Texas has no state income tax, but employers still face SUTA, federal withholding, and FICA obligations. Here's the complete Texas payroll guide.
By ExpertPaystubs Editorial Team. Published 2026-02-08
Texas is one of nine states with no individual income tax. But that doesn't mean payroll is simple — employers still need to handle federal withholding, FICA, unemployment insurance, and specific Texas regulations.
What Texas Workers DON'T Pay
- ❌ State income tax
- ❌ Local income tax
- ❌ State disability insurance (SDI)
- ❌ Paid family leave tax
What Texas Workers DO Pay
- ✅ Federal income tax (same as every state)
- ✅ Social Security (6.2% up to $184,500)
- ✅ Medicare (1.45%, no cap)
- ✅ Additional Medicare (0.9% on earnings over $200,000)
Take-Home Pay Advantage
The no-state-tax advantage is real. Here's a comparison for someone earning $75,000/year (single, no dependents):
| Deduction | Texas | California | New York |
|---|---|---|---|
| Federal Tax | $8,760 | $8,760 | $8,760 |
| State Tax | $0 | $3,150 | $3,820 |
| Social Security | $4,650 | $4,650 | $4,650 |
| Medicare | $1,088 | $1,088 | $1,088 |
| SDI/PFL | $0 | $825 | $280 |
| Total Deductions | $14,498 | $18,473 | $18,598 |
| Take-Home | $60,502 | $56,527 | $56,402 |
That's roughly $4,000/year more in Texas compared to high-tax states.
Texas Employer Obligations
State Unemployment Tax (SUTA)
- Rate: 0.31% - 6.31% (experience-rated)
- New employer rate: 2.7%
- Wage base: $9,000 per employee per year
- Paid by: Employer only
Texas Workforce Commission (TWC)
Employers must:
- Report new hires within 20 days
- File quarterly wage reports
- Maintain workers' compensation insurance (or opt out with specific approval)
Pay Frequency Requirements
Texas doesn't mandate a specific pay frequency for most workers, but:
- Overtime-eligible employees must be paid at least twice per month
- Exempt employees can be paid monthly
Pay Stub Requirements
Texas requires employers to provide an earnings statement with each payment showing hours, rate, deductions, and net pay (Texas Labor Code § 62.003).
Self-Employed in Texas
Self-employed Texans benefit from no state income tax AND no state self-employment tax:
- Only pay federal self-employment tax (15.3%)
- No state quarterly estimated payments needed
- Significant advantage over self-employed in CA (13.3% state tax) or NY (10.9%)
Generate Texas Pay Stubs
Even without state tax, your Texas pay stub should clearly show federal withholding, FICA, and any pre-tax deductions. ExpertPaystubs generates Texas-specific stubs with accurate federal calculations.