Alyssa Lane
The Texas Workforce Commission (TWC) is the state agency responsible for overseeing and providing workforce development services to employers and job seekers in Texas. The TWC administers the Unemployment Tax program in Texas, which collects wage information and unemployment taxes from employers to pay out unemployment benefits to eligible workers. The overall SUI (State Unemployment Insurance) tax rate is based on the sum of five components: the General Tax Rate (GTR), Replenishment Tax Rate (RTR), Obligation Assessment Rate (OA), Deficit Tax Rate (DTR), and Employment and Training Investment Assessment (ETIA). Employers in Texas pay unemployment taxes based on business size and history of unemployment claims, and must pay these taxes electronically on the state's Unemployment Tax Services (UTS) system.
| Characteristics | Values |
|---|---|
| Administered by | Texas Workforce Commission (TWC) |
| Who pays the tax | Employers |
| When to pay | Quarterly |
| Payment method | Electronic |
| Components | General Tax Rate (GTR), Replenishment Tax Rate (RTR), Obligation Assessment Rate (OA), Deficit Tax Rate (DTR), Employment and Training Investment Assessment (ETIA) |
| Replenishment Tax Rate (RTR) for 2025 | 0.15% |
| Deficit Tax Rate (DTR) for 2025 | 0% |
| Interest Tax Rate for 2025 | 0% |
| Applicable to | Employers with more than 4 employees |
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What You'll Learn
Who is responsible for paying unemployment insurance tax?
In Texas, employers are responsible for paying unemployment insurance tax. The Texas Workforce Commission (TWC) is the state agency that oversees and provides workforce development services to employers and job seekers. The TWC administers the Unemployment Tax program in Texas, which is a partnership between federal and state governments.
Unemployment taxes are used to fund unemployment benefits. Employers in Texas pay unemployment taxes based on business size and history of unemployment claims. The overall tax rate is based on the sum of five components: the General Tax Rate (GTR), Replenishment Tax Rate (RTR), Obligation Assessment Rate (OA), Deficit Tax Rate (DTR), and Employment and Training Investment Assessment (ETIA).
The Replenishment Tax Rate (RTR) is a flat tax paid by all employers to replenish the Unemployment Compensation Trust Fund for benefits not charged to a specific employer. The Obligation Assessment Rate (OA) consists of the Bond Obligation Assessment Rate, which is determined using the formula (Prior Year Rate x Obligation Assessment Ratio) x Yield Margin percentage, and the Interest Tax Rate, which is used to pay interest on federal loans to Texas for unemployment benefits.
The Deficit Tax Rate (DTR) is added for the next calendar year when the amount of money in the Unemployment Compensation Trust Fund is less than the established minimum level. The Employment and Training Investment Assessment (ETIA) is the fifth component of the tax rate.
It is important to note that employers with four or fewer employees in Texas may not be liable for unemployment insurance tax. Liable employers are required to register for a tax account within ten days of becoming liable and must pay taxes electronically on a quarterly basis.
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How is the tax rate calculated?
The Texas Workforce Commission (TWC) is the state agency responsible for overseeing and providing workforce development services to employers and job seekers in Texas. The TWC calculates the unemployment insurance (UI) tax rate for employers in Texas, and this rate is based on five components:
- The first component is the General Tax Rate (GTR), which is based on the benefits paid to former employees and charged to the employer's account. An employer's GTR may be impacted by the number of unemployment claims made by their former employees.
- The second component is the Replenishment Tax Rate (RTR), a flat tax paid by all employers. The RTR is used to replenish the Unemployment Compensation Trust Fund for benefits not charged to a specific employer. The TWC calculates the RTR using the formula: RTR = One-half benefits paid but not charged to any employer ÷ One Year's Total Taxable Wages.
- The third component is the unemployment Obligation Assessment (OA), which is the sum of two parts: the Bond Obligation Assessment Rate and the Interest Tax Rate. The Bond Obligation Assessment Rate is determined using the formula: (Prior Year Rate x Obligation Assessment Ratio) x Yield Margin percentage, rounded to the nearest hundredth. The Interest Tax Rate is used to pay interest on federal loans to Texas, if owed, for unemployment benefits.
- The fourth component is the Deficit Tax Rate (DTR), which is added for the next calendar year when the amount of money in the Unemployment Compensation Trust Fund is less than an established minimum level. The DTR is determined using a specific formula and is limited to 2%.
- The fifth component is the Employment and Training Investment Assessment (ETIA).
The overall UI tax rate for employers in Texas is calculated by summing up these five components and multiplying the result by the employer's taxable wages. The TWC mails tax rate notices to employers in December, and employers are required to pay their taxes electronically on the state's Unemployment Tax Services (UTS) system.
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What are the components of the tax rate?
