Setting up payroll can be a daunting task, with numerous regulations, requirements, and deadlines to keep track of. This is especially true in Texas, which has its own unique set of rules and procedures. But don’t worry, we’re here to help simplify this process for you.

In this guide, we will walk you through each crucial step of setting up payroll in Texas. We’ll provide detailed information about the necessary documentation, explain Texas-specific payroll tax requirements, and offer guidance on how to stay compliant with state regulations.

We want to ensure that you have all the tools and knowledge you need to successfully set up your payroll and meet all your obligations as an employer in Texas. So, let’s get started and dive into the intricacies of Texas payroll!

To get set up with payroll in Texas, you must provide the following:

• Texas Employer Unemployment Employer Identification Number (Texas Workplace Commission [TWC] Tax Account Number)

• Texas Employer Unemployment Tax Rate (SUI Rate)

Who needs to pay payroll taxes?

Any employer who runs a business and pays wages to employees in Texas is required to pay payroll taxes. This includes both in-state businesses and out-of-state businesses with employees working in Texas.

Texas Workplace Commission [TWC] Tax Account Number

Your TWC Tax Account Number is a nine-digit number in the following format: XX-XXXXXX-X, with the leading two digits starting with 00-21 or 99.

Where can I find my TWC Tax Account Number?

You can find your TWC Tax Account Number in one of two ways:

• on any previously submitted quarterly tax filing such as Form C-3

• by contacting the TWC via phone at 800-832-9394 or 512-463-2699, or via email at tax.statussection@twc.state.tx.us or tax@twc.state.tx.us

Don’t have a TWC Tax Account Number?

You can get a TWC Tax Account Number by either:

• creating an online account with the Texas Workplace Commission (TWC). Upon successful enrollment, you’ll receive your nine-digit TWC Tax Account number

• contacting the TWC by phone at 512-463-2731 or or email at tax.statussection@twc.state.tx.us

Texas Employer Unemployment Tax Rate (SUI Rate)

What is it?

This is a tax paid by the employer. The Texas Employer Unemployment Tax supports Texas’ unemployment benefits program, which provides financial assistance to workers who have become unemployed through no fault of their own.

New employers in Texas receive either a predetermined tax rate or a computed tax rate if they’ve acquired compensation experience from a previously liable employer. Predetermined tax rates are set by the Texas Unemployment Compensation Act (TUCA), which sets an employer’s tax rate at either their North American Industry Classification System (NAICS) industry average or 2.7%, whichever is higher.

More experienced employers will receive a rate ranging from .25% to 6.25% for 2024.

How do I find my Texas Employer Unemployment Tax Rate?

You can find your tax rate using Unemployment Tax Services and doing the following steps:

• Log on to your account in the UTS system.

• Select the Account Info tab at the top of the page.

• Select the Tax Rate Summary link on the Quick Links menu to view your tax rate information for the last several years.

You can also contact the TWC either via phone at 512-305-8708 or via email at taxexperience.rating@twc.state.tx.us

Further Reading

https://www.twc.texas.gov/programs/unemployment-tax/tax-rates

https://onpay.com/payroll/calculator-tax-rates/texas#

https://www.twc.texas.gov/programs/unemployment-tax/forms