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Tennessee's Federal-Only Pay Stub in 2026

A Tennessee paycheck is the simplest in the country to read. There is no state income tax line, no state W-4 form, and no state-side adjustments to make at hire. The Hall Tax on interest and dividend income — Tennessee's last remaining individual tax — was fully repealed effective January 1, 2021.

Five tax years later, no form of personal income reaches a Tennessee tax form: wages, salaries, tips, capital gains, dividends, interest, pensions, 401(k) distributions, IRA withdrawals, and rental income are all untouched at the state level.

The Federal-Only Pay Stub

What appears on a Tennessee pay stub is therefore short: gross pay, federal income tax withheld (driven entirely by the federal W-4), Social Security at 6.2%, Medicare at 1.45%, and any voluntary pre-tax elections like 401(k), HSA, FSA, or health-insurance premiums. Employers do not withhold a state unemployment-insurance contribution from the employee — Tennessee unemployment insurance is funded entirely by the employer side, with rates between 0.01% and 10% on the first $7,000 of wages per the Tennessee Department of Labor and Workforce Development. There is no employee-side disability premium, no paid family leave premium, and no state-mandated retirement contribution.

Constitutional Lock and the 2026 Ballot

Tennessee voters approved Amendment 3 in November 2014, adding language to Article II, Section 28 of the state constitution that prohibits the General Assembly from imposing a state tax on payroll, earned personal income, or income from stocks and bonds. Repeal would require another statewide vote. On the same November 2026 ballot, voters will decide a separate amendment that would prohibit a state-level property tax. The state has not levied property tax statewide for decades, but the General Assembly retains the authority to create one — the amendment removes that option permanently.

2026 Federal Math for a Tennessee Worker

Because no state tax intervenes, federal withholding plus FICA fully determines a Tennessee worker's take-home rate. The IRS 2026 inflation adjustments set the standard deduction at $16,100 single, $32,200 married filing jointly, and $24,150 head of household. Marginal federal brackets for single filers run 10% on the first $11,925, 12% to $48,475, 22% to $103,350, 24% to $197,300, 32% to $250,525, 35% to $626,350, and 37% above. Social Security applies at 6.2% to the Social Security wage base of $184,500 for 2026, and Medicare runs 1.45% with an additional 0.9% Medicare surtax on wages above $200,000 (single) or $250,000 (joint).

Sample Paycheck on the State Median ($71,997)

For a single filer earning Tennessee's median household income of $71,997 — the figure published in the Census ACS 2024 1-year brief — federal taxable income lands at $55,897 after the standard deduction. Federal tax sums to roughly $7,211 ($1,193 at 10%, $4,386 at 12%, $1,632 at 22%). FICA at 7.65% removes another $5,508. State tax: zero. Total annual deductions of about $12,719 produce $59,278 in annual take-home pay, an 82.3% retention rate. Biweekly that works out to roughly $2,280 net. The same gross in Georgia (5.49% flat) would lose about $2,520 more to state tax, in North Carolina (3.99%) about $1,830 more, and in Kentucky (4% flat after 2026 cut) roughly $1,832 more.

The High-Earner Bonus

Tennessee's tax advantage compounds at higher incomes. A Nashville software engineer or healthcare executive earning $130,000 single pays approximately $20,183 in federal tax and $9,945 in FICA, leaving $99,872 — a 76.8% retention rate. The same worker in California (13.3% top) would lose roughly $9,800 more to state tax, in New York (10.9% top inside NYC) about $7,500 more, and in Hawaii (11% top) roughly $7,800 more. For relocators arriving from coastal high-tax states, the move alone produces an annual paycheck increase of $7,000 to $10,000 with no change in employer compensation.

The One-Way Border: Cross-State Workers Pay Other States' Tax

Tennessee's zero income tax creates an asymmetric cross-border situation. Out-of-state workers physically performing work in Tennessee owe Tennessee no state tax — there is none to owe — and their home state typically gives credit for "tax paid to Tennessee" of zero. They simply pay their home state's full rate. Tennessee residents who commute to or work remotely for employers in income-tax states face the harder side of the asymmetry.

If You Live in TN and Work Elsewhere

Tennessee residents earning wages physically in Kentucky, Virginia, North Carolina, Georgia, or Alabama owe income tax to those states under the standard "tax where earned" rule, per the Tax Foundation 2026 nonresident filing guide. Because Tennessee has no income tax, there is no Tennessee credit to offset the work-state liability — the bill is paid in full to the work state.

A Bristol resident living on the Tennessee side and commuting across the state line to work in Bristol, Virginia owes Virginia tax at brackets up to 5.75%; Virginia exempts only Kentucky, Maryland, Pennsylvania, DC, and West Virginia residents from nonresident filing, and Tennessee is not on that list. A Memphis resident commuting to Arkansas employers pays Arkansas income tax through 4.4% in 2026.

