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The Hall tax on interest and dividends was repealed effective January 1, 2021, and Tennessee collects no personal income tax on wages.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.
State tax requirements
| Requirement |
What Tennessee employers must do |
| Personal income tax |
None on wages. The Hall income tax on interest and dividends was repealed effective January 1, 2021. Tennessee has no state withholding requirement for wages. |
| UI taxable wage base |
$7,000 per employee. |
| Who pays UI |
Employers are generally liable for Tennessee UI taxes. Employee UI withholding is not a routine employee tax in Tennessee. Employers must register and file wage and premium reports with the Tennessee Department of Labor & Workforce Development. |
| New-hire reporting |
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. |
| Paid leave, PFML and SDI |
Tennessee has no statewide mandatory paid sick leave, paid family and medical leave, or state disability insurance program for private-sector employees. Monitor local ordinances and federal developments. |
Local tax requirements
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.
Wage and hour compliance
| 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. |
Wage deductions and garnishments
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.
Compliance updates
- UI taxable wage base: Tennessee's UI taxable wage base remains $7,000 per employee. Verify annually on TN DOL publications.
- Hall tax repeal reminder: the Hall tax on interest and dividends was fully repealed effective January 1, 2021 — Tennessee collects no personal income tax on wages.
Resources and references
- Tennessee Department of Revenue — Hall income tax (repeal).
- Tennessee Department of Labor & Workforce Development — unemployment insurance tax employer guidance, and the UI employer FAQ confirming the taxable wage base.
- U.S. Department of Labor — FLSA, overtime and general wage-and-hour guidance.
- TN.gov Labor Laws — child labor; wages and breaks; pay frequency and payday rules.
- Tennessee Code, Attorney General opinions and TN Courts materials — garnishment limits and procedures (T.C.A. section 26-2-106 and related guidance).
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.
Frequently asked questions
Does Tennessee have a state income tax on wages?
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.
What is the Tennessee unemployment insurance taxable wage base?
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.
How soon must Tennessee employers report a new hire?
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.
What is the minimum wage in Tennessee?
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.
How often do Tennessee employers have to pay employees?
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.
