Your effective Unemployment Insurance (UI) tax rate is the sum of five components described below. Your effective tax rate multiplied by your taxable wages determines the amount of tax you pay. Your taxable wages are the sum of the wages you pay up to $9,000 per employee per year.
The first four tax rate components play a role in ensuring the solvency of the Unemployment Compensation Trust Fund.
The first component of your effective UI tax rate is the General Tax Rate (GTR). It reflects your company's individual responsibility for repaying benefits paid to former workers. The GTR is the experience-rated portion of your tax. It is based on benefits that have been paid to former employees of your business and charged to your account, known as chargebacks.
Your GTR is calculated by multiplying your benefit ratio by the 2023 replenishment ratio of 1.27 percent. The purpose of the replenishment ratio is to recoup half of the benefits paid to eligible workers not charged to any specific employer. The Benefit Ratio formula is as follows:
Benefit Ratio = Your last three years of chargebacks ÷ your last three years of taxable wages paid to your employees.
The three-year period used to calculate the 2023 tax rate was from the fourth quarter of 2019 to the third quarter of 2022. If you have no chargebacks for the past three years and have reported and paid taxable wages for the same period, your general tax rate is zero (0.00 percent). Each year, TWC calculates the GTR using this formula:
GTR = (Your Benefit Ratio) × Replenishment Ratio
Be aware that your GTR can be negatively impacted if UI taxes are not reported and paid on time.
The second component of your UI tax rate is the Replenishment Tax Rate (RTR), a flat tax paid by all employers. Its purpose is to replenish the Unemployment Compensation Trust Fund for benefits not charged to a specific employer. Each year, TWC calculates the RTR using this formula:
RTR = One-half benefits paid but not charged to any employer ÷ One Year’s Total Taxable Wages
The RTR for 2023 is 0.13 percent. Note that this RTR was reduced by .10 percent to offset the Employment and Training Investment Assessment (ETIA) component.
The third component of your tax rate is the unemployment Obligation Assessment (OA). The purpose of the OA is to:
- Collect amounts needed to pay bond obligations
- Collect interest due on federal loans to Texas used to pay unemployment benefits
The OA is the sum of two parts, the Bond Obligation Assessment Rate and the Interest Tax Rate.
Bond Obligation Assessment Rate
The Bond Obligation Assessment Rate is determined by this formula:
(Prior Year Rate x Obligation Assessment Ratio) x Yield Margin percentage, rounded to the nearest hundredth. The prior year rate is the sum of your 2022 General Tax, Replenishment Tax, and Deficit tax.
The Commission sets the Obligation Assessment Ratio and the Yield Margin (percentage). Those two factors are the same for all employers subject to the OA.
The 2023 Obligation Assessment Ratio (OA Ratio) is 0.00 percent.
The OA Ratio is calculated according to Commission Rule.
OA Ratio formula is:
- Sum of the principle, interest, and administrative expenses due in 2023 on outstanding bonds
- Divided by the taxes due from the General and Replenishment tax rates for the four quarters ending June 30th of the previous year
The result is rounded to the next hundredth.
The 2023 Yield Margin is 0.00 percent. The Yield Margin is adopted by Commission resolution.
There is no Bond Obligation Assessment Rate for 2023.
Interest Tax Rate
The Interest Tax Rate is used to pay interest on federal loans to Texas, if owed, used to pay unemployment benefits. This percentage will be the same for all employers in a given year. The Interest Tax is calculated according to Commission Rule.
There is no Interest Tax Rate assessed for 2023.
The fourth component of your tax rate is the Deficit Tax Rate (DTR). It is added for the next calendar year for each experience-rated employer when:
- The amount of money in the Unemployment Compensation Trust Fund on a tax rate computation date is less than an established minimum level.
The Deficit Tax Rate is determined by this formula:
- Prior Year Rate x Deficit Ratio
The resulting value is rounded to the nearest hundredth (limited to 2%).
The 2023 Deficit Tax Ratio is 0.00 percent.
There is no Deficit Tax Rate for 2023.
The fifth component of your tax rate is the Employment and Training Investment Assessment (ETIA). The assessment is imposed on each employer paying contributions. It is as a separate assessment of 0.10 percent of wages paid by an employer. Money from the assessment is deposited to the credit of the employment and training investment holding fund. By law, the Replenishment Tax Rate is reduced by the same amount, so there is no increase in your tax rate due to this assessment.
Your Effective Tax Rate for 2023 is the sum of:
- General Tax Rate (GTR)
- Replenishment Tax Rate (RTR)
- Obligation Assessment Rate (OA)
- Deficit Tax Rate (DTR)
- Employment and Training Investment Assessment (ETIA)
The minimum tax rate for 2023 is 0.23 percent.
The maximum tax rate for 2023 is 6.23 percent.
You pay unemployment tax on the first $9,000 that each employee earns during the calendar year. Your taxable wages are the sum of the wages you pay up to $9,000 per employee per year.
Have questions about your tax rate?
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
- Enter your questions in the Comments section.