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Liability
The Texas Unemployment Compensation Act (TUCA) defines which employers must pay unemployment taxes. They are referred to as "liable employers." Liable employers report employee wages and pay the unemployment tax based on state law under the Texas Unemployment Tax Act (TUCA). Liability for the tax is determined by several different criteria. Once wages are paid, employers should register with the Texas Workforce Commission (TWC). More information can be found on our Determine Whether You Need to Establish an Unemployment Tax Account webpage.
Employee or Independent Contractor
The law defines employment as a service performed by an individual for wages under an express or implied contract for hire, unless it is shown to the satisfaction of the Commission that the individual’s performance of the service has been and will continue to be free from control or direction under the contract. The three essential elements of the definition of employment are service, wages, and direction and control. Direction and control can be present in an employment relationship even if the employer does not exercise direction and control but retains the right to do so. More information can be found on our Classifying Employees & Independent Contractors webpage.
New Employer Tax Rate Information
Employers newly liable for state unemployment tax who do not acquire compensation experience from a previously liable employer begin with a predetermined tax rate set by the Texas Unemployment Compensation Act. The North American Industry Classification System (NAICS) assigns an average tax rate for each industry. Texas law sets an employer’s tax rate at their NAICS industry average or 2.7 percent, whichever is higher. More information can be found on our Unemployment Insurance Tax Rates webpage.
Taxable Wage Limit
Liable employers report employee wages and pay the unemployment tax based on the Texas Unemployment Tax Act. Wages are reported when they are paid rather than when they are earned or accrued. Employers report employee gross wages each quarter and pay taxes on the first $9,000 per employee, per year. More information can be found on our Reporting & Determining Taxable Wages webpage.
Quarterly Report Filing
The Texas Workforce Commission (TWC) requires all employers to report Unemployment Insurance (UI) wages electronically. TWC offers several electronic methods to file quarterly reports. More information can be found on our Employer’s Quarterly Wage Report Filing Options webpage.
Payment Options
The Texas Workforce Commission (TWC) requires all employers to pay Unemployment Insurance (UI) taxes electronically. TWC offers several electronic methods to file quarterly reports. More information can be found on our Payment Options for Unemployment Tax webpage.
New Hire Reporting
Reporting new hires and re-hires saves you money by reducing fraudulent claims for public assistance, worker’s compensation, and unemployment benefits, and by allowing early detection of overpayments which results in substantial savings to the Unemployment Insurance Trust Fund. New hire reporting is managed by the Office of the Attorney General. More information can be on our New Hire Reporting webpage.
Work Place Posters
Workplace compliance posters required to be displayed can vary from one employer to another. Posters can be printed free of charge directly from links on this page or by following links to the U.S. Department of Labor. More information can be found on our Posters for the Workplace webpage.
Tax Office Locations
Local Tax office phone numbers, fax numbers and addresses can be found on our Unemployment Tax Contact Information webpage.
Especially for Texas Employers
TWC's Office of the Commissioner Representing Employers produces a handy reference book entitled Especially for Texas Employers. It provides information on important workplace issues. The book includes chapters on: the basic legal issues relevant to hiring, pay and policy, work separation, post-employment problems, and employment law-related websites.
- Especially for Texas Employers (online version)
- Especially for Texas Employers