If You Live Elsewhere and Work in TN

The reverse case favors the worker. A Mississippi resident working in Memphis owes Mississippi 4% on Tennessee-earned wages above the $10,000 exemption — Tennessee withholds nothing, and the Mississippi worker files a Mississippi return claiming the full income there. A Kentucky resident working in Clarksville owes Kentucky 4% (post-2026 cut) on those wages. The home state simply collects what it would have collected if the work were local. There is no Tennessee component, so there is no double-tax risk and no credit calculation to manage — the simplest cross-border configuration in the South.

Reciprocity: None for Tennessee

Tennessee has no reciprocity agreements with any neighboring state. Reciprocity matters only for states that levy income tax, and since Tennessee does not, the question is moot in one direction and irrelevant in the other. Workers who split time across multiple income-tax states (e.g., a Memphis-based salesperson covering Mississippi, Arkansas, and Tennessee territory) must allocate wages by state-of-work days and file nonresident returns in each work state. Tennessee residency simplifies the resident return — it does not exist — but does nothing for the nonresident filings.

Roth Heaven: Why Tennessee Reshapes Retirement Tax Math

Tennessee's zero-tax status changes the calculus on Roth versus Traditional retirement contributions in a way no other no-income-tax state quite matches. Because Tennessee taxes neither contribution-year wages nor retirement-year withdrawals, both sides of the conversion question lose their state-tax friction.

Roth Conversions Without State Friction

A Traditional-to-Roth conversion creates ordinary federal taxable income in the conversion year. In a state with a 5% income tax, a $50,000 conversion carries a $2,500 state tax bill on top of the federal liability. In Tennessee, that $2,500 stays in the worker's pocket. For a high-income worker considering a Roth conversion ladder during a sabbatical or low-income year, Tennessee residency removes one of the most common drag factors.

The math also runs the other direction: future Roth withdrawals — already federal-tax-free if rules are met — also pay zero Tennessee tax, the same as any other retirement income. Retirees already living in zero-tax states do this routinely, but the Tennessee combination of zero now plus zero later makes it one of three or four states (alongside Florida, Texas, Wyoming, and South Dakota) where conversion strategies have no state component to model.

401(k), HSA, and FSA Math

Federal contribution limits for 2026 — $24,500 for 401(k) under 50, $32,000 with the catch-up at 50 or older, $4,400 single HSA, $8,750 family HSA — produce federal-plus-FICA tax savings on every dollar contributed, with no state addition. A worker maxing $24,500 in pre-tax 401(k) at the 22% federal bracket saves $5,390 federally and $1,874 in FICA on the HSA portion specifically (HSA is FICA-exempt; 401(k) is not). For Traditional 401(k) contributions, Tennessee residency means the contributing-year savings come entirely from federal brackets — no state tax savings to factor in, but also no state recapture on Roth-style contributions later.

2026 Law Changes Touching Tennessee Paychecks

Several 2026 legislative changes ripple into the broader paycheck picture even though none touches state income tax directly.

State Worker Paid Caregiving Leave (January 2026)

State government employees gained six weeks of paid caregiving leave for end-of-life family situations effective January 2026, supplementing the six weeks of paid parental leave established by Executive Order in 2020. This applies only to executive-branch state employees. Private-sector workers remain under federal FMLA (12 weeks unpaid) unless their employer offers more, although Tennessee authorized voluntary group paid family leave insurance products in 2024 that some employers now offer through carriers like UnitedHealth, MetLife, and Lincoln Financial.

Williamson County 30% Property-Tax Cut

Williamson County (Franklin, Brentwood, suburban Nashville) adopted a 30% property-tax-rate cut in its 2025-2026 budget, dropping the rate from $1.88 to $1.30 per $100 of assessed value. Tennessee assesses residential property at 25% of appraised value, so a $700,000 Brentwood home (assessed at $175,000) sees annual property tax fall from $3,290 to $2,275 — a $1,015 annual reduction that flows straight to homeowner cash flow. Davidson County (Nashville) remains at $3.254 per $100 combined city plus county for the Urban Services District; the equivalent $700,000 home there pays roughly $5,695 — a useful comparison for relocation decisions inside the metro.

Professional Privilege Tax Phase-Out

Tennessee's Professional Privilege Tax levies a flat $400 per year on attorneys, securities agents, broker-dealers, investment advisers, lobbyists, osteopathic physicians, and physicians. Pending SB 397/HB 189 would set the rate to $0 for tax years beginning on or after June 1, 2026, effectively repealing the tax for the seven affected professions while preserving the underlying statute. The bill remains under consideration in the General Assembly's 2026 session; if signed, it eliminates the only remaining direct paycheck-side tax for the affected professionals.

