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.
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.
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.
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).
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