Payroll and Benefits Guide United States – Texas
Last updated: Apr 04, 2023
Employer Payroll Contributions
|0.23% – 6.23% (Maximum taxable wages is 9,000.00 USD)||Unemployment (state)|
|2.70% (maximum taxable wages is 9,000.00 USD)||Unemployment- New Employer (state)|
|6.20% (maximum taxable wages is 160,200 USD)||FICA Social Security (federal)|
|1.45% (maximum taxable wages is 160,200 USD)||FICA Medicare (federal)|
|0.60% – 6.00% (maximum taxable wages is 7,000 USD)||The FUTA (Federal Unemployment Tax Act) tax rate is 6.0% with a taxable wage base of 7,000 USD. However, if states operate their unemployment insurance programs in compliance with federal law then the FUTA tax is reduced (credit) by 5.4% to 0.6%.|
|11.18%- 22.58%||Total Employment Cost|
Employee Payroll Contributions
|7.65% – 8.55%||Total Employee Cost|
|6.20% (Maximum taxable wages is 160,200.00 USD)||FICA Social Security (Federal)|
|1.45% (Maximum taxable wages is 160,200 USD||FICA Medicare (Federal)|
|0.90%||Additional tax on earnings over 200,000 USD (High-income earners also pay an additional 0.90% in Medicare taxes)|
Employee Income Tax
No state income tax
|Federal Tax – Singles|
|10.00%||Up to 11,000 USD|
|12.00%||11,001 USD to 44,725 USD|
|22.00%||44,726 USD to 95,375 USD|
|24.00%||95,376 USD to 182,100 USD|
|32.00%||182,101 USD to 231.250 USD|
|35.00%||231,251 USD to 578,125 USD|
|37.00%||578,126 USD or more|
|Federal Tax – Married, filing jointly|
|10.00%||Up to 22,000 USD|
|12.00%||22,001 USD to 89,450 USD|
|22.00%||89,451 USD to 190,750 USD|
|24.00%||190,751 USD to 364,200 USD|
|32.00%||364,201 USD to 462,500 USD|
|35.00%||462,501 USD to 693,750 USD|
|37.00%||693,751 USD or more|
|Federal Tax – Heads of Households|
|10.00%||Up to 15,700 USD|
|12.00%||15,701 USD to 59,850 USD|
|22.00%||59,851 USD to 95,350 USD|
|24.00%||95,351 USD to 182,100 USD|
|32.00%||182,101 USD to 231,250 USD|
|35.00%||231,251 USD to 578,100 USD|
|37.00%||578,101 USD or more|
|Standard Deduction and Personal Exemption|
|27,700.00 USD||Married Filing Jointly|
|20,800.00 USD||Head of Household|
The minimum wage in Texas is the same as the federal minimum wage which is 7.25 USD per hour.
There are also other minimum wage requirements:
- Youth minimum wage: 4.25 USD per hour
- Minimum cash wage: 2.13 USD per hour
- Maximum tip credit: 5.12 USD per hour
In Texas, employees are paid monthly or semi-monthly.
There are no statutory laws on 13th salaries.
The workweek is a maximum of 40 hours per week or 8 hours per day.
Texas adheres to the Fair Labour Standards Act (FLSA) and splits employees into two categories regarding minimum wage and overtime payments: Exempt and Non-exempt.
FLSA exemptions depend on the amount of employee’s salary and their job category.
Exempt employees do not receive overtime or compensation as outlined in FLSA. Exempt employees include contract workers, state employees, and administrative staff. An exempt worker can qualify for state compensatory time in lieu of compensation, whereas the standard federal position is that compensatory time payments do not apply.
Non-exempt employees must be paid on a time and one-half their hourly wage schedule for overtime as specified in the employment contract. For example, public safety workers have a 240-hour compensatory time limit before it becomes mandatory to receive payment.
