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Explains what Tennessee employers owe when there is no state income tax on wages, covering unemployment insurance, new hire reporting and federal payroll rules. Also touches on wage payment timing, child labor limits and garnishment.
Tennessee has no personal income tax on wages, so there is no state withholding. Employers still pay unemployment insurance on the first $7,000 per employee, report new hires within 20 days, and follow federal FLSA rules.
The Hall tax on interest and dividends was repealed effective January 1, 2021, and Tennessee collects no personal income tax on wages. Employers in Tennessee must still comply with federal withholding and payroll tax rules, state unemployment insurance (SUTA/UC) requirements, new-hire reporting, wage payment timing rules, child-labor restrictions and state garnishment laws.
Tennessee does not levy local personal income taxes on wages — there is no municipal wage tax. Local taxes for employers typically concern business taxes, local sales tax collection and property taxes, not local income withholding for employees. Confirm city business tax registration where applicable.
| Topic | Tennessee rule |
|---|---|
| Overtime | Tennessee follows the federal FLSA baseline: non-exempt employees are generally entitled to time-and-a-half for hours worked over 40 in a workweek, unless an exemption applies (executive, administrative, professional and similar). Monitor DOL updates to salary-level tests and exemption guidance. |
| Minimum wage | Tennessee has no state minimum wage statute above the federal level, so the federal minimum wage of $7.25/hr applies. |
| Tipped employees | Federal tipped-employee rules apply, including the federal tipped cash wage floor of $2.13/hr when tips make up the difference. Employers must ensure wages plus tips equal at least the federal minimum wage. |
| Rest and meal breaks | Tennessee law requires certain meal and rest provisions in specific circumstances, but there is no broad private-sector requirement for paid meal or rest breaks beyond FLSA principles. Tennessee posting materials and employer policies should reflect required unpaid meal breaks when an employee is scheduled for six consecutive hours. |
| Pay frequency | Employers must establish regular paydays and pay wages at least once per month. For employers paying monthly, wages earned prior to the 1st must be paid by the 5th of the following month. Semi-monthly payrolls have specific statutory timing — see Tenn. Code section 50-2-103. |
| Final pay | Final wages of separated employees must be paid by the next regular payday or within statutory timeframes. Confirm the specific rules in the Tennessee Code and TN DOL guidance. |
| Paid sick leave / PTO | No statewide mandatory paid sick leave — PTO policies are generally employer-driven. Review company policy and any city or county ordinances; few Tennessee cities impose paid leave. Federal obligations such as the FLSA still apply where relevant. |
| State-mandated retirement | No statewide mandatory private-sector retirement program is in effect for Tennessee private employers as of this update. Public-sector employees are covered by state retirement systems. Private employers may offer 401(k) or IRA plans under federal law, including SECURE Act and SECURE 2.0 incentives. |
| Recordkeeping and posters | Keep payroll and time records in accordance with the FLSA and Tennessee law, and post required notices — regular paydays posting, wage rules, new-hire reporting notices and the unemployment insurance poster. TN DOL publishes required poster resources. |
Employers must comply with Tennessee garnishment statutes and federal garnishment limits. Tennessee law generally limits creditor garnishments to 25% of weekly disposable earnings, or the amount by which disposable earnings exceed 30 times the federal minimum hourly wage, with additional protections and exceptions for dependents. Child-support garnishments follow higher federal and state limits, up to 50-60% in certain circumstances. Employers must follow court orders and Tennessee statutory procedures for withholding and remittance.
Note: This overview reflects state guidance as of 09/18/2025. Confirm current rates, wage bases and deadlines with the agencies above before running payroll.
No. Tennessee does not impose a broad-based personal income tax on wages, and the Hall income tax on interest and dividends was repealed effective January 1, 2021. There is no Tennessee state withholding requirement for wages.
Tennessee's UI taxable wage base is $7,000 per employee. Employers are generally liable for Tennessee UI taxes, and they must register and file wage and premium reports with the Tennessee Department of Labor and Workforce Development.
Employers must report all newly hired, rehired or returning employees to the Tennessee New Hire Reporting Program within 20 days of hire. Electronic, mail and fax options are available.
Tennessee has no state minimum wage statute above the federal level, so the federal minimum wage of $7.25 per hour applies, along with federal tipped-employee rules including the $2.13 per hour cash wage floor when tips make up the difference. Employers must ensure wages plus tips equal at least the federal minimum.
Tennessee statute requires employers to establish regular paydays and pay wages at least once per month. For monthly payrolls, wages earned before the 1st must be paid by the 5th of the following month; semi-monthly payrolls have their own timing under Tenn. Code section 50-2-103.