Tennessee payroll taxes for employers (2026)

Tennessee payroll rules worth knowing first

A Tennessee paycheck is about as simple as US payroll gets: federal income tax, FICA and nothing for the state. The employer side adds one small state tax. Where Tennessee asks more of you is workers comp in construction and the timing of final pay.

• The $7,000 base matches FUTA: the state wage base equals the federal one, so both taxes stop on the same dollar. At 2.7%, that is $189.00 per worker for the year. Rates range from 0.01% to 10.00% on the DOL table.
• A July rate year: because rates are assigned July 1 to June 30, a rate change lands mid-year. Check that your provider loads the new rate for the third quarter, not in January.
• Manufacturers are different: new employers in NAICS sectors 31 to 33 are rated on manufacturing experience, so their opening rate may not be 2.7%. Construction has no separate figure and uses 2.7%.
• Construction needs workers comp from the first employee: outside construction, coverage starts at 5 employees, counting part-time workers, minors, working family members and full-time corporate officers. In construction and coal mining it starts at 1. Since March 1, 2011, construction owners must cover themselves or register an exemption. Coverage comes from a licensed carrier or self-insurance.
• 21 days for final pay: whether someone quits or is fired, wages are due by the later of the next regular payday or 21 calendar days after separation. That comes from a TDLWD support article published March 4, 2026, which does not say which employers it covers.
• New hire reports include rehires: report within 20 days after someone is hired, rehired or returns to work.

Tennessee has no state minimum wage law, so the federal $7.25 and $2.13 tipped cash wage apply. The DOL payday table, last revised January 1, 2023, lists semimonthly pay. Tennessee has no local income tax on wages, and we found no state paid leave payroll program (not confirmed on an official page).

Tennessee employer payroll facts at a glance

Setting up as a Tennessee employer

1. Get a federal EIN.
2. Complete TDLWD's online employer registration for unemployment insurance. The UI tax page says every employer in Tennessee must register online; we could not read the registration link itself, so begin at tn.gov/workforce under unemployment insurance tax.
3. No state withholding account is needed, because Tennessee does not tax wages.
4. Report new hires, rehires and returning workers within 20 days at tnnewhire.com.
5. Buy workers comp at 5 employees, or at 1 in construction or coal mining. Construction owners who skip their own coverage must register an exemption.
6. Set a semimonthly payday. Our pay schedule guide compares the options.

Tennessee payroll calculator: one $50,000 employee

Federal taxes make up almost all of the employer cost here. The state line is capped at $189.00.

Even at the 10.00% maximum, SUTA would be $700.00 and the total $4,567.00, a $511.00 spread per worker. The employee loses $3,825.00 to FICA, plus federal income tax, and nothing to the state. Workers comp premium is extra; see what workers comp costs. Enter your own salary in the calculator below, or see all states on the 2026 SUTA rates table.

Picking payroll software or a PEO in Tennessee

Tennessee does not need much from a payroll system, which makes price the main test. The details to confirm are the July rate change, off-cycle runs for final pay and new hire reports for rehires. Builders should also read our construction payroll guide.

Compare providers on our payroll software rankings and their full fees in payroll pricing. For bundled workers comp and benefits, see the PEO rankings. If you have staff working in Kentucky, note that it has local occupational license taxes; Georgia and Alabama have their own pages too.