--- title: "Texas Payroll 2026: No Income Tax & UI" description: "Texas has no state income tax in 2026. Employers still fund unemployment insurance at 2.70% on a $9,000 wage base, plus the federal stack. Teamed EOR guide." canonical: https://www.teamed.global/country-hiring-guides/united-states/texas/state-income-tax-and-unemployment-insurance --- United States · Texas · State tax child Served by Teamed US Inc., Delaware · Payroll via SUNA Solutions # How does *Texas state income tax and unemployment insurance* work in 2026? Texas has no state income tax and no state payroll tax. What employers fund instead is unemployment insurance on a $9,000 wage base at a 2.70% new-employer rate, plus the federal stack. Last reviewed 6 June 2026 · Texas, United States guide ![The Austin, Texas skyline at dusk: glass downtown office towers above Lady Bird Lake, with the Pennybacker Bridge and Hill Country ridgeline catching the last warm light.](/cluster-assets/country-hiring-guides/united-states/texas/state-income-tax-and-unemployment-insurance/images/hero.webp) Illustration · Austin, Texas Texas is the state that looks free on a relocation slide and reads almost as simply on a payroll register. There is **no state income tax** and no withholding form, because the [Texas constitution](https://statutes.capitol.texas.gov/Docs/CN/htm/CN.8.htm) bars a personal income tax. There is also no state payroll tax. That part is genuinely simple. Your employer cost sits in one state box and the federal stack. **Unemployment insurance** runs on a **$9,000 wage base** at a new-employer rate of **2.70%**, so a maximum of about $9,000 times that rate per employee a year. On top sits Social Security, Medicare and [FUTA](https://www.irs.gov/businesses/small-businesses-self-employed/federal-unemployment-futa-tax), the same in every state. ## Does Texas have a state income tax in 2026? No. Texas is one of nine US states with no personal state income tax. The [state constitution](https://statutes.capitol.texas.gov/Docs/CN/htm/CN.8.htm) bars one outright, so you run **zero state income tax withholding** on your Texas payroll in 2026. There is no Texas equivalent of a state W-4 and no state bracket table to maintain. That does not mean no employer cost. Texas funds its government through sales and property taxes, so on payroll your only state line item is [unemployment insurance](https://www.twc.texas.gov/programs/unemployment-tax). The federal stack still applies in full. For your Austin hire, no state income tax is real take-home: they keep more of the same gross salary than a hire in California or New York. For you, the withholding side of payroll is among the easiest in the country, because there is nothing to withhold for the state and no state reconciliation return to file. Compare that with neighbouring [Louisiana](/country-hiring-guides/united-states/louisiana/state-income-tax-and-unemployment-insurance), where you run up to four state income tax brackets. Texas voters locked this in. Proposition 4 in 2019 amended the constitution to prohibit a personal income tax outright, so it would take a statewide referendum to change. The one trap is assuming "no income tax" means "no Texas payroll obligation". You still register with the [Texas Workforce Commission](https://www.twc.texas.gov/) for unemployment insurance, and you still run the full federal stack. For a full picture of what you owe as the employing entity, see Teamed's [United States hiring guide](/country-hiring-guides/united-states). ## Does Texas have a state payroll tax, and what do employers pay instead? No. Texas has no state payroll tax and no state disability levy. Your only state-level employer cost on payroll is **unemployment insurance**, paid to the [Texas Workforce Commission](https://www.twc.texas.gov/programs/unemployment-tax) on the first **$9,000** of each employee's wages. The Texas employer story is short: one state contribution, unemployment insurance, then the federal stack of [Social Security](https://www.ssa.gov/oact/progdata/taxRates.html) at **6.2%**, Medicare at **1.45%**, and [FUTA](https://www.irs.gov/businesses/small-businesses-self-employed/federal-unemployment-futa-tax). This is what makes Texas light to run. States like Nevada bolt on a Modified