Tennessee Paystub Generator - Zero Income Tax Since Hall Tax Repeal in 2021, Highest Sales Tax in America, 3 Lines, Free Preview

Tennessee Has Zero Income Tax (The Hall Tax Was Repealed in 2021, and Wages Were Never Taxed)

Tennessee's income tax history is different from any other zero-tax state. Florida and Texas never had any income tax at all. South Dakota amended its constitution to prohibit one. Tennessee took a different path: it had a partial income tax for 92 years and systematically eliminated it.

The Hall Income Tax was established in 1929. It ONLY applied to dividends and interest income from stocks and bonds. It never applied to wages, salaries, tips, bonuses, or any earned income. A factory worker in Memphis never paid a dime of Tennessee income tax. A surgeon in Nashville never paid Tennessee tax on her salary. The Hall Tax only hit people who earned money from investments.

The Tennessee legislature voted to phase out the Hall Tax starting in 2016, reducing the rate by one percentage point per year:

Some older online resources still say "Tennessee taxes investment income." That hasn't been true since January 1, 2021. If someone tells you Tennessee has an income tax, they're five years behind. Today, Tennessee has zero state income tax on wages, zero on dividends, zero on capital gains, zero on Social Security, zero on pensions, zero on 401(k) withdrawals, zero on everything. Your pay stub reflects that: three federal lines, no state line.

The 3-Line Pay Stub: Federal, Social Security, Medicare

Tennessee, Georgia, and North Carolina are the three Southeast states most commonly compared by workers considering relocation. All three are relatively simple (no local income taxes, no SDI/PFML). But Tennessee has one fewer line on the stub, and that one line makes a big difference over a career.

What Gets Taken Out of a Tennessee Paycheck: Nashville vs. Atlanta on the Same Salary

Nashville Healthcare Worker, $30/hr, Biweekly

Setup: Sarah works at HCA Healthcare in Nashville. She earns $30/hr, biweekly, 80 hours, files Single on federal W-4. Annual gross: $62,400.

Three lines. $1,951 net on $2,400 gross. Sarah keeps 81.3% of her paycheck.

The Same Worker in Atlanta, Georgia

Setup: Same salary, same hours, same filing status. Georgia has a flat 5.19% income tax with a standard deduction of $5,400 for single filers.

$219 per month more in Nashville than Atlanta. $2,626 per year. Over a 30-year career, that's $78,780 in state income tax savings, not counting investment growth on those savings. The I-24 corridor between Nashville and Atlanta is one of the busiest relocation routes in the Southeast, and this is why.

Memphis FedEx Worker, $22/hr, Biweekly

Setup: James works at the FedEx World Hub near Memphis International Airport. He earns $22/hr, biweekly, 80 hours, files Single. Annual gross: $45,760.

James keeps 83.5% of his gross. FedEx employees who receive RSUs (restricted stock units) or stock grants see those vest with zero Tennessee state tax. Only the federal portion applies. In California, those same stock vests would face 13.3% state tax on top of federal.

Estimates based on 2026 federal rates and standard withholding. Actual amounts depend on your federal W-4 and voluntary deductions.

The Trade-Off: Highest Combined Sales Tax in America at 9.55%

Tennessee keeps every dollar of your paycheck but takes a cut of nearly everything you buy. Per CountryTaxCalc (April 2026): "Tennessee's combined average sales tax is approximately 9.55%, the highest average combined rate of any state."

Groceries are taxed at a reduced 4% state rate (lowered from 5% in 2023) plus the applicable local rate. In Nashville, a $200 grocery trip includes roughly $12.50 in sales tax (4% + 2.25% = 6.25%). In most other states, groceries are completely exempt from sales tax. Prescription drugs are exempt in Tennessee.

The math on the trade-off: a household spending $60,000 per year on taxable goods and services pays roughly $5,700 in Tennessee sales tax. Per CountryTaxCalc: that's the cost of having zero income tax. A worker earning $75,000 saves roughly $4,500 in income tax compared to a state with a 6% rate. The sales tax costs $5,700. At this income level, the sales tax burden slightly exceeds the income tax savings. But higher earners come out ahead because income tax scales up with earnings while sales tax stays relatively flat.

Nashville vs. Memphis: Same State, Wildly Different Property Taxes

Tennessee's average property tax rate of about 0.66% is well below the national average of roughly 1.1%. But Memphis breaks that average. Per CountryTaxCalc's Memphis guide (April 2026): Shelby County's combined effective property tax rate can reach 1.3% to 2.7% of appraised value depending on the location and special districts.

Per CountryTaxCalc: "Memphis homeowners pay $5,000-$6,000 more per year than equivalent Nashville homeowners." Same state. Same zero income tax. But Memphis's property tax bill can be double or triple Nashville's on the same home value. Suburban Nashville counties like Williamson County are even lower at roughly 0.55%, making the gap with Memphis even wider.

The flip side: Memphis home prices are dramatically lower. The median home price in Memphis is roughly $180,000-$220,000 compared to $450,000-$550,000 in Nashville. A $200,000 home in Memphis at a 2% effective rate costs about $4,000/year in property tax. Renters in Memphis skip the property tax issue entirely and benefit from both zero income tax and low rents ($1,000-$1,500/month for a two-bedroom in good areas).

