Tennessee payroll tax rules, 2026

State income tax withholding

Tennessee has no state income tax on wages.

State unemployment (employer)

• Taxable wage limit: $7,000 per employee per year.
• New-employer rate used: 2.7%. Your state assigns your actual rate.
• New-employer rate depends on the industry sector; 2.7% assumed.

Federal taxes (every state)

• Social Security 6.2% employee + 6.2% employer, up to $184,500 of wages.
• Medicare 1.45% employee + 1.45% employer; extra 0.9% employee tax over $200,000.
• Federal unemployment (FUTA) 0.6% on the first $7,000 per employee.