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Navigating Texas Payroll Taxes
While federal payroll obligations are essential, Texas employers must also comply with Texas state-level unemployment insurance (UI) tax and new hire reporting requirements. This guide covers everything employers need for Texas New Hire Reporting and Quarterly Unemployment Insurance (UI) Tax Reporting, including Form C-3 (Employer’s Quarterly Report) and related wage adjustment forms.
Texas New Hire Reporting
New Hire Reporting is a mandatory requirement for employers in Texas to report newly hired and rehired employees to the Texas Employer New Hire Reporting Program, administered by the Office of the Attorney General (OAG).
The program supports child support enforcement and helps ensure compliance with state and federal laws.
Who must report
All Texas employers must report:
- Newly hired employees
- Rehired employees (when a new Form W-4 is completed)
This requirement applies to both in-state and out-of-state employers with employees performing services in Texas
What to report
When reporting a new hire, employers must provide the following required information:
Employer information
- Federal Employer Identification Number (FEIN)
- Employer name
- Employer address (for income withholding orders)
Employee information
- Full name
- Social Security Number (SSN)
- Home address
- Date of hire (first day services are performed for wages)
When to report
Employers must submit new hire reports within 20 calendar days of the employee’s first day of work.
How to report
Texas offers multiple reporting methods through the Texas Employer New Hire Reporting Program:
1. Online (Recommended):
- Employers can report new hires electronically through the official OAG portal.
- The portal supports direct entry and electronic submissions and is the fastest way to stay compliant.
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2. Fax:
- Complete the Texas Employer New Hire Reporting Form
- Fax to 1-800-732-5015
- Retain fax confirmation for records
3. Mail:
Send the completed form to:
Central File Maintenance
P.O. Box 12048
Austin, TX 78711-2048
Use certified or trackable mail for proof of delivery.
New Hire Reporting Penalties
Failure to report the new hire report to the state of Texas may result in:
- $25 penalty per unreported employee
- $500 penalty for conspiring to file a false or incomplete report or to avoid reporting altogether
Corrections
Corrections to previously submitted new hire reports can be made through the Texas Employer New Hire Reporting Program, either online or by resubmitting corrected information using the official form.
Form C-3: Texas Unemployment Insurance (UI) Reporting
Texas employers use Form C-3 (Employer’s Quarterly Report) to report quarterly wages and pay unemployment insurance (UI) taxes to the Texas Workforce Commission (TWC).
This reporting ensures the Texas Unemployment Compensation Fund is properly funded to provide benefits to workers who become unemployed through no fault of their own.
Who Must File
All employers subject to the Texas Unemployment Tax Act (TUTA) must file Form C-3 each quarter.
This requirement applies even if:
- No wages were paid during the quarter, or
- No UI tax is due for the reporting period
Any employer with an active Texas Workforce Commission employer account must submit Form C-3 on time.
Taxable Wage Base & Rates
Texas UI taxes are calculated based on each employee’s taxable wages and the employer’s assigned UI tax rate.
-
Annual Wage Base (2025)
Texas UI Taxable Wage Base: $9,000 per employee per year — employers pay UI tax on the first $9,000 in wages paid to each employee annually.
-
Contribution Rates (2025)
Texas assigns rates annually based on the employer’s experience.
- New Employers (2025): 2.7% (or the industry average rate if it is higher) — Texas law sets a predetermined rate for new employers based on the NAICS industry average or 2.7%, whichever is greater.
- Experienced Employers (2025): For employers with experience rating (i.e., those who have paid wages and have benefit charge history), Texas assigns a rate between 0.25% (minimum) and 6.25% (maximum) for 2025.
What to Report
Employers must include the following information on Form C-3:
-
Employee Wage Information:
- Total gross wages paid
- Taxable wages subject to Texas UI tax
-
Employer Details:
- Legal business name
- Texas Workforce Commission employer account number
- Federal Employer Identification Number (FEIN)
- Reporting quarter
-
Quarterly UI Tax Data:
- Taxable wages
- UI tax due for the quarter
When to File
Form C-3 must be filed quarterly. The due dates are:
- Q1 (Jan-Mar): April 30
- Q2 (Apr-Jun): July 31
- Q3 (Jul-Sep): October 31
- Q4 (Oct-Dec): January 31 of the following year
How to File
You have several filing options to file Form C-3:
1. Online (Preferred):
Employers can file Form C-3 electronically through the Texas Workforce Commission online portal:
Online filing allows employers to:
- Enter quarterly wage and tax information
- Submit Form C-3 electronically
- Pay UI taxes through approved electronic payment methods
Electronic filing is encouraged for accuracy and faster processing.
