Texas Hourly Paycheck and Payroll Calculator

Need help calculating paychecks? Use Gusto’s hourly paycheck calculator to determine withholdings and calculate take-home pay for your hourly employees in Texas.

Simply enter their federal and state W-4 information as well as their pay rate, deductions and benefits, and we’ll crunch the numbers for you.

The information provided by the Paycheck Calculator provides general information regarding the calculation of taxes on wages for Texas residents only. It is not a substitute for the advice of an accountant or other tax professional. The Paycheck Calculator may not account for every tax or fee that applies to you or your employer at any time. ZenPayroll, Inc., dba Gusto ("Gusto") does not warrant, promise or guarantee that the information in the Paycheck Calculator is accurate or complete, and Gusto expressly disclaims all liability, loss or risk incurred by employers or employees as a direct or indirect consequence of its use. By using the Paycheck Calculator, you waive any rights or claims you may have against Gusto in connection with its use.

Texas Paychecks and Taxes

New to the world of Texas payroll taxes and not quite sure what you have to pay or withhold on behalf of employees? We’re here to help. In Texas, there are both state and federal taxes you must withhold or pay, as well as paycheck laws you must remember. If you’d prefer to have someone else take care of calculating paychecks for you, an online payroll software or a small business accountant can help.

Does Texas have state payroll taxes?

The state of Texas may be big, but its list of payroll taxes is small. There is only one state payroll tax—unemployment insurance—and it is paid by the employer. (Yep, there’s not even state income tax in the Lone Star State.)

As an employer, you’ll pay Texas Unemployment Insurance (UI) on the first $9,000 of each employee’s wages each year. The exact tax rate is specific to your business and may change annually. In 2022, the minimum tax rate is 0.31% and the maximum is 6.31%. You can obtain your tax rate by visiting the Texas Workforce Commission’s Unemployment Tax Services website.

Workers’ Compensation

Requirements to obtain Workers’ Compensation vary by state, this table outlines some of these requirements. If you determine that your company is required to purchase Workers’ Compensation insurance in your state, learn how to sign up for this insurance with Gusto. Sometimes, companies get a request for a workers’ comp audit—head to this article and click the Workers comp audit reports dropdown for more information. 

How about federal payroll taxes?

There are also a few federal taxes that all employers must pay or withhold from their employees’ earnings. 

The tax that both employers and employees must pay is the Federal Insurance Contributions Act (FICA) tax

The FICA tax is made up of the Medicare tax and the Social Security tax.

In 2022, the Social Security tax requires employers and employees to each contribute 6.2% of wages up to $147,000. The Medicare tax requires each to contribute 1.45% of all wages. See the IRS webpage for details, like maximum thresholds.

The tax that only employers must pay is federal unemployment tax (FUTA). 

Like the state, the federal government also has an unemployment tax. It’s called FUTA and it’s an annual tax employers pay on the first $7,000 of each employee’s wages. The FUTA rate for 2022 is 6%, but most employers only have to pay 0.6% each year.

The two taxes that only employees pay are:

  1. Federal income tax: How much you withhold here depends on the employee’s withholding selections on their Form W-4. The amount each employee withholds varies based on their earnings, filing status, and other factors. Learn more about completing Form W-4.
  2. Additional Medicare tax: Depending on the employee’s filing status, they may be subject to this additional 0.9% tax. You must withhold this tax from employee wages that exceed $200,000 per year.

Anything else about Texas paychecks that I need to know?

Here are a few other important things to know:

  • Texas follows the federal minimum wage, $7.25 per hour, with few exceptions. For instance, tips and in some cases meals and lodging can be deducted (or calculated) towards wages. Engage employment counsel to ensure compliance with all the fine print. 
  • You must report new hires to the Texas Attorney General’s Office within 20 days of their first day. If you fail to report new hires, you may be fined. 
  • You must give pay stubs or another type of written earnings statement to your employees at the end of each pay period. Pay stubs must include the following information: employee name, number of hours worked during the pay period, their rate of pay, any deductions made and for what purpose, and their gross and net pay
  • Non-exempt employees must be paid at least twice per month. 
  • Hourly employees must be paid overtime: 1.5 times their regular hourly rate for any time worked beyond 40 hours in a week.  
  • If you terminate employment or or lay off an employee, you must pay the employee their final paycheck within six calendar days (or the next workday if the sixth day is on a day when the business is usually closed). If an employee voluntarily leaves, the final paycheck is due on the next regular pay date. 

Ready to hire your next employee? Calculate their paycheck here and explore the true cost of hiring an employee in Texas.

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