How Much Does It Cost to Hire an Employee in Tennessee? (2026)
State-specific payroll taxes, workers' comp, and total employer costs in Tennessee.
Hiring a $60,000/year employee in Tennessee costs employers approximately $65,385 total in 2026, including $5,385 in mandatory payroll taxes and workers' comp. That's a 1.09x multiplier on base salary.
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Total Cost at $60K Salary
$65,385
Cost multiplier: 1.09x
SUTA Rate (Mid)
1.5%
Wage base: $7,000
Workers' Comp Rate
1.08%
No state income tax
Key Insight
For a $60,000 salary in Tennessee, employers pay $5,385 in mandatory taxes — a 1.09x cost multiplier. Tennessee's SUTA rate (1.5%) is below the national average of 1.70%, and there is no state income tax — a take-home pay advantage for employees.
Model your specific hire
Use our interactive calculator pre-loaded with Tennessee's tax rates. Adjust salary, benefits, and overhead to get your true cost.
Tennessee Employer Tax Details
State-specific payroll obligations for employers
| SUTA Rate Range | 0.1% – 5.0% |
| SUTA New Employer Rate (typical) | 1.5% |
| SUTA Wage Base | $7,000 |
| Workers' Compensation (avg) | 1.08% of payroll |
| State Income Tax | No |
Example Employer Costs in Tennessee
Mandatory employer taxes only (no benefits or overhead)
| Component | $40,000 Salary | $60,000 Salary | $80,000 Salary |
|---|---|---|---|
| Social Security (6.2%) | $2,480 | $3,720 | $4,960 |
| Medicare (1.45%) | $580 | $870 | $1,160 |
| FUTA | $42 | $42 | $42 |
| SUTA (TN) | $105 | $105 | $105 |
| Workers' Comp | $432 | $648 | $864 |
| Total Employer Taxes | $3,639 | $5,385 | $7,131 |
| Total Cost (salary + taxes) | $43,639 (1.09x) | $65,385 (1.09x) | $87,131 (1.09x) |
These estimates include mandatory employer payroll taxes only. Add benefits ($7K-$17K) and overhead (~10% of salary) for full cost.
Tax rates sourced from IRS Publication 15, SSA COLA notices, and Tennessee Department of Labor. Social Security tax is 6.2% of wages up to $184,500. Medicare is 1.45% with no wage cap. FUTA is 0.6% on the first $7,000 after credit.
How Tennessee Compares
Tennessee's typical SUTA rate of 1.5% is below the national average of ~1.70%. With a relatively low wage base of $7,000, the maximum SUTA cost per employee is capped early.
Workers' compensation at 1.08% of payroll is below the national average of ~1.20%. As one of the states with no state income tax, employees in Tennessee keep more of their paycheck, which can be a hiring advantage without additional employer cost.
Tennessee Employer Environment
Below-average employer costs- No state income tax — employees keep more of their paycheck, a recruiting advantage
- SUTA rate 1.5% (wage base $7,000) — in line with national average
- Workers' comp rate 1.08% — near national average, varies by industry classification
Tennessee's overall employer tax burden is broadly in line with the national average. Review SUTA and workers' comp rates relative to your industry classification for a more precise picture.
Tennessee Employment Profile
Tennessee has no state income tax, a minimal $7,000 SUTA wage base, and no paid family leave mandate, making it one of the most employer-friendly states in the South.
automotive manufacturing (Nissan, Volkswagen), healthcare (HCA HQ), logistics
Nashville has emerged as a major healthcare corporate hub (HCA, Community Health Systems, Envision); white-collar healthcare wages are reshaping the regional compensation landscape.
Cost at Different Salary Levels in Tennessee
Total employer cost including all mandatory payroll taxes
Compare Tennessee With
Employee Costs in Other States
Hiring Cost by Industry in Tennessee
Workers' comp rates vary significantly by industry — restaurant and construction workers cost far more to insure than office staff.
Average Wages by Occupation in Tennessee
BLS OEWS 2024Median annual wages from the Bureau of Labor Statistics — use these as your baseline salary when estimating total hiring cost.
| Occupation Group | Median Annual | Employed |
|---|---|---|
| Management | $107,060 | 220,900 |
| Computer and Mathematical | $84,440 | 81,590 |
| Architecture and Engineering | $84,160 | 44,650 |
| Legal | $80,430 | 18,180 |
| Healthcare Practitioners and Technical | $75,830 | 216,160 |
| Life, Physical, and Social Science | $74,960 | 20,910 |
| Business and Financial Operations | $71,810 | 186,270 |
| Installation, Maintenance, and Repair | $52,000 | 144,910 |
States With Similar Hiring Costs
These states have SUTA rates close to Tennessee's 1.5% — good for cost benchmarking.
Tennessee Business Resources
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Pre-filled for Tennessee — customize salary and benefits
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Salary to Hourly in Tennessee
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Form an LLC in Tennessee
Step-by-step LLC formation guide
Specialized Calculators for Tennessee Employers
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franchisebudget.com — franchise startup cost estimator
Simplify Payroll in Tennessee
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