Business Tax, and California adds disability and employment-training levies. Texas adds nothing of the kind. Your state payroll obligation begins and ends with unemployment insurance. See the wages and hours picture in the [Texas wages, overtime and meal break guide](/country-hiring-guides/united-states/texas/wage-overtime-and-meal-break-law). Register with the [Texas Workforce Commission](https://www.twc.texas.gov/programs/unemployment-tax) within 10 days of becoming liable, then report wages and pay UI each quarter via the [TWC employer portal](https://www.twc.texas.gov/businesses/unemployment-tax-registration). There is no monthly state withholding deposit, because there is nothing to withhold. The work is the federal stack plus one quarterly UI return, which is why a Texas payroll runs lighter than almost anywhere else in the country. ## What is Texas's unemployment insurance wage base and rate for 2026? Texas's UI taxable wage base is **$9,000 per employee** for 2026, fixed by statute and unchanged year to year. New employers pay a UI rate of **2.70%**, the greater of that rate or your industry average, set by the [Texas Workforce Commission](https://www.twc.texas.gov/programs/unemployment-tax/your-tax-rates). Experienced employers land on a rate built from their own claims history, running from a 2026 minimum of **0.32%** to a maximum of **6.32%**. At 2.70% on a $9,000 base, you pay at most about $243 per employee a year as a new employer. Texas Workforce Commission · 2026 UI tax rates Your UI taxable wage base is **$9,000** per employee. New-employer rate: **2.70%**. Once experience-rated, you land between **0.32%** and **6.32%**. Report and pay quarterly via TWC. Source: [Texas Workforce Commission, Your 2026 Tax Rates](https://www.twc.texas.gov/programs/unemployment-tax/your-tax-rates) The $9,000 base is among the lowest in the country, and because it does not move with wages, your per-employee UI is capped. You pay UI on the first $9,000 of each employee's wages; everything above that in the calendar year is exempt. Contrast that with [Oklahoma](/country-hiring-guides/united-states/oklahoma/state-income-tax-and-unemployment-insurance), where the UI wage base runs higher. A new employer holds the 2.70% entry rate until it has enough chargeback history to be experience-rated, then moves onto a rate built from five components the [TWC publishes each year](https://www.twc.texas.gov/programs/unemployment-tax/your-tax-rates). The federal layer sits on top: [FUTA](https://www.irs.gov/businesses/small-businesses-self-employed/federal-unemployment-futa-tax) is 6.0 percent on the first $7,000 of wages, less the full credit for compliant state payers, leaving an effective 0.6%. Use the [employer cost calculator](https://www.teamed.global/tools/employer-cost) to see your full Texas cost in seconds. ## What other payroll rules apply to Texas employees? You run the full federal stack: [Social Security](https://www.ssa.gov/oact/progdata/taxRates.html) at **6.2%** to $184,500, Medicare at 1.45%, and [FUTA](https://www.irs.gov/businesses/small-businesses-self-employed/federal-unemployment-futa-tax) at an effective 0.6%. Texas's minimum wage is the federal **$7.25 an hour**, with a $2.13 tipped cash minimum. Texas mandates no state paid leave. There is no state paid-family-leave programme and no state paid sick leave, so federal [**FMLA**](https://www.dol.gov/agencies/whd/fmla) at 50 employees is the only job-protected family leave layer. Two points catch out-of-state employers. First, the minimum wage: Texas adopts the federal $7.25 by reference and bars cities from setting a higher local rate, so Austin, Houston and Dallas all sit at the same floor. Tipped staff can be paid a $2.13 cash wage as long as tips bring them to $7.25. See detailed wage and hour rules in the [Texas wages and overtime guide](/country-hiring-guides/united-states/texas/wage-overtime-and-meal-break-law). Second, leave: Texas has no state mandate at all, so any paid time off you offer is a benefit you choose, not a statute you follow. The full leave picture is in the [Texas paid leave guide](/country-hiring-guides/united-states/texas/paid-family-and-sick-leave). That makes federal [FMLA](https://www.dol.gov/agencies/whd/fmla) the whole of the