2026 tax year · Tennessee
Services and task work taxes in Tennessee
TaskRabbit, Rover, Upwork and the rest report your gross and withhold nothing. The gap between that and what you are taxed on is mileage, in Tennessee that gap is worth $1,947 in tax.
Take a driver who grossed $34,000 over 18,000 business miles. After mileage at 74.3 cents and the rest of the stack, worked through on the services and task work page $9,030 comes off and $24,970 is left as taxable profit. That profit is what Tennessee and the IRS charge against.
What that leaves you owing in Tennessee
| Self-employment tax | $3,528 |
| Federal income tax | $568 |
| Tennessee income tax | $0, no state income tax |
| Total tax | $4,097 |
| Effective rate on gross | 12.0% |
Earning more in Tennessee
A single filer taking the standard deduction, standard mileage method, this work as the only income, the calculator above handles the other filing statuses. Miles rise with earnings, so the deduction rises too, and the effective rate on gross climbs more slowly than it would for someone whose income grew without expenses attached:
| Volume | Gross | Mileage off | Taxable profit | Tennessee tax | Total tax | Rate on gross |
|---|---|---|---|---|---|---|
| Part-time | $11,000 | $1,485 | $9,515 | $0 | $1,344 | 12.2% |
| Steady side income | $34,000 | $4,455 | $29,545 | $0 | $5,083 | 15.0% |
| Full-time | $55,000 | $7,425 | $47,575 | $0 | $9,173 | 16.7% |
Tennessee specifics that change the number
Tennessee draws a sharp line by entity type. A sole proprietor faces only the gross-receipts business tax, and only after $100,000 of gross receipts in a county or city (a minimal activity license covers the $3,000 to $100,000 range; the business tax itself has a $22 minimum). Form an LLC, though, even a single-member LLC, and the franchise and excise taxes apply: 0.25% of net worth with a $100 minimum, plus 6.5% of Tennessee taxable income. In Tennessee, staying unincorporated is itself a tax decision.
Working across a Tennessee line
Services income is sourced to where the work was physically done. A job over the line can create a filing obligation in that state even for a single afternoon, and reciprocity agreements do not help, they cover wages paid by an employer, not self-employment income.
On $24,970 of profit, what the states around Tennessee would charge:
| State | Its tax | vs Tennessee |
|---|---|---|
| Kentucky | $874 | +$874 |
| Arkansas | $896 | +$896 |
| North Carolina | $996 | +$996 |
| Mississippi | $999 | +$999 |
| Missouri | $1,028 | +$1,028 |
| Virginia | $1,178 | +$1,178 |
| Alabama | $1,209 | +$1,209 |
| Georgia | $1,296 | +$1,296 |
- Kentucky would take $874 more, $874 against Tennessee's $0.
- Arkansas would take $896 more, $896 against Tennessee's $0.
- North Carolina would take $996 more, $996 against Tennessee's $0.
- Mississippi would take $999 more, $999 against Tennessee's $0.
- Missouri would take $1,028 more, $1,028 against Tennessee's $0.
- Virginia would take $1,178 more, $1,178 against Tennessee's $0.
- Alabama would take $1,209 more, $1,209 against Tennessee's $0.
- Georgia would take $1,296 more, $1,296 against Tennessee's $0.
Services and task work tax questions in Tennessee
How much should a Tennessee contractor set aside?
About 12.0% of gross on the $34,000 example, $4,097 across self-employment tax, federal income tax and nothing to Tennessee. In practice that means moving about $120 of every $1,000 payout into a separate account the day it lands, and sending roughly $1,024 to the IRS each quarter, no platform withholds any of this for you. Set aside from each payout rather than finding it in April.
Does the $34,000 on my 1099-NEC match what Tennessee taxes?
No. Tennessee taxes profit, not gross. After $9,030 of deductions the taxable figure is $24,970, so there is no Tennessee tax either way. But the federal side drops by $1,947. The form reports what the platform paid out, it knows nothing about your costs, and no one subtracts them for you. On this example 27% of the gross never becomes taxable income, but only for the contractor who kept the records to prove it.