Federal & State Regulations | Employment taxes - Texas

Summary of differences between federal and state regulations

Income tax withholding

Texas does not have a personal income tax.

Unemployment taxes

All states finance UC primarily through contributions from subject employers on the wages of their covered workers. In addition, three states (Alaska, New Jersey, and Pennsylvania) collect contributions from employees. These taxes are deposited by the state to its account in the UTF in the Federal Treasury, and are withdrawn as needed to pay benefits.

Many states have adopted a higher tax base than what is provided in FUTA. Hawaii's wage base is usually higher and changes periodically. In all states, an employer pays a tax on wages paid to each worker within a calendar year up to the amount specified in state law. In addition, most of the states provide an automatic adjustment of the wage base if federal law is amended to apply to a higher wage base than that specified under state law. As a result of the many variables in states taxable wage bases and rates, benefit formulas, and economic conditions, actual tax rates vary greatly among the states and among individual employers within a state.

Wages subject to unemployment tax in this state equal $9,000.

Minimum and maximum rates in this state are 0.067 and 8.47%. Rates apply to experience rated employers only and do not include applicable surtaxes or penalties.

Effective September 1, 2009, by March 1 of each year, employers must provide to employees information regarding general eligibility requirements for the federal Earned Income Tax Credit. Employers are to provide the information to employees in person, electronically at the employee's last known e-mail address, through a flyer included as a payroll stuffer, or by mailing the information to the employee's last known address by first class mail. (Labor Code, Title 3, Chapter 104)