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The Tennessee Paycheck Calculator estimates your take-home pay in a state that imposes no income tax on wages, salaries, or other earned income. Tennessee fully repealed the Hall Tax on investment income (interest and dividends) in 2021, making it completely income-tax-free for all practical purposes. Workers in Tennessee see only federal income tax and FICA (Social Security and Medicare) deducted from their paychecks, creating one of the simplest and most favorable paycheck calculation environments in the nation. Tennessee's lack of income tax is sustained by a relatively high state sales tax of 7% (the highest state rate in the nation), plus local additions that can push the combined rate to 9.75% in some areas. Property taxes in Tennessee are moderate, with effective rates averaging approximately 0.56% (well below the national average). The state does not impose any local income taxes, payroll taxes, or mandatory employee-funded insurance programs, keeping the paycheck calculation purely federal. Compared to neighboring states, Tennessee offers a significant tax advantage for wage earners. Kentucky has rates up to 4%, Virginia charges up to 5.75%, North Carolina has a flat 4.5%, Georgia charges a flat 5.49%, Alabama ranges up to 5%, Mississippi has rates up to 4.7%, and Arkansas charges up to 4.4%. Missouri ranges up to 4.8%. Among its eight bordering states, only Tennessee has no income tax, making it a magnet for workers seeking to maximize take-home pay while living near major employment centers in neighboring states. This calculator serves Tennessee workers across the state, from the healthcare, music, and tourism industries in Nashville (one of the fastest-growing cities in the US), to the logistics and manufacturing workers in Memphis (home to FedEx's global hub), to the automotive manufacturing workers in the Middle Tennessee corridor, to the technology workers in the growing Chattanooga and Knoxville tech scenes.
Net Pay = Gross Pay - Federal Income Tax - FICA (Social Security + Medicare) - Pre-Tax Deductions Tennessee State Income Tax: $0 (no tax on any personal income) Hall Tax: Fully repealed as of January 1, 2021 No Local Income Tax No State Payroll Taxes FICA: 6.2% Social Security (up to $168,600) + 1.45% Medicare (no cap) + 0.9% Additional Medicare Tax on wages over $200,000
- 1Enter your gross pay amount and select your pay frequency. Tennessee employers use standard pay schedules. Your gross pay includes base salary, overtime, bonuses, commissions, tip income (significant in Nashville's hospitality industry), and taxable fringe benefits. Tennessee's minimum wage follows the federal minimum of $7.25 per hour, though most Nashville-area employers pay well above this due to labor market competition.
- 2The calculator applies federal income tax withholding based on your W-4 form elections. Since Tennessee has no state income tax, your W-4 settings only affect federal withholding. Your filing status, dependents, and additional withholding amounts determine the federal tax deduction. Pre-tax deductions such as 401(k) contributions and health insurance premiums reduce federal taxable income.
- 3FICA taxes are calculated on your gross wages at standard federal rates. Social Security at 6.2% on the first $168,600, Medicare at 1.45% on all wages, plus the additional 0.9% Medicare surtax on wages over $200,000.
- 4Since Tennessee has no state income tax, the calculator skips the state tax calculation entirely. There are also no local income taxes, city taxes, or other payroll deductions at the state or local level. Tennessee is one of the cleanest states for paycheck calculations.
- 5Subtract voluntary pre-tax and post-tax deductions. Pre-tax deductions reduce only federal taxable income in Tennessee (since there is no state tax). Post-tax deductions include Roth contributions, after-tax insurance, union dues, and wage garnishments.
- 6The calculator produces your net take-home pay. Tennessee workers retain a higher percentage of their gross pay than workers in neighboring income-tax states. A single filer earning $65,000 pays approximately $6,000 in federal tax and $4,973 in FICA, totaling approximately $10,973 or 16.9% of gross pay.
- 7Compare scenarios to optimize federal tax planning. Tennessee workers can focus entirely on federal strategies since there is no state tax to consider. The calculator is particularly useful for workers evaluating cross-border job offers between Tennessee and neighboring income-tax states.
Gross biweekly pay is $2,615.38. Pre-tax 401(k) at 6% equals $156.92. Federal taxable income: $49,320. Federal tax: approximately $230 per period. No TN state tax. FICA: $162.15 (SS) plus $37.92 (Medicare) equals $200.07. Total deductions: $156.92 (401k) plus $230 (federal) plus $200.07 (FICA) equals $586.99. Net pay: approximately $2,028.39.
Gross biweekly pay is $2,115.38. Federal tax after MFJ deduction and child credits: approximately $28 per period. No TN state tax. FICA: $131.15 (SS) plus $30.67 (Medicare) equals $161.82. Total deductions: approximately $189.82. Net pay: approximately $1,925.56.
Gross monthly pay is $9,166.67. 401(k) at 10% equals $916.67. Federal taxable income: $84,400. Federal tax: approximately $1,250 monthly. No TN state tax (saving approximately $4,000-$5,000 compared to neighboring states). FICA: $568.33 (SS) plus $132.92 (Medicare) equals $701.25. Total deductions: approximately $2,867.92. Net pay: approximately $6,298.75.
Nashville's booming healthcare industry (HCA Healthcare, the largest for-profit hospital operator in the world, is headquartered here along with dozens of other healthcare companies) employs tens of thousands of workers who benefit from Tennessee's no-income-tax environment. Healthcare professionals in Nashville earn competitive salaries and keep 100% from state taxation, making Nashville one of the most financially attractive healthcare markets in the country.
