Bonus Tax in Tennessee (2026)

A bonus is supplemental pay, and it is usually withheld at a flat federal rate rather than your normal bracket. Employers apply 22% to supplemental wages up to a yearly threshold, and a higher rate on the part above it. FICA comes out on top, and then the Tennessee state layer applies.

Tennessee levies no state income tax, so only the federal 22% supplemental withholding and FICA come out of a bonus. Tennessee levies no tax on earned wages, and its Hall income tax on interest and dividends was fully repealed effective January 1, 2021 - so the state now has no individual income tax of any kind. There are no employee-paid state payroll levies.

Tennessee takes no state tax from a bonus, so only federal withholding and FICA reduce it.

Worked example: a $5,000 bonus in Tennessee

Federal withholding (22%)	$1,100
FICA (Social Security + Medicare)	$383
Tennessee withholding	$0
Total withheld	$1,483
You keep about	$3,517

Assumes year-to-date wages under the $184,500 Social Security wage base. Withholding, not final tax — it reconciles on your return.

Bonus tax calculator (2026)

Bonus amount

State

Federal withholding (flat 22%)	$1,100
FICA (Social Security + Medicare)	$383
Tennessee withholding	$0
You keep about	$3,517

Assumes your year-to-date wages are under the $184,500 Social Security wage base. Withholding, not your final tax — it reconciles on your return.

See what your regular paycheck keeps in Tennessee: Tennessee paycheck calculator.

Frequently asked questions

Why is my bonus taxed so high?

What you see is withholding, not your final tax. Federal rules withhold supplemental pay like a bonus at a flat 22%, which is often more than your normal rate, so the bonus looks heavily taxed. It squares up when you file, where your real rate is applied to your total income.

Does Tennessee have a flat bonus withholding rate?

It depends on the state. The breakdown above shows Tennessee's supplemental rate if it has one, or notes when the aggregate method applies instead.

Federal: IRS 2026 brackets (Rev. Proc. 2025-32) · FICA: IRS Topic 751 · Wage base: SSA · Tennessee: Tennessee Department of Revenue. Rates current as of July 16, 2026. Annual-liability estimates, not payroll withholding — see methodology.