Based on the exemption criteria above, overtime (when applicable) is paid at the rate of 150% of the regular pay when an employee works more than 40 hours in a working week. Similarly, if an employee is scheduled to work on weekends or rest days, no additional payment is required. However, should an employer request an employee to work in exceptional circumstances on these days, then overtime will be payable at 150% 0f the regular salary rate for the extra hours worked.
Paid Time Off
Texas does not have any state statute governing the amount and payment of vacation time. However, it is common for employers to decide whether to offer paid or unpaid vacation leave. This must comply with employment law and must be stipulated in the collective bargaining agreements.
There are 11 public holidays in Texas.
Sick leave falls under the Family and Medical Leave Act (FMLA) which provides leave for an employee with a serious health condition that makes them unable to perform the essential functions of their job.
It is common for an employer to follow the FMLA which provides certain employees with up to 12 weeks of unpaid, job-protected leave per year for certain family and medical reasons (maternity leave, serious illnesses, or if the employee needs to care for a spouse or child).
Employees are eligible for FMLA if they have worked for their employer for at least one year, completed a minimum of 1,250 hours over the past year, and worked at a location where the company employs 50 or more employees within 75 miles.
Maternity leave falls under the FMLA (see sick leave) which allows a mother:
- 12 working weeks of leave in any one year for a child’s birth and to care for the newborn child within one year of birth.
In addition to the Family and Medical Leave Act (FMLA) and the Pregnancy Discrimination Act, Texas has the following additional law regarding Maternity and Paternity Leave (Pregnancy Disability Leave), Texas’s Law Against Discrimination. This law requires employers with six or more employees to provide employees with leave due to disabilities related to pregnancy or childbirth for the duration of such disability (pregnancy and childbirth is treated as any other type of temporary disability for all employment-related purposes, including benefits such as receipt of fringe benefits). Employers must reinstate employees to their previous or comparable position upon their return.
PAID MATERNITY LEAVE (DAYS)
Paternity leave falls under the FMLA (see sick leave), which allows fathers:
- Twelve working weeks of leave in any one year for a child’s birth and to care for the newborn child within one year of birth.
The Texas Law Against Discrimination applies (see maternity leave).
Parental leave falls under the FMLA (see sick leave), which allows for:
- Leave for the adoption or foster care of a child and care for the newly placed child within one year of placement.
- Any qualifying necessity arising out of the fact that the employee’s spouse, son, daughter, or parent is a covered military member on “covered active duty.”
Leave for the care of an employee’s spouse, child, or parent who has a severe health condition falls under the FMLA (see sick leave).
Alternatively, an employee may take 26 working weeks of leave during a single one-year period to care for a covered servicemember with a serious injury or illness if the eligible employee is the service member’s spouse, son, daughter, parent, or next of kin (military caregiver leave).
Other leave under Texas law includes:
- Jury Duty: Texas law states that all employers must provide their full-time employees job-protected but unpaid time off from work to perform their duty as jurors. Employees must provide a copy of the jury summons to the employer as evidence of requirement.
- Voting Leave: Texas law requires all employers to grant their employees who are registered to vote up to two hours of paid leave to vote in any municipal, county, state, federal primary, or general election. Employees must provide reasonable notice to their employers to take time off to vote.
- Employees may request unpaid leave to attend a state or local political convention.
Except in mass dismissals or as provided for in an employment contract or a collective bargaining agreement, U.S. law does not impose a formal notice period to terminate an individual employment relationship, and employment is stipulated as “at will.”
This means that either the employer or the employee may end the employment relationship without giving either notice or reason, provided it is not illegal, notable discrimination on the grounds of a category protected by law, etc., and as per the Federal Worker Adjustment and Retraining Notification Act (WARN).
The employment contracts of executives and other highly skilled individuals often incorporate a just cause termination clause which mandates that the employer may only terminate the employee for “cause” and lists the permissible grounds. In such cases, the parties negotiate the foundations for a “just cause” termination.
