How Much Tax Is Taken Out of Your Paycheck in TN?

Understanding the taxes withheld from a paycheck can feel complex. Employers withhold a portion of an employee’s gross earnings to fulfill tax obligations. These withholdings contribute to various government programs and services, making it important to comprehend how your take-home pay is determined. This process ensures tax liabilities are met throughout the year, rather than as a single large payment.

Federal Paycheck Withholding

A significant portion of paycheck deductions goes towards federal taxes, primarily federal income tax and Federal Insurance Contributions Act (FICA) taxes. Federal income tax operates on a progressive system, meaning higher earners generally pay a larger percentage of their income in taxes. The amount withheld for federal income tax is influenced by the information an employee provides on their IRS Form W-4. This form allows employees to indicate their filing status, account for multiple jobs, claim dependents, or request additional withholding.

FICA taxes fund Social Security and Medicare programs, which provide retirement, disability, and healthcare benefits. For 2025, the Social Security tax rate is 6.2% for employees, applied to earnings up to a wage base limit of $176,100. Earnings above this threshold are not subject to Social Security tax. The Medicare tax rate is 1.45% for employees, applied to all covered earnings without any wage base limit.

An additional Medicare tax of 0.9% applies to wages exceeding certain thresholds: $200,000 for single filers and $250,000 for married couples filing jointly. This additional tax applies only to the employee’s portion of Medicare tax; employers do not match this extra amount. Employers are responsible for withholding this additional tax once an employee’s wages surpass the $200,000 threshold in a calendar year. These federal deductions are mandatory and a consistent part of paycheck calculations.

Tennessee and Local Tax Impact

Tennessee does not impose a state income tax on wages. The state repealed its tax on income earned from interest and dividends, known as the Hall Income Tax.

There are no local income taxes withheld from paychecks in any city or county within Tennessee. While Tennessee residents do pay other taxes, such as sales tax and property tax, these are not deducted directly from an employee’s gross wages. The absence of state and local income tax withholding simplifies paycheck calculations for Tennessee employees, as federal taxes constitute the primary mandatory deductions.

Key Factors Affecting Withholding

Several elements influence the specific amount of taxes withheld from an individual’s paycheck, even for those earning similar gross pay. Gross pay directly impacts withholding, as higher earnings generally result in higher federal income tax and FICA tax deductions due to the progressive tax system and fixed FICA percentages. The choices made on IRS Form W-4 significantly customize federal income tax withholding. Employees specify their filing status, the number of dependents they claim, and whether they have other income not subject to withholding, such as from a second job or investments. They can also elect to have an additional flat dollar amount withheld from each paycheck to avoid underpayment.

Pre-tax deductions further reduce taxable income, thereby lowering the amount of federal income tax withheld. Common examples include contributions to health insurance premiums, 401(k) retirement plans, and Flexible Spending Accounts (FSAs) or Health Savings Accounts (HSAs). These amounts are subtracted from gross pay before income tax calculations, which can increase an employee’s net take-home pay.

Pay frequency also plays a role in the amount withheld per paycheck, even if the total annual withholding remains consistent. For instance, employees paid weekly will have smaller amounts withheld each pay period compared to those paid bi-weekly or monthly, simply because the annual tax liability is spread across more paychecks. While the overall tax obligation for the year does not change, the distribution of that withholding across pay periods adjusts with pay frequency.

Reading Your Pay Stub

Understanding your pay stub helps verify the accuracy of your earnings and deductions. A typical pay stub will clearly display your gross pay for the current period, along with year-to-date totals. You will also find sections detailing your pre-tax deductions, such as health insurance or retirement contributions, which reduce your taxable income.

The tax withholding section will list federal deductions. Common abbreviations include “FIT” or “FWT” for Federal Income Tax, and “SS” or “OASDI” for Social Security. Medicare tax is often abbreviated as “Med” or “HI.” Regularly reviewing these amounts against your W-4 elections and understanding of tax rules helps ensure that the correct taxes are being withheld. If you notice discrepancies or have questions, contacting your employer’s payroll department can provide clarity and help maintain accurate records.