How to Calculate Payroll Taxes Withheld in Tennessee

by Grace Ferguson ; Updated July 27, 2017

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.

Step 1

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).

Step 2

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.

Step 3

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.

About the Author

Grace Ferguson has been writing professionally since 2009. With 10 years of experience in employee benefits and payroll administration, Ferguson has written extensively on topics relating to employment and finance. A research writer as well, she has been published in The Sage Encyclopedia and Mission Bell Media.