Free Texas Payroll Tax Calculator and TX Tax Rates

Updated January 13, 2021

Texas is known for being big state, but its payroll taxes are some of the smallest in the nation. Since there’s no state income tax in the Lonestar State, small business owners only have to contend with federal taxes. That means your job calculating payroll is a lot easier than employers in other states. Unfortunately it’s still not exactly easy.

Our Texas payroll calculator is here to help. Simply enter wage and W-4 information for each employee, and we’ll sort out your gross pay, net pay, and any federal deductions.

Federal Payroll Taxes

Though Texas-specific payroll taxes are a walk in the park with a cool autumn breeze and cotton candy setting sun, you still have the nuisance that is federal payroll taxes. But, the good news is our Texas payroll calculator can figure out federal payroll tax withholding and any other taxes your business needs to pay.

Here’s what you need to know when you’re calculating federal payroll taxes. For a more in-depth discussion on each of the federal payroll tax items, check out our step-by-step guide.

• Gross Wages:
  • For all your hourly employees, multiply their hours worked by the pay rate…and don’t forget to add any overtime hours worked!
  • For all your employees on salary, divide each employee’s annual salary by the number of pay periods per year.
• Deduct Pre-Tax Withholdings if your employees contribute to 401(k), FSA, or other pre-tax withholdings. Simply subtract their contributions from gross wages before applying payroll taxes.
• Deduct Federal Income Tax, which ranges from 0% to 37%. Detailed withholding information can be found through the IRS website.
• Deduct FICA Taxes (and Match):
  • For Social Security tax, withhold 6.2% of each employee’s taxable wages up until they have earned a total of $142,800 for the year. As an employer, you also need to pay this tax.
  • For Medicare tax, withhold 1.45% of each employee’s taxable wages up until they have reached a total earning of $200,000 for that year. You will also pay this tax. For employees who make salaries above $200,000, withhold an Additional Medicare Tax of 0.9%. Only the employee is responsible for paying the Additional Medicare Tax.
• Pay FUTA Unemployment Tax, which is 6% of the first $7,000 of taxable income. If you pay state unemployment taxes on time and in full, you are eligible for a tax credit of up to 5.4%. Only employers are responsible for paying FUTA taxes.
• Subtract Post-Tax Deductions, such as child support, court-ordered wage garnishments, etc. If applicable, you will receive a letter from the court stating the amount of the deduction.

Texas Unemployment Insurance

While there’s no state income tax in Texas, there’s a variety of other taxes you should make sure are taken care of. Currently, Texas unemployment insurance rates range from 0.31% to 6.31% with a taxable wage base of up to $9,000 per employee per year. New employers should use the greater of the average rate for all employers in the NAICS code or use 2.7%. Texas will be announcing 2021 tax rate changes in February.

To figure out your Effective Tax Rate, simply add these 5 components: General Tax Rate (GTR) + Replenishment Tax Rate (RTR) + Obligation Assessment Rate (OA) + Deficit Tax Rate (DTR) + Employment Training Investment Assessment (ETIA).

If you would like to estimate your Texas Unemployment Insurance benefits, click here.

Now Write Your Employees’ Paychecks!

You’ve figured out all your payroll needs, so now you can make your small business stand out in the big state of Texas. Get your signature ready because after you’ve calculated your employees’ net pay by implementing all deductions, it’s time to write those checks.

All you have to worry about is paying your employees on time and setting aside any taxes your company is responsible for (FICA and UI payments, we’re looking at you).

You need to fill out Forms 940 (annually) and 941 (quarterly), but if you prefer ongoing fulfillment, payment can be made via the EFTPS payment system. Find further information on the IRS here.

Additional TX Payroll Tax Resources:

If you’re still looking to fill your brain with more juicy payroll tax facts, here are some additional resources and contact information for those who know Texas payroll like the back of their hand:

The Texas Comptroller of Public Accounts: All the phone numbers you may need.

Employer and Tax Information directly from the Secretary of State himself, and a phone number for good measure: (512) 463-5555