Tennessee Payroll Calculator
Employee Pay Breakdown
Payroll in Tennessee Is Simpler Than Most States
Running payroll in Tennessee — or figuring out your own pay stub — starts from a cleaner base than almost anywhere else in the country. No state income tax. No local income taxes. No city withholding. That removes a full layer of calculation that employers in states like Kentucky or Missouri have to track, and it means your paycheck math comes down to three things: federal income tax, Social Security, and Medicare.
Two Views: Employee and Employer
This calculator offers two modes. The employee view shows gross pay, deductions, and net take-home. The employer cost view shows what the same employee actually costs the business — because the employer matches Social Security and Medicare on top of the wages, plus pays FUTA and Tennessee’s state unemployment insurance (SUTA).
That gap matters. A $3,000 bi-weekly employee costs an employer closer to $3,270 when you add employer-side taxes. Small business owners often underestimate this when building a hiring budget. The employer SUTA rate used here is an estimated new-employer rate. Established Tennessee businesses may pay a different rate based on their experience. Check current rates with the Tennessee Department of Labor and Workforce Development.
Overtime Pay in Tennessee
Tennessee follows the federal Fair Labor Standards Act for overtime. Non-exempt employees earn 1.5x their regular rate for every hour over 40 in a workweek. The overtime field in this calculator takes the extra premium — the 0.5x portion — not the full 1.5x, since you’ve already entered your base pay as your gross. This avoids double-counting.
If an hourly worker earns $22 per hour and works 5 overtime hours in a bi-weekly period, that’s $22 x 0.5 x 5 = $55 in overtime premium pay, which gets added to their regular gross before taxes apply.
The Full Payroll Formula for Tennessee
Net Pay = (Gross + OT Premium) – Pre-Tax Deductions – Federal Income Tax – Social Security (6.2%) – Medicare (1.45%)
Here’s how that works for a Memphis distribution center employee. Base bi-weekly pay of $2,800, married filing jointly, with $350 in pre-tax HSA contributions. No overtime this period.
- Gross: $2,800
- Pre-tax HSA: $350 — taxable income drops to $2,450 per period ($63,700 annual)
- Annual taxable after married standard deduction: $63,700 – $29,200 = $34,500
- Federal tax on $34,500: roughly $3,818 per year, or $147 per bi-weekly period
- Social Security: $2,800 x 6.2% = $173.60
- Medicare: $2,800 x 1.45% = $40.60
- State tax: $0.00
- Net pay: $2,800 – $350 – $147 – $173.60 – $40.60 = $2,088.80
Married filing jointly saves this worker about $85 per period versus filing single on the same income. The HSA contribution saves another $45 in federal tax alone.
What the Employer Actually Pays
On that same $2,800 paycheck, the employer adds: $173.60 Social Security match, $40.60 Medicare match, FUTA on the first $7,000 of the year at 0.6%, and SUTA on the first $9,000 at the estimated new-employer rate. In the early part of the year before those wage bases are hit, total employer cost per pay period runs about $3,060. That’s the real cost of a $2,800-per-period employee.
If you’re comparing the cost of employees to contractors, our 1099 vs W-2 calculator shows how those different arrangements compare in total cost and tax responsibility.
Payroll Mistakes Tennessee Employers Often Make
- Misclassifying employees as contractors. Tennessee follows IRS and Department of Labor guidelines on worker classification. Getting it wrong means unpaid employer taxes, penalties, and back wages. The test is about control and independence, not what you call the arrangement.
- Missing the FUTA and SUTA wage base resets. Both reset to zero on January 1. In Q1, those taxes apply every payroll run. By Q2 or Q3, many employees have passed their wage base and those taxes stop — but some payroll software needs manual checking.
- Not withholding on bonuses correctly. A supplemental wage like a bonus can be withheld at the flat 22% federal supplemental rate or aggregated with regular pay. Both methods are legal, but they produce different withholding amounts. Communicate clearly with employees before paying out large bonuses.
The IRS employment taxes page covers deposit schedules, Form 941 filing, and employer obligations in full detail.
FAQs
Does Tennessee have any payroll taxes beyond federal?
Tennessee has no state income tax to withhold from employee paychecks. Employers do pay state unemployment insurance (SUTA) on a wage base per employee per year. There are no city or county payroll taxes in Tennessee.
What is Tennessee’s SUTA rate for new employers?
New employers in Tennessee are assigned an experience rate by the Department of Labor and Workforce Development. The actual rate varies and is reviewed annually. Check the Tennessee Department of Labor for your specific assigned rate, as it may differ from the estimate used in this calculator.
How is overtime calculated for Tennessee payroll?
Tennessee follows the federal FLSA overtime rule: non-exempt employees earn 1.5x their regular hourly rate for hours worked over 40 in a single workweek. Tennessee has no state overtime rules that differ from federal rules, so federal law governs.
Do Tennessee employers need to file a state withholding return?
Since Tennessee has no state income tax on wages, there is no state income tax withholding return to file. Employers still file federal Form 941 quarterly and handle federal tax deposits on the standard IRS schedule.
Is there a Tennessee state minimum wage?
Tennessee does not have a state minimum wage law. The federal minimum wage applies by default. For employers covered by the FLSA, that federal rate is the floor. Some Tennessee cities have considered local minimums, but no city-level rate currently overrides the federal rate statewide.
Can an employer in Tennessee offer comp time instead of overtime pay?
Private-sector employers in Tennessee generally cannot substitute comp time for overtime pay under federal FLSA rules. State and local government employers have more flexibility here. Private employers who want to avoid overtime costs need to manage scheduling, not substitute comp time.
How often must Tennessee employers run payroll?
Tennessee law requires wages to be paid at least semi-monthly for most employees. Some specific agreements or industries may allow different schedules. Check Tennessee Code Annotated for the specific requirements that apply to your type of business and workforce.