Texas Payroll & Paycheck Tax Calculator

TTo legally hire and pay employees in Texas, you’ll need to register with the Texas Workforce Commission (TWC) for a State Unemployment Tax (SUTA) account. You’ll pay state-required unemployment insurance this way. It’s a straightforward application online at the TWC’s Unemployment Tax Registration portal. And most Texas employers must register, as long as they’re a for-profit, non-exempt company employing Texans to work in Texas.

The good news for employers is that the paperwork is smaller in Texas. But it’s not non-existent. Start with:
• Federal W-4 withholding forms: They’re still required in Texas
• Federal forms from the IRS:
• Form 941 (Quarterly federal tax return)
• Form 940 (Federal Unemployment Tax, FUTA)
• W-2 and 1099 (Year-end wage reporting)
• New Hire Reports: File this within 20 days of your new employee’s start date
• Proof of Worker’s Compensation insurance: Texas is the only state that doesn’t require it, but you’ll need to report if you’re opting out. 
• File DWC Form 005 with the Texas Division of Workers’ Compensation annually, notify employees that you’re a non-subscriber, post a notice in the office, and report any workplace injuries to the DWC.  
Non-subscriber employers will be responsible for worker injuries if the worker proves the employer was, in some way, negligent in causing the accident.

Texas follows the federal minimum wage ($7.25 per hour), though some cities like San Antonio, Austin, and Dallas have higher local wages for government contracts. For example, in Austin, the wage is $21.63. For tipped employees, the minimum wage is $2.13 per hour.

As for overtime, Texas follows the Fair Labor Standards Act (FLSA), and non-exempt employees earn 1.5x pay after 40 work hours per week. There’s no daily overtime requirement. No overtime is required for weekends or holidays (unless over 40 hours), and no double-time pay, even after a 12+ hour shift

Texas requires at least 2 monthly pay periods for most employees, and allows weekly or biweekly schedules, too. When employees quit, their final paycheck is due on the next regular payday, but employers must pay terminated employees within 6 days.

Paid leave is not mandatory in Texas, and it doesn’t require any paid sick, holiday, or family leave (though the federal Family and Medical Leave Act — FMLA — may apply). However, if you offer prospective employees paid time off, you must honor it or risk breaching your contract with employees.

Since Texas has no state income tax, payroll calculations are simpler. However, employees and employers can also get a straightforward look at their obligations, including:
• Federal income tax withholding
• FICA taxes (Social Security and Medicare)
• Unemployment taxes (FUTA and SUTA)
• Local taxes, where applicable, like city wage ordinances

Employers must file quarterly wage reports for Texas, even if they don’t pay any wages during the period. And remember to pay SUTA taxes that are paid by employers only — not deducted from employee paychecks. Rates vary, but new employers typically pay 2.7% on the first $9,000 per employee. After 2-3 years in business, rates adjust based on layoff rates, typically ranging from .23 to 6.23%.