How RSUs are taxed in Tennessee for Nashville and remote TN workers

Tennessee does not tax personal wage income at the state level for typical residents. RSU vest FMV is still federal wage income in W-2 Box 1 nationwide — the Tennessee advantage is the absence of a state income tax layer on that wage income, not an exemption from tax altogether. Federal income tax and FICA still apply on vest day the same as in every other state.

Federal supplemental withholding on RSU vests uses IRS Pub. 15 rates — typically a flat rate on the vest portion that is withholding only, not your final federal marginal rate. FICA applies on vest FMV with Social Security up to the annual wage base and Medicare without a cap. For Tennessee residents, the withholding gap is often federal-only, but it can still be material at high income when a large vest stacks on salary.

Nashville healthcare and tech employers — HCA, Oracle's regional hub, and a growing startup scene — generate RSU questions from employees who expect no state layer but are surprised by federal withholding on the vest check. Moving from California or New York to Tennessee removes state income tax on post-move vests for typical TN residents, but pre-move vests while you were still a resident of a taxing state may remain connected to that state.

Your Tennessee vest pay stub typically shows federal and FICA lines without a Tennessee state income tax line for a pure Tennessee resident. W-2 Boxes 16–17 may show zero Tennessee state tax on vest wages. That is correct — not a payroll error. Employer payroll may still show old-state withholding if residence was not updated after a move; fix that with HR promptly.

Remote Tennessee residents working for employers in Georgia or California may see multi-state W-2 lines if another state claims work performed there. Stock options and RSUs follow the same Tennessee treatment at the state level when Tennessee-sourced wages. Compare Texas and Florida guides for similar no-tax-state RSU planning — the federal and FICA stack is identical; the state layer is what differs from Georgia or California.

• ✓Pay stub: federal and FICA on vest, no TN state income tax line for typical resident.
• ✓Federal supplemental withholding rate on vest confirmation.
• ✓Federal withholding gap vs marginal bracket.
• ✓Move date and prior-state W-2 if relocated.
• ✓Remote work policy for multi-state sourcing.
• ✓W-2 Box 1 includes vest FMV federally.
• ✓Social Security wage base before large late-year vest.

• ✓Vest pay stub federal and FICA lines.
• ✓W-2 Boxes 1, 4, 6.
• ✓Move records if part-year other state.
• ✓Vest confirmation FMV.
• ✓Prior-state allocation if multi-state W-2.

• ✓Multi-state W-2 with TN and another state same vest year.
• ✓Employer withheld Georgia or California tax while TN resident.
• ✓Part-year residency with large equity income in two states.
• ✓Prior-state audit notice after move to Tennessee.