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2. By Mail:
- Download Form C-3
- Complete all the required information
-
Mail the completed Form C-3 to:
Texas Workforce Commission
P.O. Box 149037
Austin, Texas 78714-9037
Tax Payments
UI tax payments must be submitted by the quarterly due date.
Texas Workforce Commission accepts payments through approved electronic methods or other options authorized by TWC.
Texas Unemployment Insurance Penalties
Texas assesses penalties for late filing based on how late the report is submitted.
Penalty for Late Filing of Form C-3
| Late Filing Period | Penalty |
|---|---|
| Filed within 1–15 days after the due date | $15.00 flat penalty |
| Filed after 15 days, but by the last day of the month after the due date | 0.05% of taxable wages + $30.00 |
| Filed in the second month after the due date | 0.15% of taxable wages + $60.00 |
| Filed during or after the third month after the due date | 0.35% of taxable wages + $90.00 |
Penalties are calculated using the employer’s taxable wages for the quarter (Item 14 of Form C-3) and the date the report is actually filed.
Late Payment Penalty
If the UI tax payment is not paid by the due date, Texas charges interest according to TUCA Section 213.021
- Interest rate: 1.5% per month (or portion of a month) of the tax amount due.
- Interest begins accruing on the first day after the due date (same as late payment).
- Maximum interest cap: 37.5% of the tax due.
Interest continues to accrue each month until the tax is paid in full
Form C-3 Corrections
If you discover an error after filing Form C-3 (Employer’s Quarterly Report) with the Texas Workforce Commission (TWC), you must correct it promptly to keep your unemployment tax account and wage records accurate.
Texas allows employers to correct previously filed wage reports primarily through its Unemployment Tax Services (UTS) online system.
- Log in to Unemployment Tax Services (UTS)
- Select your employer tax account
- Go to Report Filing → Adjust Wage Report
- Choose the quarter to be corrected
- Make the necessary updates and provide a reason for the adjustment
- Submit the adjusted report and retain the confirmation for your records
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Frequently Asked Questions
Who is required to file Texas new hire reports?
All employers with employees working in Texas must report newly hired and rehired employees to the Texas Employer New Hire Reporting Program, operated by the Texas Office of the Attorney General (OAG). This applies to both in-state and out-of-state employers with Texas workers.
What is the deadline for reporting a new hire in Texas?
Texas employers must report new hires within 20 calendar days of the employee’s first day of work. Late or missing reports may result in penalties under Texas law.
Are independent contractors required to be reported as new hires in Texas?
No. Texas does not require employers to report independent contractors through the New Hire Reporting Program. Only employees must be reported.
What information is required when filing a Texas new hire report?
Employers must report:
- Employer FEIN and business name
- Employer address (for income withholding orders)
- Employee's full name
- Employee Social Security Number (SSN)
- Employee home address
- Date of hire (first day services are performed for wages)
What is Form C-3 in Texas unemployment insurance reporting?
Form C-3 (Employer’s Quarterly Report) is used by Texas employers to report quarterly wages and pay unemployment insurance (UI) taxes to the Texas Workforce Commission (TWC).
Do I need to file Form C-3 if I had no employees or paid no wages?
Yes. Texas requires employers to file Form C-3 every quarter, even if:
- No wages were paid, or
- No unemployment tax is due
Failing to file a zero-wage report may still result in penalties.
How do I correct an error on a previously filed Texas Form C-3?
Employers can correct Form C-3 by:
- Logging into Texas Unemployment Tax Services (UTS) and submitting an adjusted wage report online, or
- Filing adjustment forms (Form C-5 and/or Form C-7) if online correction is unavailable
Corrections may result in additional tax due or a credit for overpayment.
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