The overall SUI (State Unemployment Insurance) tax rate in Texas is based on the sum of five components. These components are:
- General Tax Rate (GTR): The General Tax Rate may be impacted by benefits paid to former employees and charged to the employer's account.
- Replenishment Tax Rate (RTR): This is a flat tax paid by all employers. It is used to replenish the Unemployment Compensation Trust Fund for benefits not charged to a specific employer. The RTR for 2025 is 0.15 percent.
- Obligation Assessment Rate (OA): The OA is the sum of two parts, the Bond Obligation Assessment Rate and the Interest Tax Rate. The Interest Tax Rate is used to pay interest on federal loans to Texas, if owed, to pay unemployment benefits.
- Deficit Tax Rate (DTR): This is added for the next calendar year when the amount of money in the Unemployment Compensation Trust Fund is less than an established minimum level. There was no Deficit Tax Rate for 2025.
- Employment and Training Investment Assessment (ETIA): The ETIA was introduced to offset the RTR.
In Texas, any employer with four or fewer employees may not be liable for unemployment taxes, but employers with a higher number of employees must remit SUI taxes to the state quarterly. Texas is one of the few states that doesn't impose or collect a personal income tax, and employers pay unemployment taxes based on business size and history of unemployment claims.
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When are tax payments due?
In Texas, unemployment insurance tax payments are due by the last day of the month following each quarter's end. If this date falls on a weekend or legal holiday, the submission deadline is pushed to the next business day. Employers must pay their taxes electronically on the state's Unemployment Tax Services (UTS) system.
The Texas Workforce Commission (TWC) requires all employers to pay their taxes electronically. The TWC offers several electronic methods to file quarterly reports. Employers must register for a tax account within ten days of becoming a liable employer.
Liable employers must report wages they pay and pay taxes on those wages. Employers must pay wages for a minimum of six quarters to receive an experience rating. Once a newly liable employer completes four chargeable quarters, the TWC assigns an interim tax rate. This rate is applicable for the duration of the calendar year and is based on an employer's performance during those four quarters. After an employer completes their first four chargeable quarters and any interim tax rate period, the TWC assigns an experience tax rate for the employer. The TWC calculates experience-rated employers' tax rates as of October 1 to be effective for the following calendar year.
Tax rate notices are typically mailed in December. Employers can visit the "Tax Report & Payment Due Dates" webpage for more information on tax due dates.
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How to pay unemployment insurance tax
Unemployment Insurance (UI) in Texas is a partnership between the federal and state governments. The U.S. Department of Labor oversees the UI program, and at the state level, the Senate Committee on Economic Development and the House Economic and Small Business Development Committee oversee the UI program. The Texas Workforce Commission (TWC) administers the Unemployment Tax program in Texas and collects wage information and unemployment taxes from employers. The wage information determines the amount of unemployment benefits claimants may receive.
If your small business has employees working in Texas, you need to pay Texas unemployment insurance (UI) tax. The UI tax funds unemployment compensation programs for eligible employees. In Texas, state UI tax is one of the primary taxes that employers must pay.
To pay UI tax, employers must register with the TWC to obtain a TWC tax account number. Employers must register for a tax account within ten days of becoming a liable employer. Employers can visit the TWC website to determine whether they need to establish an unemployment tax account. Employers should register with TWC within 10 days of becoming liable.
UI tax reports and payments are due by the last day of the month following the end of the calendar quarter. If the due date falls on a weekend or legal holiday, the submission deadline becomes the next business day. Employers must file quarterly wage reports and make quarterly tax payments.
UI tax payments must be made electronically on the state's Unemployment Tax Services (UTS) system or the TEXNET Electronic File Transfer system. Paying by check, money order, or cash is only an option for employers with a hardship waiver from the TWC.
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Frequently asked questions
The Texas Unemployment Insurance Tax Rate is based on the sum of five components: General Tax Rate (GTR), Replenishment Tax Rate (RTR), Obligation Assessment Rate (OA), Deficit Tax Rate (DTR), and Employment and Training Investment Assessment (ETIA).
The first component is the General Tax Rate (GTR), which may be impacted by benefits paid to former employees. The second component is the Replenishment Tax Rate (RTR), a flat tax paid by all employers to replenish the Unemployment Compensation Trust Fund. The third component is the Obligation Assessment Rate (OA), which is the sum of the Bond Obligation Assessment Rate and the Interest Tax Rate. The fourth component is the Deficit Tax Rate (DTR), which is added for the next calendar year when the amount of money in the Unemployment Compensation Trust Fund is less than an established minimum level. The fifth component is the Employment and Training Investment Assessment (ETIA).
Employers in Texas must pay UI taxes electronically on the state's Unemployment Tax Services (UTS) system. Payments are due quarterly by the last day of the month following each quarter's end.
A liable employer in Texas is one who has four or more employees and reports wages they pay and pays taxes on those wages. Liable employers must register for a tax account within ten days of becoming liable.
