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Unemployment Insurance Tax Rates

how much is unemployment tax

New Employer Tax Rates

An employer’s tax rate determines how much the employer pays in state Unemployment Insurance taxes. To calculate the amount of unemployment insurance 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.

Entry-Level Rate

Employers newly liable for state unemployment tax who do not acquire compensation experience from a previously liable employer begin with a predetermined tax rate set by the Texas Unemployment Compensation Act (TUCA ). The North American Industry Classification System (NAICS ) assigns an average tax rate for each industry. Texas law sets an employer’s tax rate at their NAICS industry average or 2.7 percent, whichever is higher.

Newly liable employers continue with the entry-level tax rate until they are chargeable throughout four full calendar quarters. Chargeable simply means that the employer could have been 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 applicable for the duration of the calendar year. Interim tax rates are 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

Tax Rates for Experience-Rated Employers

After the completion of their first four chargeable quarters and any interim tax rate period, TWC assign’s 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, and mails notices of the rates to employers in December. See Your 2015 Tax Rates 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 .

Historical Tax Rate Information

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.

Category: Taxes

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