Key figures
Tennessee payroll
2026, with sources
A short list
Tennessee payroll is about as simple as a state gets. There is no income tax withholding, no local payroll tax, no state minimum wage above the federal $7.25, and no paid leave program funded through payroll. The employer registers with the Department of Labor and Workforce Development for unemployment insurance, files quarterly wage reports, and reports each new hire within 20 days.
Unemployment premiums are charged on the first $7,000 of each employee’s wages, a base unchanged since 2018. New employers generally pay 2.7%, or $189 per employee, until they qualify for an experience rate; for 2026 experienced employers are rated on Premium Rate Table 6.
Unemployment premiums in practice
Premiums are reported and paid quarterly to the Department of Labor and Workforce Development, by the last day of the month after each quarter. Because the base is only $7,000, a new employer pays most of its year’s premiums on each employee in the first quarter or two of the year, then nothing more on that employee until January. Wages are still reported every quarter after the base is reached, because they determine benefit eligibility.
There is no separate employee contribution in Tennessee and no state disability or paid family leave program, so the premium is the only state payroll cost besides workers’ compensation.
Workers’ comp at five, officers included
Non-construction employers need workers’ compensation coverage at five employees, and the count includes part-time workers, family members and corporate officers, even officers who choose to decline coverage. A three-founder startup in Chattanooga that hires two engineers has five employees for this purpose and needs a policy.
Deadlines
- Last day of the month after the quarterQuarterly premium and wage report to TDLWD
- Within 20 days of hireNew hire report
The federal baseline
This page covers what Tennessee adds. The federal rules underneath it apply here too.
Common questions
When do we need workers’ comp in Tennessee?
At five employees for a business outside construction, counting part-time workers, family members and corporate officers, even officers who decline coverage. A company that drops below five can withdraw only by filing Form I-3 with the Bureau and having it accepted.
What comes out of a Tennessee paycheck?
No state income tax and no local payroll tax. A Tennessee employee’s paycheck has federal withholding and FICA only; the employer pays unemployment premiums to the Department of Labor and Workforce Development on the first $7,000 of each employee’s wages.
Payroll next door
- ALAlabama payrollAlabama payroll is state withholding at 2% to 5%, unemployment tax at 2.7% on the first $8,000 for new employers, new-hire reports within seven days, and city occupational taxes in places like Birmingham.
- ARArkansas payrollArkansas withholds at up to 3.7% in 2026, has an $11.00 minimum wage, and DWS publishes a $7,000 wage base with a 2.0% new-employer rate. No local payroll tax applies.
- GAGeorgia payrollGeorgia payroll is flat 4.99% withholding for 2026 through the Department of Revenue and unemployment tax at 2.70% on $9,500 through the Department of Labor; there is no paid leave program or local wage tax.
- KYKentucky payrollKentucky payroll is 3.5% state withholding plus local occupational taxes where employees work, unemployment insurance at 2.7% on $12,000 for new employers, and workers’ comp from the first employee.
- MOMissouri payrollMissouri’s 2026 minimum wage is $15.00 with no inflation indexing after HB 567, and the Prop A sick leave mandate is gone. Kansas City and St. Louis add a 1% earnings tax.
- MSMississippi payrollMississippi payroll is 4.0% withholding on income over $10,000 for 2026, unemployment insurance through MDES, new-hire reports within 15 business days, and workers’ comp from five employees.
- NCNorth Carolina payrollNorth Carolina payroll is flat 3.99% withholding on Form NC-4 and NC-5, unemployment insurance at 1.0% on $34,200 for new employers, workers’ comp from three employees counting officers, and E-Verify from 25.
- VAVirginia payrollVirginia payroll withholds up to 5.75%, pays unemployment on the first $8,000, and follows a minimum wage of $12.77 in 2026 that rises to $15.00 by 2028. Paid family leave contributions start April 1, 2028.
How Tennessee compares
- No tax on wagesStates with no state income tax on wagesTennessee: no state income tax on wages. 9 of 51 states are on the list.
- Paid leave payrollStates with a paid leave or disability payroll programTennessee: no state program. 16 of 51 states are on the list.
- Local payroll taxStates with city, county or district payroll taxesTennessee: state-level only. 14 of 51 states are on the list.
Founder guides on this
- PeopleContractor or employee? Classification for startupsContractor or employee depends on control, not the contract. The IRS test, state rules, 1099s, payroll registration and the cost of getting it wrong.
- ComplianceFirst-year compliance calendar for a Delaware C-corpDelaware franchise tax, 1099s, the federal return, payroll filings, state annual reports and sales tax: the deadlines a young C-corp misses most, by month.
More of the Tennessee guide
- AccountingAccounting and state tax in TennesseeCorporate tax, conformity to federal rules, apportionment and what it does to your books
- ReceivablesReceivables and sales tax in TennesseeSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayablesPayables and contractors in TennesseePaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- ComplianceCompliance and filings in TennesseeRegistering to do business, annual reports, franchise tax and the filing calendar
- AdvisoryAdvisory: credits and decisions in TennesseeCredits, incentives and the decisions that are cheaper to get right the first time
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.