Music industry professionals in Nashville, the country music capital of the world, use this calculator to understand their take-home pay from often-variable income including session fees, royalties, touring income, and gig work. The music industry's income volatility is easier to manage in a no-income-tax state because there are no state estimated payments to calculate and no state-level tax surprises.
FedEx employees in Memphis (FedEx's global headquarters and primary hub) and the broader Memphis logistics industry use this calculator for financial planning. FedEx alone employs over 30,000 workers in the Memphis area. The no-income-tax environment makes Memphis competitive for attracting logistics talent despite competition from Dallas, Atlanta, and other major logistics hubs.
Workers considering relocation to Tennessee from neighboring income-tax states use this calculator to quantify their savings. Nashville, in particular, has experienced massive population growth driven partly by the tax advantage. A worker earning $90,000 moving from Georgia (5.49% flat) saves approximately $4,941 annually, or from Kentucky (4% flat) saves approximately $3,600.
Cross-Border Workers in the Memphis-Mississippi Region
Memphis sits on the Tennessee-Mississippi border, and many workers commute between the two states. Tennessee residents working in Mississippi owe MS income tax (up to 4.7%) on their MS-source income. Mississippi residents working in Memphis owe no Tennessee tax and no Mississippi tax on their TN-source income (MS taxes only MS-source income for residents who can prove out-of-state earnings). This asymmetry benefits Mississippi residents working in Memphis.
Nashville's Boom and Variable Income in Creative Industries
Nashville's music, entertainment, and creative industries generate highly variable income for many workers. Session musicians, songwriters, producers, and content creators may earn significant income in some periods and very little in others. In a no-income-tax state, this variability is easier to manage since there are no state estimated tax payments or state-level withholding to calculate. Workers focus solely on federal quarterly estimated payments for self-employment income.
Automotive Manufacturing Workers with Overtime
Tennessee is home to major automotive plants including Nissan (Smyrna), General Motors (Spring Hill), and Volkswagen (Chattanooga). Workers at these plants often earn significant overtime during production surges. The no-income-tax environment means every overtime dollar is subject only to federal tax and FICA, maximizing the after-tax benefit of overtime work compared to the same overtime in a neighboring income-tax state.
| Tax Type | Rate | Notes |
|---|---|---|
| State Income Tax | 0% | No tax on any personal income |
| Hall Tax (Investment) | 0% | Fully repealed 2021 |
| Local Income Tax | 0% | No local income taxes |
| Social Security (FICA) | 6.2% | On wages up to $168,600 |
| Medicare (FICA) | 1.45% | On all wages, no cap |
| State Sales Tax | 7.0% | Highest state rate; plus local additions up to 9.75% |
| Grocery Sales Tax | 4.0% | Reduced rate on food items |
Does Tennessee have any income tax at all?
No. Tennessee has no income tax on any form of personal income as of 2021. The state previously imposed the Hall Tax on interest and dividend income, but this was fully repealed effective January 1, 2021. Tennessee does not tax wages, salaries, tips, bonuses, investment income, retirement income, Social Security, or capital gains.
What was the Hall Tax?
The Hall Tax was Tennessee's tax on interest and dividend income (not wages or salaries). It was originally imposed at 6% and was gradually phased out: 4% in 2017, 3% in 2018, 2% in 2019, 1% in 2020, and 0% (fully repealed) in 2021. The Hall Tax never applied to wages, salaries, or other earned income, so it did not affect paychecks.
Does Tennessee make up for no income tax with higher sales tax?
Yes, partially. Tennessee's 7% state sales tax is the highest state-level rate in the nation, and combined with local additions, it can reach 9.75%. However, groceries are taxed at a reduced 4% rate. For most workers earning above the median income, the income tax savings significantly exceed the additional sales tax costs. Studies by the Tax Foundation rank Tennessee's overall state and local tax burden in the bottom third nationally.
Are there any local income taxes in Tennessee?
No. No city, county, or local jurisdiction in Tennessee imposes any form of income tax on workers. Nashville, Memphis, Knoxville, Chattanooga, and all other Tennessee communities have zero local income tax.
If I live in Tennessee and work in Kentucky or Georgia, do I pay that state's income tax?
Yes. If you physically work in another state, you generally owe that state's income tax on your earnings there. Tennessee residents who commute to jobs in Kentucky, Georgia, Virginia, or other neighboring states must pay those states' income taxes with no Tennessee credit to offset them (since TN has no income tax). This is particularly relevant for workers in the Chattanooga-northwest Georgia, Memphis-northern Mississippi, and Bristol-southwest Virginia border areas.
Совет профессионала
If you work in Nashville's creative industries (music, entertainment, publishing), take advantage of Tennessee's no-income-tax status by establishing and maintaining genuine Tennessee residency. Creative professionals who tour nationally or work remotely for companies in income-tax states can potentially structure their business activities to minimize exposure to other states' income taxes while benefiting from Tennessee's zero-rate environment. Consult a tax professional specializing in entertainment and creative industry taxation.
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Tennessee's complete repeal of the Hall Tax in 2021 was the culmination of a decade-long effort to make the state fully income-tax-free. The Hall Tax, first imposed in 1929, was Tennessee's only form of personal income tax and applied only to interest and dividend income. Its gradual phase-out from 6% to 0% over four years made Tennessee the most recent state to achieve completely income-tax-free status. The repeal was driven by strong economic growth that provided sufficient revenue from sales taxes and other sources. Tennessee now joins eight other states (Alaska, Florida, Nevada, New Hampshire, South Dakota, Texas, Washington, and Wyoming) in the no-income-tax club.