job-protected family-leave picture: up to 12 weeks of unpaid, job-protected leave for employers with 50 or more staff within 75 miles. [Social Security](https://www.ssa.gov/oact/progdata/taxRates.html) runs at 6.2% each side to $184,500, Medicare at 1.45% on all wages, and a 0.9 percent additional Medicare applies to employee wages over $200,000. For at-will rules and what changes those, see the [Texas termination and at-will guide](/country-hiring-guides/united-states/texas/termination-law-and-at-will-exceptions). ## How Teamed runs Texas payroll end to end Teamed becomes your legal employer of record in Texas for [**from $599 per employee per month flat**](/pricing). **Zero FX mark-up**. Statutory employer cost passes through itemised on every invoice. You hire the person. Teamed registers with the Texas Workforce Commission, files and pays unemployment insurance each quarter, and runs the full federal stack. Everything runs on **one platform**. **Real HR and legal experts** handle your Texas hires and know the $9,000 UI wage base, the 2.70% entry rate, and the quarterly TWC cadence by heart. **An actual person, not a chatbot or a pooled queue.** You see every cost: unemployment insurance and federal employer taxes **pass through at cost, itemised** and auditable on every invoice. **No setup fee, no exit fee.** Contractor onboarding, [EOR payroll](/employer-of-record), and entity graduation all live on **one platform**: a Texas contractor who converts to W-2 keeps their record, and that same employee can **graduate** to your own US entity without switching systems. Because Texas has no income tax, no state payroll tax, and a $9,000 UI base, the running cost of a Texas hire is low, so the crossover point arrives later per headcount than in a high-tax state. Use the [Crossover Calculator](https://www.teamed.global/tools/crossover-calculator) to see the month the model flips. [EOR](/employer-of-record) is the right model for Texas, **until it isn't**. When the model no longer fits, [talk to an expert](https://www.teamed.global/contact) about the transition. Teamed Client Operations The mistake we see on Texas is the opposite of the usual one. People assume no income tax means hidden costs somewhere, so they over-budget. There is no state payroll tax to find. The only state line is unemployment insurance on a small wage base. Budget for that and the federal stack, and you have the whole picture. A note from Tom Price-Daniel Texas has no state income tax and no state payroll tax. Your only state line is unemployment insurance: 2.70% on a $9,000 base, then the federal stack. One of the lightest payrolls in the country. Teamed runs it for [from $599 flat](/pricing), zero FX mark-up. Tom Price-Daniel · Co-founder, Teamed ## Related United States guides - [Hiring in the United States, overview](/country-hiring-guides/united-states)country parent - [Texas wages, overtime and meal break law](/country-hiring-guides/united-states/texas/wage-overtime-and-meal-break-law)sibling - [Texas paid family and sick leave](/country-hiring-guides/united-states/texas/paid-family-and-sick-leave)sibling - [Texas termination law and at-will exceptions](/country-hiring-guides/united-states/texas/termination-law-and-at-will-exceptions)sibling - [Oklahoma state tax & UI](/country-hiring-guides/united-states/oklahoma/state-income-tax-and-unemployment-insurance)neighbour - [Louisiana state tax & UI](/country-hiring-guides/united-states/louisiana/state-income-tax-and-unemployment-insurance)neighbour - [Employer of Record overview](/employer-of-record)core - [Pricing, Zero FX Fixed](/pricing)core - [EOR vs Entity Crossover Calculator](https://www.teamed.global/tools/crossover-calculator)tool - [Employer cost calculator](https://www.teamed.global/tools/employer-cost)tool - [Talk to an expert](https://www.teamed.global/contact)CTA A note on this page. This is a guide, not legal advice. Texas's unemployment insurance wage base and rate schedule, minimum wage, and federal payroll figures update when the legislature acts or the Texas Workforce Commission and federal agencies issue new numbers. Confirm specific figures with the Texas Workforce Commission, the US Department of Labor, the IRS, or your Teamed US specialist before relying on any figure here.