Cigarette Excise Increase

HB 441 raised the cigarette excise tax from $3.20 to $3.60 per pack on January 1, 2026. The tax is paid by manufacturers and passed through at retail, but a pack-a-day worker in Tennessee now pays roughly $146 more per year at the register — a measurable take-home offset for the small share of workers who smoke heavily.

Top Employers and Wage Levels by Region

Tennessee's employer landscape is unusually concentrated for a state of 7.1 million people. Vanderbilt University Medical Center is Nashville's largest single employer at roughly 28,300 workers across hospital and research operations. HCA Healthcare's downtown Nashville corporate campus employs over 11,000 in its global headquarters role for a hospital system of about 271,000 employees worldwide. Nissan North America's regional headquarters in Franklin employs roughly 35,000 across the Smyrna assembly plant, the Decherd powertrain facility, and the Franklin office. FedEx Corporation employs over 30,000 in metropolitan Memphis at its global air hub.

Three Income Worlds Inside One State

Median household income masks dramatic regional gaps. Nashville-Davidson median household income runs near $80,000 and rises sharply through Williamson County, where Brentwood and Franklin households commonly clear $130,000-$160,000. Memphis-Shelby median sits closer to $52,000, and the broader Memphis metro skews lower still due to outlying counties. Knoxville-Knox County hovers near $62,000, and Chattanooga-Hamilton sits at $58,000-$62,000. The Tri-Cities region (Bristol, Kingsport, Johnson City) and rural Middle and West Tennessee fall below $50,000 in many counties. A worker considering a Tennessee move should look not at the $71,997 statewide median but at the metro-specific number for the city where the job sits.

Three Tennessee Take-Home Realities

The same federal math produces dramatically different lifestyles depending on where the paycheck lands. Three representative scenarios show the spread.

Memphis Logistics Worker, $52,000

A FedEx ramp agent or warehouse supervisor at the Memphis hub earning $52,000 single takes home roughly $43,952 — about $1,690 biweekly — after $4,070 federal income tax and $3,978 FICA. With Memphis's median home price near $185,000 per Norada Real Estate and Tennessee's 0.64% effective property tax, monthly principal-interest-tax-insurance on a median home stays well under $1,300, leaving room for retirement contributions and saving even on a below-state-median wage.

Statewide Median, $71,997

The state-median worker takes home $59,278 (82.3% retention), or roughly $2,280 biweekly. Maxing a $300 biweekly pre-tax 401(k) contribution reduces federal tax by roughly $66 (22% bracket) and FICA on the HSA portion only — Traditional 401(k) does not reduce FICA — producing a net paycheck reduction near $234 rather than the full $300. Over a 30-year career, that contribution pattern accumulates roughly $1.2 million at 7% real returns, more in a Roth.

Nashville Tech, $130,000

A senior software engineer or healthcare data analyst at Oracle's new East Bank campus, AllianceBernstein's relocated headquarters, or one of Nashville's 900-plus health companies earning $130,000 single takes home about $99,872 (76.8%) — roughly $3,841 biweekly. Pair that with a $700,000 Brentwood home now paying $2,275 in Williamson County property tax (post-30% cut) instead of $3,290, and the move from a 5%-tax state typically frees $10,000-$15,000 of annual cash flow without any salary change.

Working Smart in Tennessee in 2026

Three planning moves matter most for Tennessee workers under the unusual zero-state-tax regime. First, treat Roth contributions and Roth conversions as the default option rather than the contrarian choice. Tennessee's combination of no tax now plus no tax later makes Roth structurally favored for any worker who expects positive real investment returns and any retiree who plans to remain in Tennessee.

Second, if you commute to or work remotely for an employer in Kentucky, Virginia, North Carolina, Georgia, or Alabama, set up payroll withholding for the work state directly — Tennessee will not collect, but the work state will, and most employers will not auto-withhold for a different state without explicit setup. Filing only a federal return and forgetting the work-state nonresident return is the most common Tennessee cross-border error.

Third, model the housing-tax math together. Tennessee's THDA Great Choice Plus program offers $6,000 deferred-and-forgivable down-payment assistance or $15,000 amortized at 2%, with a 0.5% rate discount for veterans, active military, law enforcement, firefighters, EMTs, and paramedics under Homeownership for Heroes. Combined with the 0.64% statewide effective property tax rate and the absence of state income tax on every paycheck, a Tennessee homeowner's total tax footprint typically runs 25-40% below the same household in Georgia, North Carolina, or Kentucky.

The Tennessee Mortgage Calculator and Tennessee Affordability Calculator handle the property-tax and assessment-ratio mechanics, and the Tennessee financial calculators hub bundles the state-specific tools for paycheck, housing, and retirement planning. For the federal-only side of FICA mechanics, the national Paycheck Calculator shows the full Social Security and Medicare breakdown with no state component to clutter the math.