Last reviewed: July 2026
New Texas employers need a federal EIN from the IRS and a state unemployment tax account with the Texas Workforce Commission (TWC), registered within 10 days of meeting the wage or employment threshold. Because Texas has no state income tax, TWC registration is the only state-level payroll tax registration required. Workers' compensation is optional in Texas, unlike almost every other state.
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Hiring your first employee in Texas triggers a short registration checklist, and because Texas has no state income tax, that checklist is shorter than in most states. Here's the order to work through it.
Registration Overview
Every new Texas employer needs:
- A federal Employer Identification Number (EIN)
- A state unemployment tax account with the Texas Workforce Commission
- A decision on workers' compensation coverage, since it isn't mandatory
- New hire reporting set up with the Texas Attorney General's Office
Step 1: Get Your Federal EIN
Apply for a free EIN at irs.gov/ein. The online application takes about 15 minutes, and you receive the number immediately. You'll need it for your TWC registration and every filing that follows.
Step 2: Register With TWC
Register with the Texas Workforce Commission within 10 days of paying $1,500 or more in wages in a calendar quarter, or employing someone for part of a day in 20 different weeks in a calendar year. Register online through TWC's Unemployment Tax Services portal. You'll receive a TWC employer account number, separate from your federal EIN, plus your initial tax rate: a standard 2.7% for most new employers on the first $9,000 of each employee's wages for 2026. After registering, you'll file a quarterly wage report (Form C-3) by the last day of the month following each quarter.
Step 3: Workers' Compensation
Texas is the only state where most private employers can legally skip workers' compensation insurance. Employers who choose to go without coverage are called non-subscribers and must file that status with the Texas Department of Insurance, Division of Workers' Compensation, and report qualifying workplace injuries when they happen. Going non-subscriber also removes several legal defenses an employer would normally have if an injured employee sues, so many Texas businesses carry coverage anyway, purchased through a private insurance carrier.
Step 4: New Hire Reporting
Report every new or rehired employee within 20 days of their start date. Texas routes this to the Texas Attorney General's Office, not TWC, which surprises employers used to a single agency handling both. You'll need the employee's name, address, Social Security number, start date, and your EIN. Most payroll software files both this and the TWC wage report automatically.
Once registrations are complete, use our paycheck calculator to check net pay, and send new hires to our W-4 helper for their federal withholding form. Our Form 941 guide covers the federal side of quarterly filing.
Frequently Asked Questions
Where do Texas employers register for unemployment insurance?
Texas employers register for a state unemployment tax account with the Texas Workforce Commission (TWC). Registration must happen within 10 days of first meeting the wage or employment threshold that makes a business a liable employer.
Do Texas employers need to register for state income tax withholding?
No. Texas has no state income tax, so there is no withholding account or agency to register with. The Texas Workforce Commission registration is the only state-level payroll tax registration a Texas employer needs.
How soon must a new Texas employer register with TWC?
Register with TWC within 10 days of paying $1,500 or more in wages during a calendar quarter, or employing a worker for part of a day in 20 different calendar weeks during a year. Waiting past that window can lead to back taxes and penalties once TWC catches up with your filing history.
Is workers' compensation insurance required when registering as a Texas employer?
No. Texas lets most private employers opt out of workers' compensation entirely as non-subscribers. Employers who go without coverage must still file their non-subscriber status with the state and report qualifying workplace injuries.
Payroll Without the Extra Layer of Withholding
Because Texas has no state income tax, running payroll here comes down to federal filings plus quarterly wage reports to TWC. Pacific Data Services, in business since 1969, handles that combination remotely for Texas employers so registration paperwork and quarterly filings never slip.
See how Pacific Data Services supports Texas employers remotely →
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Legal & Tax Disclaimer
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 July 2026 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.