Tennessee Minimum Wage 2026

Tennessee Minimum Wage After Tax in 2026

A full-time Tennessee worker at $7.25 an hour grosses $15,080 a year. After $0 in federal income tax, $1,154 in FICA and $0 in state income tax, take-home pay is about $13,926 a year, or $1,161 a month and $268 a week.

Tennessee Minimum Wage 2026: No State Tax, No State Minimum

Tennessee holds a unique dual distinction among states: it has neither a state minimum wage above the federal $7.25 floor nor any state income tax on wages. The result is that Tennessee minimum wage workers owe only FICA (Social Security and Medicare at 7.65% combined) from their gross pay. For a full-time worker earning $15,080, the only mandatory deduction is $1,154 in FICA, leaving a take-home of $13,926 annually -- the same as Texas and about $700 to $800 more than minimum wage workers in states with income taxes at the same $7.25 wage level.

Tennessee's Zero Income Tax: Understanding the Hall Tax Repeal

Tennessee has never taxed wages or salaries as income. The state previously had the Hall Income Tax, a 6% tax on investment income (dividends and interest), which was the only form of state income taxation in Tennessee. The Hall Tax was phased out and fully repealed effective January 1, 2021. Since that repeal, Tennessee has no income tax of any kind. Workers in Tennessee retain every dollar of wage income beyond FICA obligations.

Tennessee funds state government primarily through sales tax -- which at a combined state and local rate can reach 9.75% in many counties, among the highest in the nation. The state and local sales tax burden partially offsets the income tax advantage for low-income workers, who spend a higher share of their income on taxable goods.

Nashville's Explosive Growth and Cost Crisis

Nashville has experienced one of the most dramatic economic transformations of any American city over the past decade. The city has attracted corporate relocations, a major technology sector, and significant real estate investment. Median home prices in Nashville proper have doubled or more since 2019. One-bedroom apartments in desirable Nashville neighborhoods now regularly rent for $1,400 to $2,000 per month. A minimum wage worker earning $13,926 net annually -- about $1,161 per month -- cannot afford Nashville housing without significant subsidies, multiple roommates, or long commutes from outer suburbs in Murfreesboro, Smyrna, or Gallatin.

Memphis Manufacturing and Logistics

Memphis is one of the nation's great logistics hubs, home to FedEx's global headquarters and air hub, and a major distribution center for companies across multiple industries. The airport area and surrounding industrial zones provide thousands of jobs in warehousing, package handling, and logistics support. While FedEx and large logistics operators generally pay above minimum wage, smaller subcontractors and third-party logistics providers may pay closer to the federal minimum. Memphis also has a significant manufacturing sector including transportation equipment and food processing, with a range of entry wages.

Country Music and Hospitality Economy

Nashville's country music industry generates enormous economic activity in hotels, restaurants, entertainment venues, and tourism. The Broadway honky-tonk strip, Opryland, and the broader Nashville tourism ecosystem employ large numbers of servers, bartenders, hotel staff, and entertainment venue workers at or near minimum wage with tipped wage arrangements. Music row's support economy -- from studio security to music publisher administrative positions -- also includes minimum wage employment.

Tipped Wage: $2.13 Federal Rate Applies

Tennessee follows the federal tipped minimum wage of $2.13 per hour. Nashville's large hospitality and entertainment economy means thousands of Tennessee workers are tipped employees earning this lower base rate. The Broadway entertainment district, Music Row area, and the Opryland resort are all major tipped wage employers. Enforcement of the tip credit requirement is handled through the federal Department of Labor, as Tennessee has no state equivalent.

Comparison to Tennessee's Eight Neighbors

Tennessee borders eight states -- more than any other state except Missouri. Among its neighbors: Kentucky has a $7.25 minimum and state income tax; Alabama has no minimum wage law but has an income tax; Mississippi has no minimum wage and a 4.7% income tax; Georgia has effectively $7.25 and a 5.49% income tax; North Carolina is at $7.25 with 4.5% income tax; Virginia has $12.41 and 5.75%; and Arkansas has a minimum wage above $7.25. Tennessee's combination of no wage floor and no income tax is unique among all eight neighbors.

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