Tennessee collects income tax on dividends and interest earnings, but it does not tax individual wages and salaries earned by its residents. Therefore, a Tennessee employer is not required to withhold state income tax from employee paychecks. Local income tax withholding is also not required. As a worker in Tennessee, you are subject to federal income tax, Medicare tax and Social Security tax withholding. Apply the guidelines in the Internal Revenue Service's Circular E to figure how your employer arrived at your federal taxes withheld.
Locate the Circular E withholding tax table that matches the filing status and allowances shown on lines 3 and 5 of your W-4 form, and your wages and pay period to determine federal income tax. For example, if you earn $1,400 semimonthly in 2011, and claim married with one allowance on your W-4, you pay $104 semimonthly (see page 48 of the 2011 Circular E).
Calculate Social Security tax at 4.2 percent (in 2011) of your gross income, up to $106,800 for the year. Your gross income is your pay before deductions; your net or take-home earnings is your pay after deductions.
Compute Medicare tax at 1.45 percent (in 2011) of your gross income.
If you have a pretax benefit, such as a Section 125 health plan, deduct your contribution before calculating federal income tax, Medicare tax and Social Security tax.
If you have a traditional retirement plan, such as a 401(k) plan, deduct your contribution before withholding federal income tax; however, these plans are subject to Medicare and Social Security taxes.