Self-employment taxes in Tennessee
Tennessee is one of the states with no state income tax. As a self-employed person in Tennessee, you won't owe any state income tax on your business profit, only federal income tax and self-employment tax. That makes Tennessee one of the more tax-friendly places in the country to freelance or run a small business.
- State income tax: none
- Tax on self-employment income: $0 at the state level
- You still owe: federal income tax + 15.3% self-employment tax
The federal taxes every self-employed person pays
No matter which state you're in, self-employment income carries federal self-employment tax of about 15.3% (12.4% Social Security up to the annual wage base, plus 2.9% Medicare), on top of federal income tax. You may also qualify for the 20% qualified business income (QBI) deduction, and you can deduct half of your self-employment tax. The calculator above includes all of this along with Tennessee's state tax.
Because you don't have an employer withholding taxes for you, you're generally expected to pay quarterly estimated taxes. A common rule of thumb is to set aside 25–30% of your net profit, but your exact number depends on your income and deductions, use the estimate above as your starting point.
Frequently asked questions
Do I pay Tennessee state tax on self-employment income?
No. Tennessee does not levy a state income tax, so your self-employment income is not taxed by the state. You are still responsible for federal income tax and federal self-employment tax.
How much should I set aside for taxes in Tennessee?
Enter your profit above for a personalized number. As a rough guide, many self-employed people in Tennessee set aside 25–30% of net profit to cover federal and state taxes combined, but the calculator gives you a far more accurate figure.
Would an S-corp lower my taxes?
Possibly, if your profit is high enough. See the LLC vs S corp calculator to compare, or the full calculator to model your whole situation.