2026 tax year · Tennessee
RSU tax in Tennessee
Tennessee takes nothing from a vest, but your employer still under-withholds the federal share, $2,970 of it on the example below.
What a $60,000 vest actually costs in Tennessee
A single filer already earning $180,000 in salary. The vest stacks on top of that, so it fills the highest brackets rather than starting at the bottom:
| Withheld by your employer at 22.0% | $13,200 |
| Federal tax the vest actually costs | $16,170 |
| Federal shortfall, owed in April | $2,970 |
| Tennessee income tax on the vest | none |
| Total still to find | $2,970 |
The withholding rate is flat, 22.0% below $1 million of supplemental pay. And takes no account of your salary. That is why the gap grows the more you earn.
The gap widens with salary
| Salary | Withheld | Actually owed | Shortfall | Tennessee tax |
|---|---|---|---|---|
| $90,000 | $13,200 | $13,764 | $564 | , |
| $160,000 | $13,200 | $14,570 | $1,370 | , |
| $260,000 | $13,200 | $20,630 | $7,430 | , |
How Tennessee treats a vest
Tennessee has no personal income tax, so a vest is a federal-only event here, $16,170 of federal tax on $60,000 of vesting stock, and nothing to the state.
What the same vest costs around Tennessee
Total income of $240,000 in the states Tennessee borders:
| State | Its tax | vs Tennessee |
|---|---|---|
| Kentucky | $8,400 | +$8,400 |
| Arkansas | $9,283 | +$9,283 |
| North Carolina | $9,576 | +$9,576 |
| Mississippi | $9,600 | +$9,600 |
| Missouri | $11,350 | +$11,350 |
| Alabama | $11,960 | +$11,960 |
| Georgia | $12,456 | +$12,456 |
| Virginia | $13,543 | +$13,543 |
- Kentucky would take $8,400 more, $8,400 against Tennessee's $0.
- Arkansas would take $9,283 more, $9,283 against Tennessee's $0.
- North Carolina would take $9,576 more, $9,576 against Tennessee's $0.
- Mississippi would take $9,600 more, $9,600 against Tennessee's $0.
- Missouri would take $11,350 more, $11,350 against Tennessee's $0.
- Alabama would take $11,960 more, $11,960 against Tennessee's $0.
- Georgia would take $12,456 more, $12,456 against Tennessee's $0.
- Virginia would take $13,543 more, $13,543 against Tennessee's $0.
RSU questions in Tennessee
Should I sell at vest?
Selling immediately raises the cash for the $2,970 you still owe and leaves no capital gain, because the sale price equals the price you were already taxed on. Holding turns it into an investment decision, any further gain is a capital gain, and any fall is a loss you take on shares you were already taxed on at the higher value.
I moved to Tennessee mid-vest, who taxes it?
Both states, split by workdays. The income is allocated across the vesting period, not assigned to wherever you happened to live on the vesting date. The state you left can still claim its share, and California, New York and Massachusetts pursue it hardest.