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An employer’s tax rate determines how much the employer pays in state Unemployment Insurance (UI) taxes. To calculate the amount of UI tax payable, TWC multiplies their amount of taxable wages by the employer’s tax rate. The maximum amount of taxable wages per employee per calendar year is set by statute and is currently $9,000.

New Texas employers are assigned an entry-level tax rate.  

Entry-Level Rate

Employers newly liable for state unemployment tax begin with either:

  • A predetermined tax rate
  • A computed tax rate if they acquired compensation experience from a previously liable employer

A predetermined tax rate is set by the Texas Unemployment Compensation Act (TUCA). Texas law sets an employer’s tax rate at their NAICS industry average or 2.7 percent, whichever is higher. The North American Industry Classification System (NAICS) assigns an average tax rate for each industry. 

Newly liable employers continue with their predetermined tax rate until four chargeable quarters.

Chargeable means that the employer may be responsible for unemployment benefits paid to a former employee. It is not required that an unemployment claim be filed.  

In most cases an employer is not chargeable until their third quarter of paying wages. Employers must pay wages a minimum of six quarters to receive an experience rating.

Interim Tax Rate

Once a newly liable employer completes four chargeable quarters, we assign an interim tax rate. This rate is applicable for the duration of the calendar year and is based on an employer’s:

  • Taxable wages paid
  • Timely payment of taxes
  • Payment of unemployment claims, if any, to former employees charged to the employer

After the completion of their first four chargeable quarters and any interim tax rate period, TWC assigns an experience tax rate for the employer.

How is an Experience-Rated Employer’s Effective Tax Rate Computed

TWC calculates experience-rated employers’ tax rates as of October 1 to be effective for the following calendar year. 

Tax rate notices are typically mailed in December. See your current tax rate notice for information regarding the components and calculation of your current tax rate.

Tax Rate Formula

The effective tax rate for experience-rated employers is the sum of five components. The amount of tax you pay is the sum of the five tax components multiplied by your taxable wages.

General Tax Rate (GTR) + Replenishment Tax Rate (RTR) + Obligation Assessment Rate (OA) + Deficit Tax Rate (DTR) + Employment and Training Investment Assessment (ETIA) = Effective Tax Rate.

Visit Your Current Tax Rate for specific information regarding each component.

Unemployment tax rates vary year by year. For tax rate information for the last ten years, see the table below.

For details on how the current year tax rate was calculated, select the current year link in the table below.

YearTaxable Wage BaseMinimum Tax RateMaximum Tax RateAverage Tax RateAverage Experience Tax Rate

An employer's tax rate experience is transferred to a successor employer when:

  • All or part of the organization, trade, business, or workforce of another employer is acquired.
  • The operation of the organization or business is continued.
  • Certain relationships exist between the predecessor and successor.

There is no provision in the law for voluntary total transfer of experience.

A partial transfer of compensation experience is possible when:

  • The successor acquired a distinct and separate part of the organization, trade, or business.
  • The acquired part can operate independently and separately from the predecessor.
  • The wages attributed to the acquired portion are separate and distinct from other wages of the predecessor employer. 
  • Wages must be solely attributable to services provided on behalf of the acquired part of the organization, trade, or business.
  • A partial transfer of compensation experience application is approved by TWC.

The partial transfer of compensation experience application must be:

  • Postmarked within two years from the date of acquisition for common ownership transfers
  • Postmarked within one year from the date of acquisition for non-common ownership transfers
  • Signed by both predecessor and successor

For more information, please review our C-82/C-83 partial application transfer section.

It is unlawful for employers to avoid a higher unemployment tax rate by altering their experience rating through transferring business operations to a successor. This practice, known as State Unemployment Tax Act (SUTA) dumping, is a common scheme in which a business with a higher unemployment tax rate shuffles employees to another business in order to pay a lower rate.  For more information, see State Unemployment Tax Act (SUTA) Dumping.

An employer’s General Tax Rate may be impacted by benefits paid to former employees and charged to the employer’s account.

The Voluntary Contribution Election is an option private employers can exercise to reduce their tax rate. Employers can voluntarily pay all or part of the benefits paid rather receive an increased unemployment tax rate.

