker's total tax bill is $13,408. The rest, $61,592 a year or roughly $5,133 a month, is take-home pay. The Tennessee $75,000 salary page shows the same figures by pay period.
The federal 22% bracket is the marginal rate at this salary, and it is the only income tax rate that applies to a raise. Each extra $1,000 of pay costs federal tax and FICA, with nothing added for the state.
No local wage tax and no state payroll programs
Tennessee cities and counties cannot tax wages, so a Memphis paycheck and a Johnson City paycheck have the same deductions. Tennessee also has no state disability or paid family leave contribution, and unemployment insurance is paid by employers, not workers.
The deductions that remain are federal income tax, Social Security at 6.2% up to $184,500 of wages, Medicare at 1.45%, and the additional 0.9% Medicare tax on wages above $200,000. Anything else is an elective benefit.
Withholding and working across Tennessee's borders
There is no Tennessee withholding certificate. Your federal W-4 alone sets withholding, so a two-earner household or a worker with a side business should use Step 2 or Step 4(c) to keep federal tax on track. Service and hospitality workers in Nashville and Gatlinburg can enter expected qualified tips in Step 4(b) to reflect the new federal tips deduction during the year.
Tennessee borders eight states, and cross-border commuting is common. A Tennessee resident who works in Kentucky, Virginia, Georgia, or Mississippi owes that state's nonresident income tax on those wages, with no Tennessee credit to offset it, since Tennessee has no income tax. Clarksville residents with a Kentucky job site, Bristol, Tennessee residents who work across State Street in Bristol, Virginia, and Chattanooga commuters into north Georgia all face this.
The reverse commute is the bargain. Residents of Mississippi, Arkansas, and Georgia who work in Memphis or Chattanooga owe no Tennessee tax on those wages, though their home state still taxes them as residents.
How much more Tennessee workers keep
Tennessee ties for first among the 50 states and DC for take-home pay at $75,000 and $150,000. Against its eight neighbors at $75,000, a single filer keeps $2,268 more than in Mississippi, $2,287 more than in Arkansas, $2,484 more than in North Carolina, $2,507 more than in Kentucky, $2,534 more than in Missouri, $2,994 more than in Georgia, $3,127 more than in Alabama, and $3,498 more than in Virginia.
Those gaps grow with income because every neighbor taxes wages at 3.5% or more on the margin. See Georgia vs Tennessee or Kentucky vs Tennessee for side-by-side paychecks.
What to expect at your income
Earning under $50,000
Under $50,000, Tennessee workers pay federal tax and FICA only. A single filer earning $30,000 keeps $26,285, or $2,190 a month, and at $50,000 takes home $42,355, or $1,629 every two weeks. Since there is no state income tax, there is also no state earned income credit, so the federal EITC is the main credit to check. Sales tax on everyday purchases is the bigger state cost at this income, so budget for it.
Earning $50,000 to $150,000
From $50,000 to $150,000 the federal 22% bracket is the only income tax rate on extra pay. A single filer earning $100,000 takes home $79,180, or $6,598 a month, and a married couple filing jointly on $100,000 keeps $84,710. Traditional 401(k) deferrals save only federal tax here, so a Roth 401(k) can make sense, especially if you plan to retire in Tennessee, where withdrawals face no state tax either.
Earning over $150,000
Above $150,000, Tennessee's lack of income tax is worth thousands of dollars a year against any neighbor. A single filer earning $150,000 takes home $113,791, and at $250,000 keeps $183,182, or $7,045 every two weeks, after the 32% federal bracket and the 0.9% additional Medicare tax. With no tax on interest, dividends, or capital gains since 2021, investment income is also state tax free.
Tennessee paycheck tips
Fill out the federal W-4 carefully
With no state form, federal withholding is the only lever. Use Step 2 for two jobs and Step 4(c) for extra withholding if you have side income.
Account for out-of-state wages
If you take a job in Kentucky, Virginia, or Georgia while living in Tennessee, that state taxes your wages and Tennessee offers no credit. Compare the offer on after-tax pay.
Report expected tips on W-4 Step 4(b)
The federal deduction for qualified tips, up to $25,000, is claimed on your return, but entering expected tips in Step 4(b) lowers withholding during the year instead of waiting for a refund.
Weigh Roth savings
Tennessee will not tax your retirement withdrawals, and it does not tax your contributions now, so the choice between traditional and Roth accounts turns on federal tax alone.
Budget for sales tax
Tennessee's state sales tax combines with local rates set by counties and cities, so large purchases cost noticeably more than in states with lower sales taxes.
Common mistakes
Assuming a Tennessee address shelters out-of-state work
Tennessee residency does not stop Kentucky, Virginia, or Georgia from taxing wages earned there. Expect those states to withhold their tax.
Forgetting about other states' rules for remote work
Working from home in Tennessee for an out-of-state employer usually keeps wages free of state tax. The exception is an employer in a state with a convenience-of-the-employer rule, such as New York, which can tax those remote days.
Moving to or from Tennessee
Moving to Tennessee
Moving to Tennessee from Virginia raises take-home by $3,498 at $75,000, from Georgia by $2,994, and from Kentucky by $2,507. You will file a final part-year return in your old state but no Tennessee income tax return. The trade-off is sales tax: Tennessee's combined rates are among the highest in the country, and groceries are still taxed at a reduced state rate.
Leaving Tennessee
Leaving Tennessee for any neighbor adds a state income tax: $2,268 at $75,000 in Mississippi, $2,484 in North Carolina, and $3,498 in Virginia. You will need to file a state return and a state withholding form at your new job. If you have investment income, your new state will tax it as well.