TX · Payroll tax 2026
The true cost of hiring in Texas
Estimate what a W-2 employee costs in Texas and compare it with a 1099 contract using sourced 2026 payroll-tax defaults that you can adjust to your assigned rate.
Estimate a Texas hire
Pre-filled with a 2.7% base new-employer rate. Adjust SUI, salary, benefits, and the 1099 rate to fit your hire.
Results update instantly. Your values stay in this browser.
A W-2 hire in Texas costs more than salary. Employers pay federal FICA and FUTA plus state unemployment insurance. For 2026, HiringMath uses a 2.7% base new-employer rate on the first $9,000 of wages, producing up to about $243 of state UI tax per worker before experience-rating or account-specific adjustments. Texas does not tax wage income. No state income tax. The calculator below combines those statutory items with editable benefits, workers' compensation, and overhead, then compares the result with a 1099 contract.
Texas employer tax facts
| Item | TX |
|---|---|
| Base new-employer SUI rate | 2.7% |
| SUI taxable wage base | $9,000 |
| Federal FICA (employer) | 7.65% |
| FUTA | 0.6% |
| State income tax on wages | None |
| Worker classification test | Economic reality test |
Extra employer taxes: No state income tax.
Example: a $75,000 hire in Texas
At a $75,000 base salary with typical benefits, a W-2 employee in Texas costs an employer $99,323 per year — $24,323 above base pay. An equivalent 1099 contract at $75,000 would cost $24,323 less; the breakeven contract rate is $99,323.
Misclassification risk in Texas
Test: Economic reality test
Common-law/economic reality test; TWC audit back taxes and penalties.
Penalties by stateCompare nearby rates
Texas's 2.7% new-employer SUI rate sits near Alabama (2.7%), District of Columbia (2.7%), Florida (2.7%), Kentucky (2.7%). See the full 51-state comparison or the 2026 employer payroll tax reference.
Common questions
Texas hiring-cost FAQ
What SUI rate does HiringMath use for Texas?
The calculator starts with a 2.7% base new-employer rate, applied to the first $9,000 of each employee's 2026 wages. Your assigned rate can differ because of industry, surcharges, and claims history, so replace the default with the rate on your state notice when available.
Does Texas have a state income tax?
No. Texas does not tax wage income, though employers still owe federal payroll taxes and state unemployment insurance.
What should employers know about worker classification in Texas?
Common-law/economic reality test; TWC audit back taxes and penalties. This is a planning summary, not legal advice; confirm classification decisions with the relevant agency or counsel.