Unemployment Compensation Tax 

2.7% for most new employers to Tennessee

Exceptions are:

• mining 6%
• construction 5%
• manufacturing sect 31 - 5.5%
• manufacturing sect 33 - 6%

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 $7,000 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.