Texas Payroll Tax Requirements Here’s a comprehensive guide to Texas payroll tax rates and regulations to help you stay compliant. Explore More Default State 1099 State Filing W-2 State Filing ACA State Filing Payroll Requirements Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Rhode Island New Jersey District of Columbia California Massachusetts Connecticut Hawaii Maryland Minnesota Vermont Washington Alaska Arizona Arkansas Florida Texas Tennessee State Registration New Hire Reporting State Tax Requirements State Tax Payments State Tax Filings Payroll Texas Payroll Filings and Requirements TaxBandits FREE Payroll Automate the payroll process with TaxBandits What's included for FREE? Run Unlimited Payrolls Accurate Payroll & Tax Calculations Secure Portal for Employee & Contractor Generate Pay Stubs Instantly Includes Bonus & Off-Cycle Payroll Includes Bonus & Retirement Plan Get Started Now Employer's Payroll Tax & Filing Requirements for the State of Texas (TX) Are you managing payroll in Texas? It is one of the states that does not require state income tax. However, employers need to be aware of other key requirements, such as unemployment insurance and state labor laws. Below is a comprehensive guide for Texas payroll tax filing, outlining all the requirements to help keep your business compliant. Applicable Texas Taxes In Texas, employers are responsible for a few key state and federal payroll taxes. Here’s a quick overview of the taxes in Texas. While Texas does not have a state income tax, businesses must still manage Unemployment Tax. At the federal level, employers are required to withhold and pay Federal Income Tax, Social Security, and Medicare (FICA) taxes. Employers are also responsible for the Federal Unemployment Tax (FUTA). Understanding these obligations is essential for maintaining compliance and avoiding penalties. Registering for Texas State Unemployment Insurance If you run a business in Texas and become liable under the Texas Unemployment Compensation Act, you must register with TWC (for unemployment tax) within 10 days of becoming liable. Steps to Register with the Texas Workforce Commission (TWC) Step 1: Go to the Unemployment Tax Registration (UTR) system on the TWC website. Step 2: You may need to create or use an existing TWC user ID/password to log in. Step 3: Fill in business ownership, payroll, and location information (you might need your FEIN, business address, number of employees, etc.). Step 4: The system will determine if your business is liable, and if so, immediately issue a TWC tax account number. Step 5: TWC will mail an “Employer Liability Notice” within ~2 weeks. After registration, you’ll use Unemployment Tax Services (UTS) to file reports and pay taxes. If you need help to register, call the agency at (512) 463-2699. Texas New Hire Reporting All Texas employers are required to report newly hired and rehired employees to the Texas New Hire Reporting Center. This helps the state enforce child support orders, detect unemployment insurance fraud, and maintain accurate employment records. Who needs to report? All Texas employers are required to report newly hired or rehired employees within 20 days from the date of joining. What information must be reported? To complete the new hire report, you’ll need the following information: For Employer details: Business name, Address, and Federal Employer Identification Number (FEIN) For Employee details: Name Address Social Security Number (SSN) Date of hire How to report new hires in Texas? You can report new hires to the Texas New Hire Reporting Center in the following ways: 1. Online (Recommended) Visit the Texas New Hire Reporting Portal to complete the report. 2. Mail You can complete the new hire report and mail to: Texas New Hire Reporting Center P.O. Box 149224 Austin, TX 78714-9224 3. Fax You can also fax the completed new hire report to (800) 850-6442. What are the penalties for not filing a New hire report in Texas? Employers who knowingly fail to report a new hire can face a penalty of $25 per employee. For conspiring with an employee to avoid reporting, the penalty is $500. Texas State Payroll Tax Requirements Texas is one of the few states that does not have a state income tax, which simplifies payroll administration for employers. However, businesses must still comply with other state-specific requirements, including unemployment tax (SUTA), workers’ compensation rules (if applicable). This section outlines the key state tax and reporting obligations that every Texas employer must follow to stay in compliance. Texas State Income Tax Texas is one of the states that does not impose state income tax, which means employers are not required to withhold state income tax from employee paychecks. This makes payroll processing simpler compared to many other states. Texas State Unemployment Tax State unemployment taxes are state-level payroll taxes that employers pay to fund unemployment benefits for eligible workers who lose their jobs through no fault of their own. Who is liable? Employers are liable for SUI taxes if they meet the following conditions: if Pay $1,500 or more in a calendar quarter. Employ at least one worker for any part of the day in 20 different weeks. Non-profit organization with 4 or more employees in 20 different weeks Household employer who pays $1000 or more in wages in a calendar quarter An agricultural employer who pays $20,000 or more in a calendar quarter or employs 10 or more workers for any of the 20 weeks in a year. Texas State Unemployment Tax Rate Employers in Texas must pay State Unemployment Insurance (SUI) taxes to support the state’s unemployment benefit program. The following table outlines the applicable SUI tax rates in Texas: Texas SUI Tax Details Taxable Wage Base $9,000 Tax Rate Range 0.25% – 6.25% New Employer Rate 2.7% Texas Minimum Wage Requirements Texas follows the federal minimum wage standard of $7.25 per hour, which applies to most employees in the state. Employers must ensure all workers are paid at least this rate, including a separate, reduced rate for tipped workers—as long as tips make up the difference. Wage Texas Tax Rate (per hour) Federal Rates (per hour) Minimum wage $7.25 $7.25 Tipped Minimum Wage $2.13 $2.13 Actual Tip Credit $5.12 $5.12 Overtime Regulations Texas follows the federal Fair Labor Standards Act (FLSA) for overtime pay. Under the FLSA, employees must be paid 1.5 times their regular hourly rate for all hours worked over 40 in a workweek. Who qualifies for overtime payment? Not all employees in Texas are eligible for overtime. In general, non-exempt employees—those who earn less than $684 per week on a salaried basis or who do not meet specific job duty requirements—must receive overtime pay for any hours worked beyond 40 in a workweek. Hourly workers are typically non-exempt and automatically qualify. Tipped employees (such as restaurant servers) are also entitled to overtime. Their overtime rate must be calculated based on Texas’s minimum wage (which matches the federal rate), not just their cash wage, and must reflect time-and-a-half after 40 hours. Exemption: Certain employees are exempt from overtime if they meet both the salary and duties tests outlined by the FLSA. In Texas, this generally includes: Executive employees Administrative employees Professional employees To qualify for exemption, these employees must earn at least $684 per week on a salaried basis and perform specific job functions defined by the FLSA. Texas Termination Reports Texas requires employers to report terminated employees to the Texas Workforce Commission (TWC), primarily to keep state records up to date for child support enforcement and other wage-related programs. Who needs to report? All employers in Texas who have previously hired employees and reported them as new hires. Includes: Corporations, LLCs, partnerships, sole proprietors Nonprofit organizations Government agencies Household employers Independent contractors are typically excluded from termination reporting. When is the deadline for submitting the termination report in Texas? Termination reports must be submitted within 20 days of the employee’s last day of work or termination date. How to report termination in Texas? Employers can report terminated employees through: 1. Online (Recommended) Visit the Texas Workforce Commission (TWC) Employer Benefits Services portal (Reporting Terminated or Separated Employees) and complete the termination report. 2. Mail You can complete the termination report and mail it to: Texas Workforce Commission 101 E. 15th Street Austin, TX 78778-0001 3. Fax You can also fax to (512) 463-2839 to report the terminated employees. Texas State Tax Payments Texas State Unemployment Insurance (SUI) In Texas, employers must submit State Unemployment Insurance (SUI) tax payments also called Unemployment Tax, to the Texas Workforce Commission (TWC) on a quarterly basis. Quarterly filers – Payments are due by the last day of the month following the end of each calendar quarter: Quarter Filing Deadline Quarter 1 (January - March) April 30 Quarter 2 (April - June) July 31 Quarter 3 (July - September) October 31 Quarter 4 (October - December) January 31 Methods to deposit SUI taxes To deposit federal and state unemployment taxes, you can use various payment methods, which include: Every employment tax must be paid electronically. Texas taxes can be deposited using certain payment methods, which include: ACH transactions: One of the convenient methods to deposit the Texas taxes using TWC’s Unemployment Tax Services. Electronic Fund Transfer (EFT): Easily deposit your taxes via EFT to stay compliant. Credit or Debit Card: Deposit your Texas taxes using a credit or debit card through a third-party processor. Penalties: If you fail to pay State Unemployment Insurance (SUI), here are the penalties for late payment. 5% penalty if payment is 1–15 days late. An additional 5% penalty (total 10%) if payment is more than 15 days late. Interest of 1.5% per month (or part of a month) accrues on the unpaid balance until it is fully paid. Texas State Filings Texas employers must file quarterly unemployment tax reports (Form C-3) and make timely SUI payments to the Texas Workforce Commission. Quarterly State Unemployment Filings Form C-3: The Employer’s Quarterly Report is used by employers in Texas to report the unemployment taxes. It must be reported using Form C-3 to the Texas Workforce Commission (TWC). Due Dates for Quarterly Filings: Unemployment insurance tax report and payments are due by the last day of the month following the end of the calendar quarter. If any of the due dates fall on a weekend or holiday, the following business day will be considered as the due date. Quarter Filing Deadline Quarter 1 (January - March) April 30 Quarter 2 (April - June) July 31 Quarter 3 (July - September) October 31 Quarter 4 (October - December) January 31 Run payroll for free with TaxBandits. With TaxBandits, you can process payroll in less than 5 minutes with no limits. Everything is automated, including federal and state filings and payments. Explore More Success Starts with TaxBandits The Smart Business Owners Choice Create a Free Account