Tennessee is one of the most taxpayer-friendly states in the U.S. Because the state has no individual income tax on wages, calculating your take-home pay is significantly simpler than in most other regions. Whether you live in Nashville, Memphis, or Knoxville, your primary withholdings are restricted to the federal level.
Key Components of the Tennessee Calculation
No State Income Tax: Tennessee does not tax earned income. The Hall Income Tax (which taxed interest and dividends) was fully repealed as of January 1, 2021.
FICA Taxes: Everyone must pay Social Security (6.2%) and Medicare (1.45%) taxes. These are calculated based on your gross pay minus certain pre-tax deductions.
Federal Income Tax: This is based on your IRS filing status and the progressive tax brackets for the current tax year.
Pre-Tax Deductions: Contributions to 401(k) plans or health insurance premiums reduce your taxable income, effectively lowering the amount of federal tax you owe.
Example Calculation
If you earn an annual salary of $60,000 in Tennessee and are paid monthly:
Gross Monthly Pay: $5,000.00
FICA Withholding: Approx. $382.50 (7.65%)
Federal Tax: Based on Single filer status, roughly $520.00
State Tax: $0.00
Estimated Monthly Take-Home: ~$4,097.50
Disclaimer: This calculator provides estimates based on 2024 federal tax tables. Actual payroll results may vary based on specific employer benefits and individual tax situations.