We include an application for voluntary contribution with the annual tax rate accounts above the minimum tax rate. Predetermined rates are not eligible for a voluntary contribution.

For more information, see Voluntary Contribution Program.

The annual contribution rate is computed for taxed government employers as a group. All taxed government employers have the same rate each year.

Government tax rates are determined by comparing: 

  • How much the group has withdrawn from the Unemployment Compensation Trust Fund for benefit payments
  • How much the group has paid in taxes. 

These rates do not apply to government employers who have elected to be reimbursing employers rather than taxed employers. 

Basis for Governmental 2024 Tax Rate Computation

The annual contribution rate is expressed as a percentage. The numerator is the amount of all benefits paid, less benefits paid and reimbursed from other sources. If the amount of benefits paid is greater than the contributions paid, the excess benefits paid are added. If the amount of benefits paid is less than the contributions paid, the excess contributions are deducted. The denominator is the amount of the total wages paid by employers in the group.

Formula for Governmental Tax Rate Calculation2024 Amounts
Benefits paid and charged to taxed political subdivisions$7,132,491.06 
- Contributions collected in excess of benefits paid (reduction to benefits paid)$0.00
+ Benefits paid in excess of contributions collected (increase to benefits paid)$6,018,178.13
Adjusted amount of benefits paid to all claimants of taxed political subdivisions for the year ended December 31st$13,150,669.19
Total wages paid by all taxed political subdivisions for the year ended December 31st$1,078,301,426.21

The table below shows the history of governmental tax rates for the last ten years. 

Rate YearEffective Tax Rate

A government employer may elect to become a reimbursing employer in lieu of paying unemployment taxes. Reimbursing employers repay TWC the benefits paid to their former employees, dollar per dollar. They have no contribution rate. 

To learn more about the reimbursing employer option, see Reimbursing & Government Employers.

You can view your tax rate and obtain a copy of your tax rate notice using Unemployment Tax Services(UTS).

To view your tax rate:

  • 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.

To obtain a copy of your tax rate notice:

  • Log on to your account in the UTS system.
  • Select the eCorres tab at the top of the page.
  • Select View PDF on the Action column for the Rate Notice you wish to view.

If you cannot obtain a copy of your tax rate notice on UTS:

  • Submit a Contact Request.  From the Employer menu, select:
    • Reason for Contact: Employer Tax Account Actions/ Issues
    • Issue that you are having: Request Employer Tax Rate Statements

Information related to the chargebacks used in your tax rate calculation can be obtained by: 

  • Visiting Unemployment Tax Services
    • Log in to your account in the UTS system.
    • Select the Report Filing tab at the top of the page.
    • Select the Chargeback History link on the Quick Links menu to view your chargeback information for the last several years.
  • Phone: 512-463-2887 Fax: 512-463-8185
  • Submit a Contact Request.  From the Employer menu, select:
    • Reason for Contact: Other Tax Issues
    • Issue that you are having: Chargeback Issue

If you have questions related to an individual chargeback claim, please see Employer Unemployment Benefit Chargebacks.

There are several ways you may be able to lower your taxes:

  • Keep your tax account's mailing and email addresses up to date.  By keeping your addresses current, you will receive important tax notices and be able to reply timely.  To check your mailing address, log on to UTS. Select the Account Info tab.  On the Quick Links menu, select the Update Address option.  Save any changes.  To update your email address, select My Profile in the top right-hand corner.  Submit your updates.
  • Pay all outstanding taxes by October 31st.  The taxable wages you report can be used to offset chargebacks only if the corresponding taxes have been paid.  To check your tax account balance, log on to UTS.  Select the Payments tab.  There are several options to submit a payment electronically.
  • Respond to Employer Notices regarding unemployment benefits as quickly as possible.  You may also designate a special mailing address for receiving unemployment claim notices and chargeback notices.
  • Make Voluntary Contributions before the deadline to reduce your next year's tax rate.  
  • Report new hires and unemployment benefit fraud immediately to help avoid claimant overpayments and fraud.