See federal withholding and FICA for any salary and pay frequency. Texas adds no state income tax line.
Texas payroll taxes are unusual because Texas has no state personal income tax, so no state income tax is withheld from a Texas paycheck. A Texas worker only has federal taxes withheld: Social Security (6.2%), Medicare (1.45%), and federal income tax based on Form W-4. Texas also has no local income tax. The main state-level payroll tax is the employer-paid unemployment tax administered by the Texas Workforce Commission on the first $9,000 of each employee's wages.
- Texas has no state personal income tax and no local income tax, so a Texas paycheck shows no state or city withholding line at all.
- Federal taxes still apply in full: Social Security at 6.2% up to a $184,500 wage base for 2026, Medicare at 1.45% with no cap, plus federal income tax withholding from Form W-4.
- The Texas unemployment tax is paid by the employer, not the employee, on the first $9,000 of each worker's wages per year.
- For 2026 the Texas unemployment tax rate runs from 0.32% to 6.32%, with a 2.70% entry-level rate for new employers, all administered by the Texas Workforce Commission.
- Texas employers file the Employer's Quarterly Report (Form C-3) and must report new hires within 20 days to the Texas Office of the Attorney General.
What Makes Texas Payroll Different
Federal payroll tax is identical in every state. What changes from one state to the next is the second layer: state income tax withholding, state-run disability programs, and employer-side unemployment taxes. Texas has one of the lightest second layers in the country, because it has no state income tax.
This shapes everything about a Texas paycheck. There is no state withholding form, no state supplemental wage rate, and no local income tax. The only meaningful state payroll obligation sits on the employer side: the unemployment tax paid to the Texas Workforce Commission (TWC). For employees, that means the take-home calculation stops after federal taxes. For employers, it means the state compliance work is concentrated in quarterly wage reporting and new hire reporting rather than ongoing income tax withholding. The federal baseline that still applies is covered in the how payroll taxes work guide.
Employee Withholding Overview in Texas
A Texas employee sees fewer lines on a pay stub than a worker in a state with income tax. Every deduction on a standard Texas paycheck is federal. There is no state income tax line and no state disability line.
| Deduction | Who Pays | Rate (2026) | Wage Cap |
|---|---|---|---|
| Social Security (federal) | Employee + Employer | 6.2% | $184,500 |
| Medicare (federal) | Employee + Employer | 1.45% | None |
| Additional Medicare (federal) | Employee only | 0.9% | Wages over $200K ($250K MFJ) |
| Federal income tax withholding | Employee only | Varies (W-4) | None |
| Texas state income tax | N/A | None | No state income tax |
| Texas local income tax | N/A | None | No local income tax |
The federal lines work identically to any other state. For Social Security, the 2026 wage base is $184,500, after which Social Security stops for the year. Medicare has no cap, and an Additional Medicare Tax of 0.9% applies to wages over $200,000. Because the state and local income tax lines are both zero, the federal withholding from Form W-4 is the single largest variable on a Texas check. The mechanics of that election are explained in the W-4 withholding explained guide.
Does Texas Have State Income Tax Withholding?
No. Texas does not levy a personal income tax, so there is no state income tax withholding on wages and no state withholding certificate to complete. Texas is one of a small group of states with no individual income tax, and its constitution makes imposing one difficult, so this is a stable feature rather than a temporary rate.
For payroll, the practical effect is that employers in Texas do not register for a state withholding account, do not remit state income tax deposits, and do not file a state income tax withholding return. The federal Form W-4 still governs federal income tax withholding, but there is no Texas equivalent of California's DE 4 or New York's IT-2104. The only state payroll registration a Texas employer needs is with the Texas Workforce Commission for unemployment tax, covered below.
Texas Unemployment Tax (the State Employer Tax)
The Texas unemployment tax, sometimes called the state unemployment tax (SUTA), is the primary state-level payroll tax in Texas. It is paid by the employer to the Texas Workforce Commission and is not deducted from employee wages. It funds unemployment benefits for workers who lose their jobs.
| Component | 2026 Figure | Notes |
|---|---|---|
| Taxable wage base | $9,000 | First $9,000 per employee per year |
| Minimum tax rate | 0.32% | Experience-rated employers |
| Maximum tax rate | 6.32% | Experience-rated employers |
| New employer entry rate | 2.70% | All groups, no exceptions for 2026 |
| Replenishment Tax Rate (RTR) | 0.21% | Component of the effective rate |
| Employment and Training Investment Assessment (ETIA) | 0.10% | Component of the effective rate |
An employer's effective unemployment tax rate is the sum of five components: the General Tax Rate (based on the employer's own benefit ratio multiplied by the 2026 replenishment ratio), the Replenishment Tax Rate, the Obligation Assessment, the Deficit Tax Rate, and the Employment and Training Investment Assessment. A new Texas employer is assigned the 2.70% entry-level rate until enough history exists to calculate an experience rate. Because the wage base is only $9,000, the maximum unemployment tax for any single employee in 2026 is 6.32% of $9,000, or about $568.80 per year. Employers can model this employer-side cost with the employer payroll tax calculator.
