Overview
Texas is one of nine states that does not levy a state income tax on earned wages. Texas is one of the most employer-friendly states when it comes to payroll taxes, as there is no state income tax on earned wages. This makes Texas a popular choice for businesses of all sizes. Employers need only focus on federal withholdings and the state unemployment insurance contribution.
What Makes Texas Unique: Texas has no state income tax, the second most populous state in the nation, yet employers face zero state withholding obligations. Texas employers must still comply with FUTA and SUTA (called TWC Unemployment Tax).
State Income Tax (SIT)
Texas does not impose a state income tax on individual wages. This means employers do not need to withhold any state income tax from employee paychecks. Employees get to keep more of their gross pay, and payroll administrators have one fewer withholding calculation to manage.
Setup Note: Even though there is no state income tax, if you have employees who work in multiple states, you may still need to set up Texas in your payroll system to ensure multi-state withholding calculations work correctly.
Employer State Unemployment Tax (SUTA)
Even without a state income tax, Texas employers are still required to pay into the state’s unemployment insurance fund.
Your specific SUTA rate will be assigned by the state based on your company’s history with unemployment claims. New employers typically start at the default rate until they build enough experience for an individualized rate.
| Tax Type | Employer-paid (not deducted from employee wages) |
| Default New Employer Rate | 2.7% |
| Rate Assignment | Experience-rated; assigned annually by the state based on unemployment claims history |
How to Set Up Texas Payroll Withholding
Follow these steps to begin withholding Texas payroll taxes for your employees:
- Obtain your Federal EIN at irs.gov
- Register for Texas Unemployment Tax with the Texas Workforce Commission at twc.texas.gov
- No state income tax withholding registration required
- Submit a Netchex tax team request to enable Texas SUTA
- Have each employee complete their tax forms with an automated onboarding task in Netchex, digitally storing tax forms
- Configure any additional tax settings in the employee profile
Once setup is complete in Netchex, the system will automatically calculate, withhold, and remit all Texas payroll taxes on your behalf.
Texas Payroll Tax Filing Deadlines
The following are general filing and deposit deadlines for Texas payroll taxes. Deadlines may vary based on your employer size and deposit frequency. Always verify current schedules at TexasWorkforce Commission.
| Tax | Deposit Frequency | Typical Due Date |
| SUTA (TWC Unemployment Tax) | Quarterly | April 30, July 31, Oct 31, Jan 31 |
Note: Deadlines are subject to change. Always confirm current requirements directly with Texas Workforce Commission at https://www.twc.texas.gov/businesses/unemployment-tax.
Resources & Links
The following official resources will help you stay current on Texas payroll tax requirements:
Frequently Asked Questions: Texas Payroll Taxes
Does Texas have a state income tax?
No. Texas does not impose a state income tax on wages.
What is Texas’s SUTA wage base?
Texas’s SUTA wage base is $9,000 per employee per year. Verify at twc.texas.gov.
Does Texas have local payroll taxes?
No. Texas does not have local income or payroll taxes.
What payroll taxes are required for Texas employers?
Texas employers owe FUTA and Texas Unemployment Tax (SUTA). No state income tax withholding is required.
Federal Taxes That Apply
While Texas keeps things simple at the state level, all standard federal payroll taxes still apply:
| Federal Income Tax (FIT) | Based on W-4 – Employee (withheld by employer) |
| Social Security (FICA) | 6.2% each – Employee and Employer |
| Medicare | 1.45% each – Employee and Employer |
| Additional Medicare | 0.9% – Employee only (wages over $200K) |
| FUTA | 6.0% (typically 0.6% after credit) – Employer only |
What This Means for Your Payroll
Running payroll in Texas is relatively straightforward. Without a state income tax, you’ll primarily focus on federal withholdings and the employer-paid SUTA contribution. The key things to stay on top of are making sure your SUTA rate is current each year and that federal withholdings are calculated correctly based on each employee’s W-4.
Disclaimer: This content is provided for general informational purposes only and does not constitute legal, tax, or accounting advice. Netchex does not provide tax or legal guidance and makes no representations regarding the accuracy or applicability of this information. Laws and regulations may change. The information on this page reflects payroll tax guidelines as of March 2026.
Let Netchex Handle the Complexity
Staying compliant with payroll taxes doesn’t have to be stressful. Netchex automatically calculates, withholds, and files your payroll taxes so you can focus on what matters most — your people.
Why Netchex
Choosing a partner who simplifies payroll and integrates with your HR, benefits, and time tracking systems changes everything.
Netchex stands out with:
Integrated Payroll + HR + Time & Attendance in one platform
Built-in compliance and tax automation (no surprises or lagging updates)
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