Tennessee employers must handle several payroll tax obligations: SUI contributions (0.01%–10.00% on the first $7,000 per employee), plus all federal payroll taxes (FICA at 7.65%, FUTA at 0.6% on the first $7,000). Tennessee does not have a state income tax on wages. New employers pay an SUI rate of 2.7%.
Table of Contents
Overview: Tennessee Payroll Tax Landscape
Running payroll in Tennessee means managing federal tax obligations and state unemployment insurance. Here is the complete picture of what Tennessee employers owe:
| Tax | Who Pays | Rate | Wage Base |
|---|---|---|---|
| Tennessee SUI | Employer | 0.01%–10.00% | $7,000 |
| Social Security (FICA) | Split 50/50 | 6.2% each | $176,100 |
| Medicare (FICA) | Split 50/50 | 1.45% each | No limit |
| FUTA | Employer | 0.6% (after credit) | $7,000 |
Tennessee Has No State Income Tax
Tennessee is one of the states that does not levy a state income tax on wages. This means you do not need to withhold state income tax from employee paychecks, and there is no state income tax return for employees to file.
However, this does not mean your payroll obligations are simple. You still must handle federal income tax withholding, FICA taxes, FUTA, and — critically — Tennessee State Unemployment Insurance (SUI) contributions.
💼 From the Payroll Desk
Even though Tennessee has no income tax, employers still need to register for SUI and pay unemployment taxes. We see new Tennessee employers skip this step because they think ‘no income tax’ means no state obligations at all. SUI registration is still required.
State Unemployment Insurance (SUI)
Tennessee SUI is an employer-paid tax on the first $7,000 of each employee’s wages per year. New employers pay 2.7%. Experienced employers are rated between 0.01%–10.00% based on their claims history.
SUI is administered by the Tennessee Department of Labor and Workforce Development. You must register for an SUI account when you hire your first employee and file quarterly wage reports.
For a detailed breakdown, see our Tennessee SUI Rates 2026 guide.
Federal Payroll Taxes
On top of Tennessee state obligations, every employer must handle federal payroll taxes:
- FICA (Social Security + Medicare): 7.65% employer share, 7.65% employee share. Social Security applies to the first $176,100; Medicare has no cap.
- FUTA: 0.6% employer-only tax on the first $7,000 per employee (after state SUI credit).
- Federal Income Tax Withholding: Based on employee W-4 and IRS tables. Employer withholds but does not pay.
For a complete breakdown, see our Federal Payroll Tax Basics guide.
Filing Schedules and Deadlines
Key deadlines for Tennessee employers:
- Federal 941: Quarterly — due by the last day of the month after each quarter
- Federal 940 (FUTA): Annual — due January 31
- Tennessee SUI: Quarterly wage reports — due by the last day of the month after each quarter
- W-2s: Due to employees by January 31, filed with SSA by January 31
Penalties for Late Filing and Payment
Late or missed payroll tax payments result in penalties at both the federal and state level:
- IRS: Failure-to-deposit penalties range from 2% to 15% depending on how late
- Tennessee: State penalties vary but typically include interest on unpaid balances plus fixed or percentage-based penalty fees
- Trust fund penalty: The IRS can hold business owners personally liable for unpaid withholding taxes (the “Trust Fund Recovery Penalty”)
Frequently Asked Questions
What payroll taxes do Tennessee employers pay?
Tennessee employers pay federal payroll taxes (FICA, FUTA) and state unemployment insurance (SUI) on the first $7,000 of wages per employee. Tennessee has no state income tax.
What is the Tennessee SUI wage base for 2026?
The Tennessee SUI wage base for 2026 is $7,000. Employers pay SUI on the first $7,000 of each employee's wages per year.
What is the new employer SUI rate in Tennessee?
New employers in Tennessee typically pay an SUI rate of 2.7%. Experienced employer rates range from 0.01%–10.00% based on claims history.
When are Tennessee payroll taxes due?
Tennessee SUI taxes are typically filed quarterly. Federal payroll tax deposits follow the IRS monthly or semi-weekly schedule. Check with the Tennessee Department of Revenue for current due dates.
Does Tennessee have local payroll taxes?
Tennessee does not have local income taxes in addition to the state-level requirements.
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Legal & Tax Disclaimer
This article is for general informational purposes only and does not constitute legal, tax, or professional advice. Employment laws, tax regulations, and compliance requirements change frequently. The information on this page reflects our understanding as of February 2026 and may not reflect recent changes in federal or Tennessee state law.
Do not act or refrain from acting based solely on the information in this article. Always consult a qualified attorney, CPA, or HR professional familiar with Tennessee law before making payroll or compliance decisions for your business.