How to Calculate Tennessee State Income Taxes

Income tax is the tax taken off the total amount of money you make in a year. Each state's tax requirements are slightly different -- Tennessee is no exception -- so knowing how Tennessee taxes income helps you fill out your State of Tennessee tax return properly. This is especially critical if you are self-employed.

Instructions

1. Calculate your yearly wage or salary. If you are paid by the hour, calculate the total number of hours you work for the year times your dollar per hour pay. If you are a salaried employee, add your base salary plus any bonuses you received during the year. Now, for the best and most surprising part; no income tax is taken off of any wages or salaries in the State of Tennessee, so make sure you do not include this amount in your total taxable income.

2. Calculate the total investment income (dividends and interest) you received during the year from your stocks and bonds. If you are a single filer, your investment income is taxable, however, the first $1,250 is exempt from taxation, To calculate the total income tax for your stocks and bonds, take the total income received, minus $1,250. Take the resulting sum and multiply it by 6 percent (or 0.06) to determine your total state income tax due.

3. Calculate the total investment income (dividends and interest) you received during the year from your stocks and bonds. If you are a married joint filer, the first $2,500 is exempt from taxation. To calculate the total income tax from your investment income, take the total income received and subtract $2,500. Take that number and multiply it by 6 percent (or 0.06) to find what the total state income tax on your investment income should be.

4. Calculate the total income tax you owe. If you are a person over 65 years of age, filing your taxes individually, and earn less than $16,200 for the tax year, including wages, salaries, stocks and bonds, you are exempt from State of Tennessee taxation of your income.

5. Calculate the total income tax you owe. If you are a person over 65 years of age and are filing jointly and your joint income is less than $27,000, you do not owe State of Tennessee income tax on any of your wages, salaries, stocks or bonds.

References

• TN.GOV: Individual Income Tax
• "Guidance for Tennessee's Individual Income Tax Return"; Tennessee Department of Revenue