Payroll
How to Register with Texas TWC as a New Employer
Register at twc.texas.gov within 10 days of first paying wages. Get your employer account number and start filing.
No state income tax doesn't mean simple payroll. TWC registration, SUI rates, FUTA, federal withholding, and wage law compliance still apply. Get practical guides written for Texas small business owners — not accountants.
| Tax / Obligation | Rate / Threshold | Who Pays |
|---|---|---|
| Federal Income Tax Withholding | Bracket-based (W-4) | Employer withholds |
| Texas State Income Tax | None | N/A |
| TX SUI (new employer) | 2.7% on first $9,000 | Employer pays |
| FICA (Social Security) | 6.2% each on first $176,100 | Employer + Employee |
| FICA (Medicare) | 1.45% each (no cap) | Employer + Employee |
| Texas Minimum Wage (2026) | $7.25/hr (federal minimum) | All employers |
Source: twc.texas.gov • Updated January 2026
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Register at twc.texas.gov within 10 days of first paying wages. Get your employer account number and start filing.
New employer rate 2.7%, experienced employers 0.23%—6.23%, wage base $9,000. Experience rating explained.
Texas minimum wage is $7.25/hr — the federal floor. Tipped minimum $2.13/hr. State preempts local ordinances.
Semi-monthly pay required, final pay within 6 days for terminations, next payday for voluntary quits.
Texas is the only state where workers' compensation is optional. What non-subscribers risk and how premiums work.
Trustpilot ratings — public, updated continuously. ADP: 1.2/5 from 12,000+ reviews. Paychex: 1.3/5 from 4,000+ reviews.
"Called four times about a billing error. Each rep told me to call back. Still unresolved after six weeks."
"They misfiled our 941 and then charged us a correction fee. Support transferred me three times. Nobody owned the problem."
Pacific Data Services has been running payroll since 1969. They work with businesses from 1 to 500 employees. Three options: log into their system and run payroll yourself, send hours by phone or email and let PDS handle data entry, or use their system only for reports while they do everything else. You don't have to learn new software. That's a real option, not a sales line.
On pdspayroll.com — family-owned payroll company, not a national chain.
Gusto handles payroll calculations, tax filings, and direct deposit automatically. Trusted by 300,000+ small businesses. Start with a free trial — no credit card required.
On Gusto’s website — Texas Payroll Guide may earn a commission at no cost to you.
LegalZoom handles your Articles of Organization, registered agent, and operating agreement — all online. Trusted by 4M+ small business owners. Starts at $0 + state filing fees. (LegalZoom does not process payroll — see PDS or Gusto above for that.)
On LegalZoom’s website — Texas Payroll Guide may earn a commission at no cost to you.
This article is for general informational purposes only and does not constitute legal, tax, or professional advice. Employment laws, tax regulations, and compliance requirements change frequently. The information on this page reflects our understanding as of the date noted above and may not reflect recent changes in federal or Texas state law. Do not act or refrain from acting based solely on the information in this article. Always consult a qualified attorney, CPA, or HR professional familiar with Texas law before making payroll or compliance decisions for your business.
Texas payroll stands out for what it lacks as much as what it requires. There is no state income tax in Texas, which means you will never withhold state income tax from an employee's paycheck or file a state income tax return on their behalf. For most businesses, that simplifies payroll considerably compared to operating in states like California or New York. What you do owe is federal payroll taxes—FICA, FUTA, and federal income tax withholding—plus the Texas state unemployment insurance tax administered by the Texas Workforce Commission. Setting up your TWC account and understanding the SUI rate structure is where Texas payroll compliance actually starts.
New employers pay SUI at 2.7% on the first $9,000 of each employee's wages in 2026. After your account accumulates sufficient experience, your rate is recalculated annually based on your layoff history and reserve ratio. Employers with stable workforces and few unemployment claims tend to see rates drop well below the new-employer rate over time; those with high turnover see rates rise. The TWC sends rate notices each November for the following calendar year. The Texas SUI system does not include any employee contribution—the entire burden falls on the employer, and it cannot be deducted from employee paychecks. For more on registering and managing your account, see the Texas TWC registration guide.
Texas follows the federal minimum wage of $7.25 per hour because the state has not enacted a higher rate. There is no state law scheduled to change this in 2026. Most Texas employers are covered by the federal Fair Labor Standards Act, so the $7.25 floor applies, and overtime is calculated at 1.5 times the regular rate after 40 hours in a workweek—strictly weekly, with no daily overtime trigger like California uses. Some Texas cities have attempted local minimum wage ordinances, but the Texas Supreme Court has held that cities cannot set minimum wages above the state rate for private employers.
One area where Texas is genuinely unusual: private employers are not required to carry workers' compensation insurance. Texas is the only state that makes workers' comp optional for most private-sector businesses. Employers who opt out are called "non-subscribers" and lose the usual legal protections that workers' comp provides—they can be sued directly by injured employees without the employer being able to raise certain standard defenses. Whether to carry coverage is a real business decision, not a formality. The Texas workers' comp and payroll guide walks through what opting out actually means in practice.
Final paycheck timing depends on how employment ends. If you discharge an employee—termination, layoff, or involuntary separation—the final paycheck is due within six calendar days. If the employee resigns, the check is due on the next regularly scheduled payday. Texas does not require a separate state disability insurance program or paid family leave contributions. There is no state equivalent of California's SDI or New York's PFL. Employers must report new hires to the Texas New Hire Reporting Program within 20 days. Federal forms W-4 and I-9 are required at hire, and federal 941 deposits follow the standard IRS schedule based on your lookback period. See the Texas payday law overview for final pay rules and permissible deductions.
2026 Texas payroll quick facts: No state income tax | SUI new employer rate 2.7% on $9,000 wage base (TWC) | No state disability insurance | No state paid family leave | Minimum wage $7.25/hr (federal floor) | Final paycheck: 6 days after discharge, next regular payday after resignation | New hire reporting: 20 days | Overtime: federal FLSA only, 1.5x after 40 hrs/week | Workers' comp: optional for private employers | Payroll registration: Texas Workforce Commission (twc.texas.gov)
Quarterly deadlines, line-by-line walkthrough, deposit schedules, how to amend with Form 941-X, and penalties for late filing.
Minimum wage, overtime thresholds, white-collar exemption tests, child labor rules, recordkeeping, and DOL audit triggers.
New hire, every-payroll, monthly, quarterly, and annual federal compliance tasks in one organized checklist.
Pay periods, pay dates, time entry deadlines, direct deposit, expense reimbursement, final paycheck, garnishments, and pay stub access.