Local guides / Tennessee / Memphis
Gig Workers in Memphis, TN: taxes and retirement for 2026
For rideshare and delivery drivers, shoppers and app-based workers in Memphis, TN. Tennessee has no state income tax on wages or self-employment income. Here are the 2026 rules, a worked example and the official sources.
What's different in Memphis
- Local income tax
- No city income tax in Memphis.
- Tennessee business tax: state business tax and City of Memphis business tax
- A gross-receipts tax with rates set by business classification, filed with the Tennessee Department of Revenue; a business with $100,000 or more in gross receipts in a county or city must register for and pay it (minimum tax $22), while a location with more than $3,000 but under $100,000 needs only a minimal activity license.
- City business license
- Businesses inside Memphis city limits need a combined City of Memphis ($15) and Shelby County ($15) business license through the Shelby County Clerk. Under state rules, a location with gross receipts above $3,000 and under $100,000 needs a minimal activity license, and $100,000 or more needs a standard business license.
- Also worth knowing
- Tennessee has no personal income tax on wages or self-employment income; its Hall income tax on interest and dividends was repealed for tax periods beginning January 1, 2021 (https://www.tn.gov/revenue/taxes/hall-income-tax.html). The $3,000 / $100,000 license thresholds come from the Tennessee Department of Revenue (https://www.tn.gov/revenue/taxes/business-tax/registration-and-licensing.html); classification rates and the $22 minimum tax are at https://www.tn.gov/revenue/taxes/business-tax/due-dates-and-tax-rates.html. We found no Memphis ordinance for gig, app-based, or freelance workers.
Tennessee rules for gig workers
- State income tax (2026)
- Tennessee has no state income tax on wages or self-employment income. Tennessee does not tax wages or self-employment income. Its only individual income tax, the Hall tax on interest and dividends, was repealed for tax periods beginning on or after January 1, 2021.
- Tennessee business tax (gross receipts)
- A tax on gross receipts, owed per county and city where you have $100,000 or more in sales; you then need a standard business license and must file returns. Between $3,000 and $100,000 you only need a $15 minimal activity license and do not pay the tax. The rate depends on the business classification and is a fraction of 1%: for example, 0.1875% for Classification 3 retailers (which includes many service businesses), 0.1% for Classification 4 contractors, and lower rates for wholesalers. The minimum is $22 per location ($44 inside a city that also levies the tax).
- Tennessee franchise and excise tax
- Applies to corporations, LLCs, LPs and business trusts, not to unincorporated sole proprietors. A single-member LLC owned by an individual is taxed as its own entity, because Tennessee only disregards SMLLCs owned by a corporation. Excise tax is 6.5% of net earnings and franchise tax is 0.25% of net worth, with a $100 minimum franchise tax for registered entities.
- Tennessee professional privilege tax
- A flat $400 a year, due June 1, for people licensed in Tennessee as attorneys, securities agents, broker-dealers, investment advisers or lobbyists. You pay it only once even if you hold more than one of these licenses.
- Marketplace contractor law (Public Chapter 648, 2018)
- Effective July 1, 2018, people who find work through an app or online marketplace are independent contractors, not employees, if the platform meets set conditions. The conditions include a written contractor agreement, no required hours, freedom to use other platforms and take other work, no required supplies or equipment, and no control over how the work is done. It does not cover rideshare (TNC) drivers or construction services.
- IRS 20-factor worker classification test (Public Chapter 337, 2019)
- Since January 1, 2020, Tennessee uses the 20 factors in IRS Revenue Ruling 87-41 to decide whether a worker is an employee or a contractor. This applies to state wage and hour law, unemployment insurance, workplace safety (OSHA) and drug-free workplace programs. Workers' compensation keeps its own existing factors.
- Voluntary Portable Benefit Plan Act (Public Chapter 131, 2025)
- Lets companies, including app-based companies, voluntarily pay into portable benefit accounts for independent contractors without that counting toward employee status. The accounts can fund health insurance, income replacement insurance, life insurance and retirement benefits. Any withholding from the worker's pay must be in a clear written agreement, and the worker must opt in and can opt out at any time.
Federal rules for 2026
Mileage is the big deduction
Business miles are deductible at the IRS standard rate: $0.725 a mile for miles driven January through June 2026 and $0.76 from July 1. Keep a log of each trip; Gigaverse lets you start and stop trips in the app.
App fees and phone
Platform service fees, a business share of your phone and plan, insulated bags and parking or tolls while working are deductible.
Self-employment tax
On top of income tax, self-employed people pay 15.3% on 92.35% of net profit: 12.4% Social Security up to the 2026 wage base of $184,500, plus 2.9% Medicare with no cap. Half of it is deductible.
Quarterly estimated taxes
No one withholds tax from self-employment income, so you generally pay estimates four times a year if you expect to owe $1,000 or more. For 2026 income the federal dates are April 15, June 15 and September 15, 2026, and January 15, 2027. Paying 100% of last year's tax (110% if your AGI was over $150,000) in four equal installments avoids the underpayment penalty.
