©2023 OnPay, Inc.
Insurance offered through OnPay Insurance Agency, LLC (CA License #0L29422)
Ready to get started?
Updated: June 27, 2023
Payroll taxes in Texas 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 much easier than employers in other states.
Though Texas-specific payroll taxes are a less of a tightrope, you still have the nuisance that is federal payroll taxes. But, the good news is our Texas payroll calculator at the top of this page 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 in 2023. New employers should use the greater of the average rate for all employers in the NAICS code or use 2.7%.
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).
You can also use the Texas Workforce Commission’s unemployment benefits estimator if you want to estimate your Texas Unemployment Insurance benefits.
Federal and state law requires employers to report new hires and rehires within 20 calendar days of the employee’s first day on the job (which is also the day the employee starts earning wages). New hires can be reported online through Texas’s employer portal.
Are you a multi-state employer? Be sure to select Texas as your reporting state. According to the attorney general’s website, it is the only way the Texas Workforce Commission (TWC) can receive new hire information on Texas residents who may be:
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.
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.
These rates are based on local legislation and can change at any time. Always consult a tax professional if you are unsure about your obligations.
Employers in Texas can use the calculator at the top of this page to quickly calculate their employees’ gross pay, net pay, and deductions (and feel confident when cutting paychecks). But every now and then, employers run into situations that require a bit more wrangling. For example, do your high-performing employees receive bonuses from time to time? Remember that Uncle Sam considers this type of payment to be supplemental wages and requires taxes to be withheld. Also, if you have workers who come and go, there may be times when you need to figure out what their final paycheck will be. So, if you can use a little more help managing the math, check out some of the calculators listed below.
Try OnPay out yourself to see how easy payroll and HR can be. To get started, just share a few basic details about your business. Our team of pros will set everything up and import your employees’ information for you.