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Unemployment Compensation Tax 


2.7% for most new employers to Tennessee

Exceptions are:

  • mining - 5%
  • construction - 7%
  • manufacturing sect 33 – 5.5%  

Collected by both the federal and state governments, Tennessee's portion is a credit against part of the federal taxes owed. Unemployment Compensation Tax is paid by employers only and cannot be deducted from employee's wages.

The first $9,000 in wages paid to each employee is subject to this tax. Taxable wages include: tips, meals, lodging and other payments in kind. Non-taxable wages include: payments made by employer for insurance, retirement, or annuities.

After 3 years as an employer in the state of Tennessee, an employer’s history can be reviewed and a different lower rate assigned

Source:  Mark Howell, State of Tennessee, Director Employer Accounts Operations, Dept. of Labor & Workforce Development