How to Calculate Payroll Taxes Withheld in Tennessee

Payroll taxes are commonly defined as taxes imposed by federal and state governments that are withheld from an employee's regular paycheck. Payroll taxes are commonly used to fund a variety of essential services, including Social Security and Medicare, among others. Employees who contribute payroll taxes throughout their working years will likely be able to reap the benefits of these valuable services once they reach retirement age. Although payroll taxes may have valuable long-term benefits, many individuals are eager to better understand how these taxes will affect their regular paycheck.

On the state level, employees working in the state of Tennessee are not required to pay a payroll tax. However, although income is not taxed in the state of Tennessee, individuals are still required to pay state taxes on any income derived from dividends and earnings on interest. Regardless of state-level tax obligations, all residents of Tennessee must still adhere to federal guidelines concerning income tax. Fortunately, you can use a series of simple steps to calculate your federal income tax obligations.


  • Residents of Tennessee are not required to pay state-level income tax on money earned through their employment. However, income tax will still be charged on income derived from dividends or earnings on interest.

Understanding Tennessee Income Tax Laws

As mentioned previously, individuals working in the state of Tennessee are not required to pay state-level taxes on their employment income. Regardless of their current salary, no state-level tax obligations will apply. However, if an individual has generated any income from investment dividends or income from interest, these sums will be subjected to tax. This particular tax is referred to as the Hall tax. Beginning in 2017, the Hall tax rate was set at 4 percent and was slated to drop each year by 1 percent until going away entirely by 2021.

In order to calculate and document your tax obligation on these funds, you can use the Tennessee Taxpayer Access Point, or TNTAP. This online portal will also allow you to make estimated payments on your Hall taxes throughout the year.

Assessing Federal Income Tax Laws

Although you may have used a payroll calculator in some manner to assess what your take-home pay would be after tax, you won't be able to accurately estimate your federal income taxes until you gain a complete overview of your adjusted gross income. Your adjusted gross income takes into account any and all deductions and credits you may have qualified for throughout the year. Once this information has been collected, you can compare your adjusted gross income with the current federal income tax tables to determine which specific income bracket you should be placed in. From here, you can gain a very precise understanding of the specific proportion of your adjusted gross income that will be allocated toward your federal tax obligations.

Exploring Your Paycheck

If you still have questions about the various taxes being deducted from your paycheck, you can either use a paycheck calculator or take the time to explore your pay stub. Your employee pay stubs should clearly indicate all of the taxes, such as Social Security and Medicare, that have been taken from your gross pay. With this information, you can also begin to calculate how much take-home pay you will generate over the course of a year.