Hiring a remote employee in Tennessee
Your company is in another state and one employee lives and works from home in Tennessee. Which state's taxes apply, unemployment, paid leave and Tennessee's employer rules, each with its official source.
Tennessee at a glance
- Income tax
- No income tax on wages
- Unemployment
- $7,000 wage base, 2.7% new employer
- Paid leave
- None
- New hire report
- Within 20 days
Which state's taxes apply
- Work state
- Tennessee has no income tax on wages, so nothing is withheld for Tennessee.Source: Tennessee Department of Revenue, GEN-34 Income Tax Withholding (opens in a new tab), checked October 5, 2026
- Convenience rules
- If your company is in Delaware, New York or Pennsylvania, the employee is assigned to an office there and works there on some days, that state taxes the days worked from home in Tennessee for the employee's convenience.Source: Delaware Division of Revenue, 2025 Form PIT-NON Instructions, Non-Resident Individual Income Tax Return (PDF) (opens in a new tab), checked October 6, 2026; NYS DTF, TSB-M-06(5)I, New York Tax Treatment of Nonresidents and Part-Year Residents: Application of the Convenience of the Employer Test to Telecommuters and Others (May 15, 2006, PDF) (opens in a new tab), checked October 6, 2026; PA Department of Revenue, PA Personal Income Tax Guide, Gross Compensation (opens in a new tab), checked October 6, 2026
Where to withhold: two states
Pick your company's state, the state where the employee lives and works from home, and the days a year the employee works at your office. The answer reads each state's rules from the data on these pages.
Income tax withholding
No state income tax withholding: neither state taxes these wages.
No New York withholding: the employee does no work in New York.
Unemployment
Tennessee: the employee works from home there, so the work is localized in Tennessee.
Simplified: resident credits, dollar tests, local taxes and a move during the year are not worked out here. Each state's rule and its source are on its page.
Unemployment
The employee works from home in Tennessee, so the work is localized in Tennessee: pay Tennessee unemployment tax, not your company state's.
- Agency
- Tennessee Department of Labor and Workforce Development (Employment Security, Employer Accounts)Source: TDLWD, Unemployment Insurance Tax (opens in a new tab), checked October 5, 2026
- Wage base
- $7,000 Fixed by lawSource: TDLWD, UI Tax Rates (Variable Taxable Wage Base table) (opens in a new tab), checked October 5, 2026
- New employer rate
- 2.7% 2.7% for every industry since July 1, 2021; by statute a new employer whose two-digit NAICS industry has a reserve ratio below 0% gets that industry's rate from the premium table in effect instead Surcharges includedSource: TDLWD, Instructions for Report to Determine Status / Application for Employer Number (LB-0441), Premium Rate Information (opens in a new tab), checked October 5, 2026
Open the account: Tennessee payroll tax registration
Paid leave
Tennessee has no paid leave program funded through payroll.
Tennessee employer rules
Employment law applies where the employee works, so these follow the employee into Tennessee.
- Final pay
- Fired: Next regular payday or 21 days after separation, whichever is later Quit: Next regular payday or 21 days after separation, whichever is laterSource: TDLWD, Wages, Fringe Benefits, Paychecks & Breaks (opens in a new tab), checked October 5, 2026
- Pay frequency
- At least once a month: monthly payrolls by the 5th of the next month. With two or more pay periods a month, wages for the 1st to 15th are due by the 5th of the next month and wages for the 16th to month-end by the 20th of the next month. Private employers with 5 or more employees must keep regular paydays.Source: Tennessee Department of Labor and Workforce Development, Wages & Breaks (opens in a new tab), checked October 6, 2026
- Pay notice
- The employer must tell the employee the wage before the employee starts work, and a pay cut before any work at the lower rate. Notice need not be written; no form is prescribed. Domestic service, farm labor and Railway Labor Act carriers are excluded.Source: Tenn. Code Ann. 50-2-101, Prospective employee to be informed as to wages (2025 Tennessee Code, Justia) (opens in a new tab), checked October 5, 2026
- New hire reporting
- Within 20 days of the date of hire.Source: TDLWD, New Hire Reporting (opens in a new tab), checked October 5, 2026
- E-Verify
- Private employers with 35 or more full-time equivalent employees under the same FEIN must use E-Verify for new hires from January 1, 2023, counting employees in and outside Tennessee. Smaller employers may use E-Verify or keep copies of listed identity documents (Tennessee Lawful Employment Act).Source: TDLWD, Employment Verification (Tennessee Lawful Employment Act) (opens in a new tab), checked October 5, 2026
- Sick leave
- No state sick leave law.Source: TDLWD, Wages, Fringe Benefits, Paychecks & Breaks (opens in a new tab), checked October 5, 2026
When the employee moves
Re-check the work state and the registrations before the next payroll: a move changes which state's withholding, unemployment, paid leave and employer rules apply.
Registering your business in Tennessee, and whether one remote employee creates tax nexus for your company, are separate questions this page does not cover.
More on Tennessee
WORKLIO HCM
Payroll for employees who work from home in another state
We help open state accounts when you hire somewhere new, and our registration service can register your employer tax accounts for you. Worklio HCM calculates, deposits and files your payroll taxes in every state and locality, and when an agency notice arrives, you upload it and our tax team resolves it.
Remote employees in other states
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Delaware
- District of Columbia
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Rhode Island
- South Carolina
- South Dakota
- Texas
- Utah
- Vermont
- Virginia
- Washington
- West Virginia
- Wisconsin
- Wyoming
Sources
The agency page or document behind each fact, as checked.
- Tennessee Department of Revenue, GEN-34 Income Tax Withholding (opens in a new tab), checked October 5, 2026
- Delaware Division of Revenue, 2025 Form PIT-NON Instructions, Non-Resident Individual Income Tax Return (PDF) (opens in a new tab), checked October 6, 2026
- NYS DTF, TSB-M-06(5)I, New York Tax Treatment of Nonresidents and Part-Year Residents: Application of the Convenience of the Employer Test to Telecommuters and Others (May 15, 2006, PDF) (opens in a new tab), checked October 6, 2026
- PA Department of Revenue, PA Personal Income Tax Guide, Gross Compensation (opens in a new tab), checked October 6, 2026
- TDLWD, Unemployment Insurance Tax (opens in a new tab), checked October 5, 2026
- TDLWD, UI Tax Rates (Variable Taxable Wage Base table) (opens in a new tab), checked October 5, 2026
- TDLWD, Instructions for Report to Determine Status / Application for Employer Number (LB-0441), Premium Rate Information (opens in a new tab), checked October 5, 2026
- TDLWD, Wages, Fringe Benefits, Paychecks & Breaks (opens in a new tab), checked October 5, 2026
- Tenn. Code Ann. 50-2-101, Prospective employee to be informed as to wages (2025 Tennessee Code, Justia) (opens in a new tab), checked October 5, 2026
- TDLWD, New Hire Reporting (opens in a new tab), checked October 5, 2026
- TDLWD, Employment Verification (Tennessee Lawful Employment Act) (opens in a new tab), checked October 5, 2026
General information, not legal or tax advice. Rules change; confirm current requirements with the relevant agency or your advisor. You remain responsible for your employment taxes and for each state's rules.