A worked example
| Mileage deduction | $11,138 |
|---|---|
| Net profit after mileage | $33,863 |
| Self-employment tax | $4,785 |
| Self-employment tax the mileage saves | $1,574 |
Miles split evenly between the two 2026 rates. Federal figures only; the mileage also lowers income tax. Computed from 2026 IRS limits (Notice 2025-67, Rev. Proc. 2025-32) and the SSA wage base.
Free tools
Guides by job and platform
Questions
Is there a local income tax in Memphis?
No city income tax applies in Memphis. Tennessee has no state income tax on wages or self-employment income.
What local business taxes apply to self-employed gig workers in Memphis?
Tennessee business tax: state business tax and City of Memphis business tax: A gross-receipts tax with rates set by business classification, filed with the Tennessee Department of Revenue; a business with $100,000 or more in gross receipts in a county or city must register for and pay it (minimum tax $22), while a location with more than $3,000 but under $100,000 needs only a minimal activity license.
Do I need a business license to freelance from home in Memphis?
Businesses inside Memphis city limits need a combined City of Memphis ($15) and Shelby County ($15) business license through the Shelby County Clerk. Under state rules, a location with gross receipts above $3,000 and under $100,000 needs a minimal activity license, and $100,000 or more needs a standard business license.
Do gig workers in Tennessee pay state income tax?
Tennessee has no state income tax on wages or self-employment income. Tennessee does not tax wages or self-employment income. Its only individual income tax, the Hall tax on interest and dividends, was repealed for tax periods beginning on or after January 1, 2021.
Are there other Tennessee taxes for self-employed gig workers?
Tennessee business tax (gross receipts): A tax on gross receipts, owed per county and city where you have $100,000 or more in sales; you then need a standard business license and must file returns. Between $3,000 and $100,000 you only need a $15 minimal activity license and do not pay the tax. The rate depends on the business classification and is a fraction of 1%: for example, 0.1875% for Classification 3 retailers (which includes many service businesses), 0.1% for Classification 4 contractors, and lower rates for wholesalers. The minimum is $22 per location ($44 inside a city that also levies the tax). Tennessee franchise and excise tax: Applies to corporations, LLCs, LPs and business trusts, not to unincorporated sole proprietors. A single-member LLC owned by an individual is taxed as its own entity, because Tennessee only disregards SMLLCs owned by a corporation. Excise tax is 6.5% of net earnings and franchise tax is 0.25% of net worth, with a $100 minimum franchise tax for registered entities. Tennessee professional privilege tax: A flat $400 a year, due June 1, for people licensed in Tennessee as attorneys, securities agents, broker-dealers, investment advisers or lobbyists. You pay it only once even if you hold more than one of these licenses.
What Tennessee laws affect independent contractors and gig workers?
Marketplace contractor law (Public Chapter 648, 2018): Effective July 1, 2018, people who find work through an app or online marketplace are independent contractors, not employees, if the platform meets set conditions. The conditions include a written contractor agreement, no required hours, freedom to use other platforms and take other work, no required supplies or equipment, and no control over how the work is done. It does not cover rideshare (TNC) drivers or construction services. IRS 20-factor worker classification test (Public Chapter 337, 2019): Since January 1, 2020, Tennessee uses the 20 factors in IRS Revenue Ruling 87-41 to decide whether a worker is an employee or a contractor. This applies to state wage and hour law, unemployment insurance, workplace safety (OSHA) and drug-free workplace programs. Workers' compensation keeps its own existing factors. Voluntary Portable Benefit Plan Act (Public Chapter 131, 2025): Lets companies, including app-based companies, voluntarily pay into portable benefit accounts for independent contractors without that counting toward employee status. The accounts can fund health insurance, income replacement insurance, life insurance and retirement benefits. Any withholding from the worker's pay must be in a clear written agreement, and the worker must opt in and can opt out at any time.
Track it in one place
Gigaverse estimates your quarterly taxes from what you actually earn, logs business trips, categorizes expenses from your bank and answers money questions with your own numbers. Retirement accounts are coming soon.
Free · Takes 10 seconds · First 1,000 in line get launch perks
On Android? Get the app on Google PlayMore for Memphis, TN
Sources
- www.tn.gov/revenue/taxes/hall-income-tax.html
- www.dol.gov/agencies/whd/state/minimum-wage/tipped
- www.tn.gov/content/dam/tn/revenue/documents/tax_manuals/june-2025/Business-Tax-Manual.pdf
- www.tn.gov/revenue/taxes/franchise---excise-tax/due-dates-and-tax-rates.html
- www.tn.gov/revenue/taxes/professional-privilege-tax.html
- wapp.capitol.tn.gov/apps/BillInfo/Default.aspx?BillNumber=HB1978&GA=110
- wapp.capitol.tn.gov/apps/BillInfo/Default.aspx?BillNumber=HB0539&GA=111
- wapp.capitol.tn.gov/apps/BillInfo/Default.aspx?BillNumber=SB1377&GA=114
- www.tn.gov/revenue/taxes/business-tax.html
- memphistn.gov/licenses-and-permits
State and local facts researched from official sources and independently re-checked; last verified October 2026, next scheduled review 2027-01-02. Educational information for 2026, not tax, legal or investment advice. Rules change; check the official sources listed and a tax professional for your situation. Gigaverse AI, Inc. is a financial technology company, not a bank, and not itself a registered investment adviser or broker-dealer.