3 min read

Your Ultimate Guide to Tennessee Payroll

US Payroll


Jemima Owen-Jones


July 31, 2023

Last Update

June 28, 2024

Table of Contents

Paying unemployment insurance

Personal income tax

Paying your Tennessee workers’ compensation

Simplify US payroll tax compliance with Deel

Key takeaways
  1. Employers must pay unemployment insurance in the state of Tennessee.
  2. Tennessee does not have any personal income tax.
  3. Tennessee employers do not need workers’ compensation unless they work in construction or have more than five employees.

Employers must navigate various regulations and requirements to ensure proper payroll withholding in each US state. This guide introduces what employers must pay and withhold from payroll in Tennessee, including unemployment insurance and workers’ compensation. 

Paying unemployment insurance

On top of withholding federal taxes such as Medicare and Social Security taxes, you are also responsible for withholding and paying certain Tennessee state taxes from your employee’s payroll. These taxes together are referred to as employer payroll taxes or payroll withholding. One of the taxes you must pay is unemployment insurance (UI). 

Unemployment insurance is a national program administered by the US Department of Labor. The program provides temporary payments to people who are unemployed through no fault of their own. You can manage your Tennessee unemployment insurance through the online portal.

Refer to the Tennessee Department of Labor and Workforce Development for more information on paying your unemployment insurance. 

Personal income tax

Tennessee does not have any personal income tax; therefore, you do not have to withhold any personal income tax after hiring your first employee in the state.

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Paying your Tennessee workers’ compensation

On top of paying your Tennessee payroll taxes, you will also need to pay for workers’ compensation. Unlike most other states, you will not need to purchase workers’ compensation in Tennessee unless you are in construction or have more than five employees.

Workers’ compensation is insurance for an employee’s injury while performing their job. Employers should purchase workers’ compensation from a qualified commercial carrier in the state. Tennessee State provides information online to help you find a qualified commercial carrier.

Employers should verify that their workers’ compensation insurance complies with the state’s regulations for workers’ compensation.

Simplify US payroll tax compliance with Deel

While this guide provides essential information on Tennessee payroll taxes, payroll compliance and state requirements extend beyond what is covered above. To streamline the process and ensure full compliance, companies can turn to Deel.

Deel offers a comprehensive solution for managing US and international payroll, including payments, taxes, worker classification, and more. Speak with an expert today to see how you can streamline your US payroll processes and ensure compliance with state regulations.

Disclaimer: This article is provided for general informational purposes and should not be treated as legal or tax advice. Consult a professional before proceeding.

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