Employer Payroll Obligations in Texas
A Texas employer carries the full set of federal employer taxes plus the state unemployment tax. The federal side, detailed in the employer payroll tax obligations guide, includes the matching 6.2% Social Security and 1.45% Medicare and the Federal Unemployment Tax (FUTA). On the state side, only the TWC unemployment tax applies.
| Employer tax | Rate (2026) | Wage base |
|---|---|---|
| Social Security match (federal) | 6.2% | $184,500 per employee |
| Medicare match (federal) | 1.45% | None |
| FUTA (federal, after state credit) | 0.6% | $7,000 per employee |
| Texas unemployment tax (TWC) | 0.32% to 6.32% | $9,000 per employee |
| Texas unemployment tax, new employer | 2.70% | $9,000 per employee |
FUTA starts at 6.0% on the first $7,000 of wages but drops to an effective 0.6% when the employer pays state unemployment tax on time, because the federal credit applies. Texas is not in a FUTA credit reduction status for 2026, so Texas employers receive the full credit. There is no state income tax deposit, no state disability tax, and no local payroll tax to administer. Federal deposit timing is covered in the payroll tax deadlines guide.
Supplemental Wages in Texas
Supplemental wages are payments outside regular salary: bonuses, commissions, overtime, and back pay. Texas has no state supplemental wage withholding rate, because there is no state income tax. A bonus paid to a Texas employee has no state income tax withheld at all.
Federal rules still apply to supplemental wages. The IRS flat supplemental withholding rate, Social Security, and Medicare are all calculated on a Texas bonus exactly as they would be anywhere else. The only difference from a state like California, which withholds a flat state percentage on bonuses, is that the Texas state portion is zero.
Does Texas Have a Local Payroll Tax?
No. No city, county, school district, or other local jurisdiction in Texas imposes a local income tax that is withheld from employee paychecks. This is a meaningful difference from states such as Pennsylvania, Ohio, and New York City, where workers see a separate local income tax line on every check.
Texas local governments raise revenue mainly through sales tax and property tax, neither of which is a payroll withholding. From the perspective of running payroll, there is no local tax registration, no local tax deposit, and no local tax line on a Texas pay stub.
Texas Filing and Payment Frequency
Because there is no state income tax, the only recurring state payroll filing is the unemployment tax report to the Texas Workforce Commission. Employers file the Employer's Quarterly Report (Form C-3), which reports total and taxable wages, and pay the unemployment tax due.
Quarterly reports are due by the last day of the month following the end of each calendar quarter: April 30, July 31, October 31, and January 31. TWC rules require most employers to report wages and pay the tax electronically. Separately, Texas employers must report each new hire and rehire within 20 days of the hire date to the Employer New Hire Reporting Operations Center, which is administered by the Texas Office of the Attorney General. Late or missing new hire reports carry a penalty of $25 per unreported employee. Federal deposit and return timing is described in the payroll tax deadlines guide.
How Take-Home Pay Works in Texas
The Texas calculation sequence is shorter than in an income tax state because it ends after federal taxes. Pre-tax deductions reduce the income tax base but not the Social Security and Medicare base, which are calculated on gross wages.
- Start with gross wages for the pay period.
- Subtract any pre-tax deductions (401(k), Section 125 health premiums) to find taxable wages for federal income tax.
- Apply federal income tax withholding using the Form W-4 and IRS Publication 15-T.
- Subtract Social Security (6.2%) and Medicare (1.45%) on gross wages.
- There is no state income tax line and no local income tax line.
- The remainder is net pay.
To see exact figures for a specific salary, filing status, and pay frequency, use the paycheck calculator or the take-home pay calculator for a full pre-tax benefits stack.
What Texas Employees Should Check on a Pay Stub
- No state income tax line: A correct Texas stub has no state withholding deduction. If a state income tax line appears, confirm it is not another state's tax from a prior job or relocation.
- No local tax line: A Texas stub should not show any city or local income tax deduction.
- Social Security cap: Late in the year, Social Security should stop once year-to-date wages reach $184,500 for 2026.