In Texas, most employees are employed at will, and either party can terminate the employment relationship without notice. In Texas, payout of unused vacation time is not required by law. Still, employers will generally pay an employee for unused vacation days, provided the employee gave some advanced notice of resignation. There is no official notice period. Still, in general practice, two weeks’ notice is a minimum requirement.
In mass dismissal cases the Worker Adjustment and Retraining Notification Act (WARN Act) must be followed, and employers must give 60 days’ notice to impacted employees.
Except as otherwise provided in an employment contract or collective bargaining agreement, employers are not required to make severance payments to terminated employees. Employers who choose to offer severance would need to have the provisions within the employee’s contract and agreed by both parties. Many employers choose to offer severance pay based on the employee’s length of employment.
No legal provision governs a formal trial or probation period. However, it is common practice for employers to set a performance evaluation after an initially stated period of employment of 90 days.
Foreign nationals without permanent resident status or a work visa are not permitted to work in the United States. An employer seeking to hire a foreign national may file a petition with the United States Department of Homeland Security or the United States Citizenship and Immigration Services (USCIS) for an employment visa on behalf of the prospective employee.
If the petition is approved, the prospective employee must obtain a visa stamp from a United States embassy or consulate (Canadian citizens are exempt from this requirement). To get a temporary U.S. work visa, an employer must file a petition with U.S. Citizenship and Immigration Services (USCIS). An approved petition must be part of the visa request.
The types of visas include:
- H-1B: For applicants with a college degree hired to do specialized work. The visa is valid for three years and can be extended for an additional three years. The visa is connected to the employer that filed the petition. If there is a change of employer, the new employer must repeat the process. There are 65,000 H-1B visas available each year.
- H-1B1: For applicants with a college degree from Chile and Singapore. The US government grants up to 1,400 visas to Chilean citizens and 5,400 from Singapore each year.
- H-2A: For temporary or seasonal agriculture work. It is limited to citizens of qualified countries. Usually valid for up to 1 year and can be extended to a maximum of 3 years.
- H-2B: For temporary non-agricultural work. These visas are limited to citizens of qualified countries. Usually valid for up to 1 year and can be extended to a maximum of 3 years.
- L: For intercompany transfers (people transferred from a foreign company to a US branch of the company). The applicant must have been employed at the company for a year before the transfer and work in a managerial level position or higher with specialized knowledge.
- O: For people with extraordinary abilities in science, arts, education, business, or athletics.
The standard procedure is to obtain a short-term work visa and then apply for an immigrant visa after the employee has started working in the United States.
For those seeking employment-based immigrant visas:
- E-1: Highest priority employment for those with extraordinary ability in science, arts, education, business, and athletics
- E-2: For those with advanced degrees or exceptional ability
- E-3: For skilled workers and professionals, as well as unskilled workers
- E-4: Members of certain immigrant groups
- E-5: Immigrant investors in US companies (substantial investment)
Alternatively, an employer may sponsor a potential employee’s application for permanent resident status, referred to as a “green card” if the employee can establish that the potential employee is a multinational executive or manager transferee, has unique skills, or has been offered a job in the United States. The employer must have been unable to recruit a U.S. worker who meets the position’s minimum requirements.
All employers are obligated to verify that all individuals they employ are authorized to work in the United States.
Texas has a minimum combined 2023 sales tax rate of 7.94% (state tax at 6.25% and local tax at 0% 0 2%)
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Payroll contributions and personal income tax rates have been updated.
Questions & Answers
Payroll and Benefits Guide
in United States – Texas
What’s covered in this guide:
- Employer/employee contributions
- Minimum wage
- Working hours
- Visa requirements
Public Holidays Calendar
|Sunday||Jan-1||New Year's Day|
|Monday||Jan-16||Martin Luther King Jr. Day|
|Monday||Jun-19||Juneteenth Independence Day|
|Tuesday||Jul-4||Independence Day July|