TN · Cost to hire 2026
How much does it cost to hire an employee in Tennessee?
The real first-year cost of a W-2 hire in Tennessee is the ongoing fully-loaded payroll plus the one-time spend to recruit, onboard, and equip the person. A $75,000 hire runs about $109,269 in year one.
The first-year cost to hire in Tennessee combines two layers that an offer letter never shows: the recurring fully-loaded payroll burden and the one-time spend it takes to get a worker productive. Year one stacks recruiting, onboarding and training, plus equipment and software setup (HiringMath defaults to roughly $8,500 one-time and about $1,500 a year in software) on top of every ongoing employer tax. On the recurring side, Tennessee keeps the state layer light. New employers pay State Unemployment Insurance at 2.7% on the first $7,000 of wages, capping SUI at $189 per worker, and Tennessee levies no state income tax on wages, so there is no employer-side withholding administration. Federal FICA (7.65%) and net FUTA still apply in full. With Middle Tennessee automotive plants, Nashville healthcare and Memphis logistics all competing for headcount, the gap between salary and true year-one cost is where margin quietly disappears. Model the full number before the offer goes out.
Estimate a Tennessee hire
Pre-filled with Tennessee's 2.7% new-employer SUI rate. Adjust salary, benefits, and one-time costs to fit your hire.
First-year cost of a $75,000 hire in Tennessee
| Recurring (annual) | |
| Base salary | $75,000 |
| Employer payroll taxes | $5,969 |
| Workers' comp | $750 |
| Benefits | $10,050 |
| Overhead | $7,500 |
| Software & toolsrecurs yearly | $1,500 |
| One-time (year one) | |
| Recruiting | $4,000 |
| Onboarding & training | $2,000 |
| Equipment & setup | $2,500 |
| Ongoing annual cost (year 2+) | $100,769 |
| Total first-year cost | $109,269 |
First-year cost by salary in Tennessee
| Base salary | First-year total |
|---|---|
| $50,000 | $78,856 |
| $75,000 | $109,269 |
| $100,000 | $139,681 |
What drives the cost in Tennessee
Tennessee's new-employer SUI rate is 2.7% on the first $7,000 of wages, a maximum of $189 per worker per year (above the national average of 2.07%). That sits on top of 7.65% employer FICA and 0.6% FUTA. Tennessee levies no state income tax, so there is no state withholding to administer.
Extra employer costs: No state income tax on wages.
Compare and dig deeper
Weighing an employee against a contractor? See the Tennessee W-2 vs 1099 comparison for the breakeven contract rate. Compare neighboring markets, including Alabama, District of Columbia, Florida, Georgia, or read how much it costs to hire an employee nationally.
Cost-to-hire FAQ for Tennessee
- What goes into the first-year cost of a Tennessee hire beyond salary?
- Year one combines ongoing fully-loaded payroll (salary, 7.65% FICA, net FUTA, SUI at 2.7% on the first $7,000, and benefits) with one-time hiring costs. HiringMath defaults those one-time items to roughly $8,500 for recruiting, onboarding, training, and equipment, plus about $1,500 a year in software.
- How much does Tennessee SUI add per employee each year?
- A new Tennessee employer pays State Unemployment Insurance at 2.7% on the first $7,000 of each worker's wages, capping the annual SUI cost at $189 per employee. Once Tennessee assigns an experience rate based on claims history, that figure can move up or down.
- Does Tennessee's lack of state income tax lower the employer's cost to hire?
- Indirectly. Tennessee charges no state income tax on wages, so there is no employer-side state withholding to administer, which trims compliance overhead. Your direct recurring costs are still driven by FICA, FUTA, the 2.7% SUI contribution, benefits, and the one-time setup spend of the first year.