- Federal withholding accuracy: Because federal income tax is the only income tax on the check, confirm your Form W-4 reflects your actual filing situation.
- Gross vs. taxable wages: Pre-tax 401(k) or health premiums should reduce the federal income tax base but not the Social Security or Medicare base.
What Texas Employers Should Verify Before Running Payroll
- TWC registration: Confirm an active Texas Workforce Commission unemployment tax account and the assigned tax rate for the year.
- Wage base tracking: Confirm the payroll system stops applying unemployment tax once an employee reaches $9,000 in wages for the year.
- No state withholding setup: Confirm no Texas state income tax withholding is configured, since none exists.
- New hire reporting: Report each new hire to the Texas Office of the Attorney General within 20 days of the hire date.
- Quarterly filing: Confirm the Form C-3 quarterly report is scheduled for the April 30, July 31, October 31, and January 31 deadlines.
Texas Payroll Quick Facts (2026)
| State income tax | None |
| State withholding form | None (no state income tax) |
| Local income tax | None |
| State supplemental rate | None (federal rate still applies) |
| Unemployment tax wage base | $9,000 per employee |
| Unemployment tax rate (2026) | 0.32% to 6.32% |
| New employer rate (2026) | 2.70% |
| Quarterly report | Form C-3 (TWC) |
| New hire reporting | Within 20 days, Texas OAG |
| State agency | Texas Workforce Commission |
At LMN Tax Inc, the most common Texas payroll question we get from new employees is whether the larger net pay is a mistake. It usually is not. Moving from a state with income tax to Texas removes the state withholding line entirely, so the same gross salary produces a noticeably bigger paycheck. The error we see most often is on the employer side: businesses that hire their first Texas worker sometimes forget the Texas Workforce Commission unemployment account is a separate registration from their IRS payroll setup, and they miss the new hire reporting window with the Office of the Attorney General. Both are quick to fix but easy to overlook because there is no state income tax step to prompt them.
Real-World Example: A Texas Biweekly Paycheck
Daniel earns $60,000 per year and works in Houston. He is paid biweekly (26 pay periods), files Single on his W-4, and makes no pre-tax contributions. The federal income tax figure below is approximate and depends on the exact W-4 elections. The Social Security and Medicare lines are exact percentages.
Gross pay per period: $60,000 / 26 = $2,307.69
| Line | Amount |
|---|---|
| Gross wages | $2,307.69 |
| Social Security (6.2%) | −$143.08 |
| Medicare (1.45%) | −$33.46 |
| Texas state income tax | −$0.00 |
| Federal income tax withholding (approx.) | −$198.00 |
| Net pay (approx.) | $1,933.15 |
The $0.00 Texas state income tax line is the difference that matters. A worker in California earning the same salary would also have a State Disability Insurance deduction and a California income tax deduction, lowering net pay. Daniel's employer separately pays its matching Social Security and Medicare, plus the Texas unemployment tax on the first $9,000 of his wages. Run your own numbers with the paycheck calculator.
When Texas Payroll Logic Does Not Apply
- Remote and multi-state workers: A Texas resident who physically works in another state may owe that state's income tax on wages earned there. Texas has no income tax and therefore no reciprocity agreements, so each other state's rules apply on their own terms.
- Out-of-state employers: A worker living in Texas but employed by a company in an income tax state should confirm whether that state requires withholding, because employer location can matter.
- Prior-state withholding: An employee who recently moved to Texas may still see a prior state's tax on early checks if the payroll system was not updated.
- Self-employed and 1099 workers: Independent contractors are not subject to payroll withholding and handle federal income tax through estimated payments, as described in the self-employment tax guide.
- Pre-tax benefit elections: The simplified example above assumes no 401(k) or Section 125 deductions. Those change the federal income tax base and the net pay figure.
Frequently Asked Questions
If you are a Texas employee, use the paycheck calculator to see federal withholding and FICA for your salary and pay frequency, then confirm your Form W-4 reflects your actual filing situation, since federal withholding is the only income tax on your check.
If you are a Texas employer, confirm your Texas Workforce Commission unemployment tax account and assigned rate, then model your full cost-to-hire with the employer payroll tax calculator and review the employer payroll tax obligations guide for federal deposit and filing duties.
- Texas Workforce Commission: Your 2026 Tax Rates
- Texas Workforce Commission: Unemployment Tax Basics
- Texas Workforce Commission: Tax Report and Payment Due Dates
- Texas Office of the Attorney General: New Hire Reporting
- IRS Publication 15 (Employer's Tax Guide)
- IRS Topic 751: Social Security and Medicare Withholding Rates