No. Texas has no state personal income tax, so employers withhold no Texas income tax from wages. Employers still pay federal payroll taxes and state unemployment insurance on the first $9,000 per employee.
Texas employers must comply with federal payroll taxes (FICA and federal income tax), state unemployment insurance, new-hire reporting, child-labor rules, and Texas pay and recordkeeping laws. Many routine employer obligations — unemployment tax, final pay timing, child-labor limits and similar — are administered by the Texas Workforce Commission (TWC) or other Texas state agencies.
State tax requirements
| Requirement |
What Texas employers must do |
| Personal income tax |
None. There is no Texas state personal income tax, and employers do not withhold a Texas income tax from wages. Employers still withhold federal income tax per IRS rules and must remit federal payroll taxes. |
| UI taxable wage base |
$9,000 per employee per calendar year — the current statutory base. |
| Employer UI tax rates |
New-employer and experienced rates vary. For 2025 the TWC published a minimum rate of 0.25% and a maximum rate of 6.25%. Check your assigned rate notice in TWC Unemployment Tax Services (UTS). |
| New-hire reporting |
Report new hires and rehires within 20 calendar days from the date the employee begins earning wages, to the Texas Office of the Attorney General New Hire Reporting program. |
| State and local wage taxes |
Texas has no state personal income tax and generally no municipal income or wage taxes requiring employer withholding — the Texas tax system relies on sales, property and other state taxes. Confirm tax obligations if employees work in other states. |
Local tax requirements
There is no general local wage tax withholding requirement in Texas — the state has no municipal income tax structure comparable to some other states. Confirm obligations if employees work across state lines.
Wage and hour compliance
| Topic |
Texas rule |
| Overtime |
The federal FLSA is the baseline: non-exempt employees are generally entitled to time-and-a-half for hours worked over 40 in a workweek. Texas enforces the FLSA framework, and TWC guidance references both the FLSA and the Texas Minimum Wage Act. Exemptions (executive, administrative, professional, certain commissioned employees) follow the federal tests. Compute the regular rate correctly for overtime and follow DOL recordkeeping rules. |
| Tipped employees |
Texas follows FLSA rules on the tip credit. Employers may take a tip credit if they meet FLSA requirements — the cash wage minimum for tipped workers, proper tip pooling rules, and ensuring combined cash plus tips is at least the federal minimum wage. See DOL guidance on tipped employees for the precise requirements. |
| Rest and meal breaks |
No Texas law requires private-sector paid meal or rest breaks. If an employer chooses to provide short breaks, typically under about 20 minutes, those breaks are compensable under the FLSA. Follow company policy consistently and document it. |
| Final pay |
Pay regular wages due by the next regularly scheduled payday for resignations, and by the sixth calendar day for employees who are discharged or laid off. Consult TWC guidance for details on what counts as wages and on timing. |
| Paid sick leave / PTO |
There is no statewide mandatory paid sick-leave law requiring private-sector employers to provide paid sick leave. Texas labor statutes and TWC guidance make clear that benefits such as paid time off are generally employer-provided, not required by state statute. Follow your written PTO and paid sick leave policies and consult TWC and the Labor Code for notice and posting obligations. |
| Wage deductions and garnishments |
Follow Texas statutes and federal garnishment laws. Voluntary deductions require employee authorization, and court-ordered garnishments and child-support withholding must be honored within statutory limits. Consult TWC and Texas courts for forms and procedures. |
| Recordkeeping and notices |
Maintain payroll, time and tax records per the FLSA and Texas recordkeeping guidance. Where employers operate in municipalities with specific posting requirements, follow those postings only where not preempted by state law; generally the Labor Code and TWC set employer posting and notice expectations. |
Child labor and minimum age
Under Texas law it is generally illegal to employ a child under age 14, with exceptions for entertainment and performers, agricultural work and similar categories. Texas follows federal rules for work hours and hazardous-occupation restrictions for ages 14-17. Tipped minors are treated under the same child-labor rules, and tipped employees must still meet FLSA and tip-credit requirements.
Retirement programs
- Private sector: Texas does not have a statewide mandatory private-sector retirement or auto-IRA program requiring employers to automatically enroll employees, and employers are generally not required by Texas law to offer retirement plans. Employers that do offer plans must follow ERISA and IRS rules.
- Public sector: state employees participate in Texas public retirement systems such as ERS and TRS under statutory rules, which are mandatory for many state and public employees.
Compliance updates
- 2025 TWC UI rates and taxable wage base: TWC publishes annual employer tax rates and confirms the $9,000 taxable wage cap and the 2025 rate schedule. Check your TWC Unemployment Tax Services notice for your assigned rate each year.
- Local paid-leave efforts and preemption: Texas statutes and legislative actions have established that fields occupied by the Texas Labor Code, including employment leave and employment benefits, preempt conflicting local ordinances. Rely on the Texas Labor Code and TWC guidance for employer obligations, and if a city attempts an employment-leave ordinance, verify whether state law preemption applies.
Important: The Texas statutory scheme occupies the field of employment leave and terms, so conflicting local employment-leave ordinances are void and unenforceable under state law.
Resources and references
- Texas Comptroller — taxes and the state tax framework, including the absence of a personal income tax.
- Texas Workforce Commission — unemployment tax: taxable wage base, employer tax rates and reporting.
- Texas Workforce Commission — Texas Child Labor Law summary.
- Texas Workforce Commission — final pay and the employer guidebook.
- Texas Office of the Attorney General — New Hire Reporting (20 days).
- Texas Workforce Commission — Texas Minimum Wage Law and wage and hour guidance.
- U.S. Department of Labor, Wage and Hour Division — FLSA and overtime fact sheets.
- Texas Labor Code — statutory preemption language, including employment leave.
Note: This overview reflects state guidance as of 09/18/2025. Confirm current rates, wage bases and deadlines with the agencies above before running payroll.
Frequently asked questions
Does Texas have a state income tax for payroll?
No. Texas has no state personal income tax, so employers do not withhold a Texas income tax from wages. Employers still withhold federal income tax under IRS rules and must remit federal payroll taxes.
What is the Texas unemployment insurance taxable wage base?
The Texas UI taxable wage base is $9,000 per employee per calendar year. New-employer and experienced rates vary, and for 2025 the Texas Workforce Commission published a minimum employer tax rate of 0.25% and a maximum of 6.25%, so check your assigned rate notice.
How soon must Texas employers report new hires?
Employers must report new hires and rehires within 20 calendar days from the date the employee begins earning wages, to the Texas Office of the Attorney General New Hire Reporting program.
When must final pay be issued in Texas?
Texas rules require employers to pay regular wages due by the next regularly scheduled payday when an employee resigns, and by the sixth calendar day when an employee is discharged or laid off.
Does Texas require employers to provide paid sick leave?
No. Texas has no statewide mandatory paid sick-leave law for private-sector employers, and paid time off is generally employer-provided rather than required by state statute. The Texas statutory scheme occupies the field of employment leave, so conflicting local employment-leave ordinances are void and unenforceable under state law.