Tennessee vs. Texas vs. Florida: The Three Zero-Tax Giants Compared

Tennessee, Texas, and Florida are the three largest zero-income-tax states. People comparison-shop between them constantly. Here's how the total tax burden actually breaks down:

Tennessee's property tax advantage over Texas is enormous: $4,850/year on a $500,000 home. That more than offsets Tennessee's higher sales tax. For homeowners, Tennessee is roughly $4,100/year cheaper than Texas despite the higher sales tax. Florida edges out Tennessee by about $800/year, mostly from Florida's lower sales tax and grocery exemption. But Nashville's healthcare infrastructure, music scene, and lower home prices compared to Miami or Tampa make the overall cost of living competitive.

Music City, Healthcare Capital: Why Nashville Workers Save Thousands

Nashville is the undisputed capital of the American music industry. Music Row, the Opry, and hundreds of recording studios, publishers, and labels operate in a city with zero state income tax. Songwriting royalties, publishing income, sync fees, and streaming payments are all completely untaxed at the state level. A Nashville songwriter earning $150,000 in royalties keeps every dollar from Tennessee. The same songwriter in Los Angeles would owe California $13,950 (roughly 9.3% effective). That gap has been pulling the music industry to Nashville for decades.

Nashville is also the healthcare capital of the South. HCA Healthcare, the largest private hospital operator in the United States, is headquartered in Nashville. Vanderbilt University Medical Center, Community Health Systems, and dozens of healthcare companies are based in the Nashville metro. Per CountryTaxCalc's Nashville guide: nurses, doctors, administrators, and executives at these companies earn Tennessee wages with zero state deductions.

Amazon announced a major operations hub in Nashville. Oracle is building a campus. AllianceBernstein relocated its headquarters from New York. Bridgestone Americas is headquartered in Nashville. Nissan North America is in Franklin, just south of the city. The influx of corporate headquarters and tech companies is turning Nashville into a top-tier job market that also happens to have zero income tax.

Tennessee Payroll Requirements 2026: What Every Employer Needs to Know

Who Uses the Tennessee Paystub Generator?

Nashville Metro Workers

HCA Healthcare is the largest private hospital operator in the United States, headquartered in Nashville with thousands of local employees. Vanderbilt University and VUMC. Nissan North America (Franklin). Dollar General (Goodlettsville). Bridgestone Americas. Amazon's Nashville operations hub. AllianceBernstein. Music Row's 10,000+ industry jobs spanning songwriters, publishers, producers, studio engineers, and artists. The Nashville metro has added hundreds of thousands of residents over the past decade, and every one of them needs pay documentation.

Memphis Metro Workers

FedEx World Headquarters employs roughly 30,000 people in the Memphis area. Memphis International Airport is the world's second-busiest cargo airport. St. Jude Children's Research Hospital is one of the premier pediatric facilities in the world. International Paper, AutoZone, and ServiceMaster are also headquartered in Memphis. FedEx workers who receive stock grants see them vest with zero Tennessee state tax.

Knoxville and East Tennessee Workers

Pilot Company (travel center chain, Knoxville HQ). University of Tennessee. Oak Ridge National Laboratory (one of the largest Department of Energy labs in the country). Eastman Chemical Company (Kingsport). The Smoky Mountains tourism sector drives seasonal hospitality employment.

Chattanooga Workers

Volkswagen operates a major assembly plant in Chattanooga. TVA (Tennessee Valley Authority) is headquartered there. EPB provides the nation's fastest municipal broadband. The city's growing tech scene benefits from zero income tax and a lower cost of living than Nashville.

Military Workers (Fort Campbell)

Fort Campbell straddles the Tennessee-Kentucky border near Clarksville. Home to the 101st Airborne Division (Air Assault). Military and civilian workers on the Tennessee side benefit from zero state income tax. Kentucky residents working on the Kentucky side of the installation pay KY's 3.5% flat rate. Active duty members can choose Tennessee as their state of legal residence regardless of where they're stationed.

Small Business Owners and Contractors

A hot chicken restaurant on Broadway. A construction crew in Murfreesboro. A recording studio on Music Row. A logistics company in Memphis. A whiskey distillery in Lynchburg. Tennessee small businesses enjoy the simplest payroll environment: no state withholding, no state W-4, three stub lines. Self-employed workers carry the full 15.3% FICA self-employment tax per IRS rules but owe zero to Tennessee.

How to Create a Tennessee Pay Stub: 3 Steps

TN payroll is among the simplest in America. No state tax. No state W-4. Three deduction lines. Enter your federal info and you're done.

1. Enter company and employee info
   Business name, address, employee name, address, pay period dates. No state withholding form needed. Federal W-4 determines your federal tax withholding.
2. Enter earnings and deductions
   Hourly rate or salary (at least $7.25/hr, or $2.13 for tipped employees), hours worked, any overtime. Add voluntary deductions. The tool calculates federal income tax, Social Security (6.2%), and Medicare (1.45%) automatically.
3. Free preview, then download
   Check every line. Gross pay, three mandatory federal deductions, voluntary deductions, net pay, YTD totals. Download when satisfied.

Start Your Tennessee Pay Stub, Free Preview →

When You Need a Tennessee Pay Stub as Proof of Income

Renting in Nashville, Memphis, or Anywhere in TN

Nashville's Germantown, East Nashville, The Gulch, and 12 South neighborhoods have competitive rental markets driven by population growth. Memphis's Midtown, Cooper-Young, and Harbor Town are popular rental areas. Landlords want two to three recent stubs showing gross monthly income of at least 2.5 times the rent. TN stubs with three clean lines are easy to verify.

TN DHS Programs (SNAP, TennCare)

The Tennessee Department of Human Services requires current income documentation for SNAP and TennCare (Tennessee Medicaid) applications. Pay stubs are the standard accepted document.