Tennessee itself takes nothing out of your paycheck. The state has no individual income tax, and no Tennessee city or county levies a local wage tax either.1Tennessee Department of Revenue. GEN-34 – Income Tax Withholding The gap between your gross pay and your take-home pay is entirely federal: income tax withholding, Social Security, and Medicare. For most workers, that combined bite runs somewhere between 15% and 30% of gross pay, depending on how much you earn and what you put on your W-4.
The Flat Federal Taxes: Social Security and Medicare
Two federal deductions are the same on every paycheck regardless of what you claim on your W-4. Social Security tax is 6.2% of your gross wages, and Medicare is 1.45%. Combined, that FICA total is 7.65% of gross pay.2Social Security Administration. FICA and SECA Tax Rates
Social Security has an annual wage cap. For 2026 the cap is $184,500, and once your year-to-date wages pass that number the 6.2% withholding stops for the rest of the year.3Social Security Administration. Contribution and Benefit Base Medicare has no cap. Every dollar you earn is subject to the 1.45%.4Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates
An extra 0.9% Additional Medicare Tax kicks in on wages above $200,000 for single filers, $250,000 for married couples filing jointly, and $125,000 for married filing separately. Your employer starts withholding the additional 0.9% once your wages pass $200,000 in a calendar year, regardless of your filing status; if you file jointly, you settle up on your return.5Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
Federal Income Tax Withholding
Federal income tax is the biggest and most variable piece of the paycheck. The amount depends on your earnings, your filing status, and the information on your W-4.6Internal Revenue Service. Tax Withholding It uses progressive brackets, so each slice of income is taxed at its own rate.
For 2026, single-filer brackets are:7Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
- 10% on income up to $12,400
- 12% on $12,401 to $50,400
- 22% on $50,401 to $105,700
- 24% on $105,701 to $201,775
- 32% on $201,776 to $256,225
- 35% on $256,226 to $640,600
- 37% above $640,600
For married couples filing jointly, each threshold roughly doubles, with the 37% rate starting above $768,700.7Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
Landing in the 22% bracket does not mean 22% of your paycheck goes to income tax. Only the dollars inside that bracket are taxed at 22%. Your first $12,400 is still taxed at 10%. Your effective tax rate is always lower than your top bracket.
The 2026 standard deduction shrinks the income that’s actually taxed: $16,100 for single filers and $32,200 for married filing jointly.7Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 Your employer builds this into the withholding formula based on the filing status you put on your W-4, using the IRS tables in Publication 15-T.8Internal Revenue Service. Publication 15-T (2026) – Federal Income Tax Withholding Methods
Pre-Tax Deductions That Reduce Your Withholding
Some payroll deductions come out of your gross pay before tax is calculated, which lowers what the IRS can withhold. Three of them do most of the work for a typical Tennessee employee.
401(k) or 403(b) contributions are excluded from taxable wages for federal income tax. The 2026 employee limit is $24,500. FICA still applies, so Social Security and Medicare are calculated on the full amount.9Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
Health insurance premiums paid through an employer’s Section 125 cafeteria plan come out before both income tax and FICA. That’s a deduction on both fronts.
HSA contributions through payroll, if you’re on a high-deductible plan, are excluded from income tax, Social Security, and Medicare. The 2026 limits are $4,400 for self-only coverage and $8,750 for family coverage.10Internal Revenue Service. Rev. Proc. 2025-19
The savings are real and automatic. A single Tennessee worker earning $60,000 who puts $6,000 into a 401(k) has federal income tax calculated on $54,000 instead, which can shave roughly $1,300 off the annual income tax bill depending on bracket placement.
Changing Your Withholding With the W-4
Your employer calculates federal income tax withholding from the information on your IRS Form W-4.11Internal Revenue Service. About Form W-4, Employee’s Withholding Certificate The form covers your filing status, dependents, whether you hold multiple jobs, and any extra dollar amount you want withheld each pay period.
If your W-4 has been sitting untouched for years, the withholding may no longer fit your situation. Marriage, a new child, a second job, or a spouse leaving work all shift the math, and the IRS specifically flags these events as reasons to update the form to avoid an unpleasant tax-time balance.12Internal Revenue Service. Pay As You Go, So You Won’t Owe: A Guide to Withholding, Estimated Taxes and Ways to Avoid the Estimated Tax Penalty
When you turn in a new W-4, your employer must implement it no later than the start of the first payroll period ending on or after the 30th day from the date they received it.13Internal Revenue Service. Topic No. 753, Form W-4, Employees Withholding Certificate Most payroll departments move faster than that in practice.
The IRS Tax Withholding Estimator walks through income, deductions, and credits to suggest specific W-4 entries. It’s especially useful for two-job households and working couples, where the built-in W-4 worksheet tends to under-withhold.14Internal Revenue Service. IRS Tax Withholding Estimator Helps Taxpayers Get Their Federal Withholding Right Have a recent pay stub and last year’s return ready before you start.
Why Nothing Comes Out for Tennessee
Tennessee once taxed interest and dividend income under the Hall Tax, but that tax was fully repealed on January 1, 2021, and it never applied to wages or salaries.15Tennessee Department of Revenue. HIT-3 – Hall Income Tax Repealed Beginning January 1, 2021 Since then, no state or local tax is withheld from any Tennessee paycheck.
The state funds itself largely through sales tax instead. The state rate is 7% on most goods, with local add-ons of up to 2.75%, and groceries are taxed at a reduced 4% state rate plus the local piece.16Tennessee Department of Revenue. Due Dates and Tax Rates The paycheck advantage is unaffected either way: what’s withheld on payday is federal money only.
If You’re Self-Employed in Tennessee
Independent contractors and freelancers see no withholding at all, because no employer is doing the paperwork. You handle the federal taxes yourself, and the FICA equivalent is higher because you pay both halves.
Self-employment tax is 15.3%: 12.4% for Social Security and 2.9% for Medicare, double the 7.65% an employee pays.17Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) The Social Security portion caps at $184,500 in net earnings for 2026, and the 0.9% Additional Medicare Tax applies at the same thresholds as it does for employees.3Social Security Administration. Contribution and Benefit Base
You can deduct the employer-equivalent portion of self-employment tax when calculating your adjusted gross income, which reduces your income tax but not the self-employment tax itself.17Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) Most Tennessee freelancers also need to send quarterly estimated payments to the IRS to stay ahead of underpayment penalties.