Question 1

What payroll taxes does an employer pay in Texas?

Accepted Answer

Every Texas employer pays Social Security (6.2% of wages up to $184,500), Medicare (1.45% of all wages), federal unemployment tax (FUTA, 0.6% of the first $7,000) and Texas unemployment tax (SUTA, 2.7% of the first $9,000 for a new employer in 2026). Texas has no other statewide employer payroll tax. For one employee paid $50,000, that comes to about $4,110 a year, or 8.22% on top of wages.

Question 2

What is the Texas SUTA rate for new employers in 2026?

Accepted Answer

A new Texas employer pays 2.7% on the first $9,000 of each employee's wages in 2026, so at most $243.00 per employee per year. After the new-employer period, the state assigns an experience rate based on your layoff history. Rate notices come from the state agency (Texas Workforce Commission); once you have yours, use that rate.

Question 3

Is Texas a FUTA credit reduction state for 2026?

Accepted Answer

No. Texas is not on the U.S. Department of Labor list of potential 2026 credit reduction states (only California and the U.S. Virgin Islands are), so Texas employers get the full 5.4% credit and pay 0.6% FUTA, $42 per employee. The final list is set after November 10, 2026.

Question 4

When are payroll taxes due in Texas?

Accepted Answer

Federal income tax withholding, Social Security and Medicare are deposited monthly (by the 15th of the next month) if your lookback-period liability was $50,000 or less, and semiweekly otherwise. Form 941 is filed quarterly: the third-quarter 2026 return is due November 2, 2026 (October 31 is a Saturday), and the fourth-quarter return and the annual Form 940 for 2026 are due February 1, 2027. Texas unemployment wage reports and tax are filed quarterly with the state unemployment agency (Texas Workforce Commission).

Question 5

Do employers pay Social Security and Medicare on top of wages?

Accepted Answer

Yes. The employer matches the employee's 6.2% Social Security tax on wages up to $184,500 in 2026 (at most $11,439 per employee) and the 1.45% Medicare tax on all wages. The extra 0.9% Additional Medicare Tax on wages over $200,000 is withheld from the employee only, with no employer match. The Social Security wage base rises to $192,300 for 2027.

Question 6

Why are FUTA and SUTA higher in the first paychecks of the year?

Accepted Answer

Both stop once an employee's wages for the year pass the wage base: $7,000 for FUTA and the state's own base for SUTA. In a state with a low base, the whole year's unemployment tax is paid in the first few paychecks. The per-paycheck figures on this page are annual averages, so budget a little more cash for January through March.

Question 7

Is it cheaper to hire a 1099 contractor than an employee?

Accepted Answer

You pay no payroll taxes on a contractor, but whether someone is a contractor is not your choice: the IRS looks at behavioral control, financial control and the relationship of the parties, and misclassification brings back taxes and penalties. A contractor also pays the full 15.3% self-employment tax, so expect higher rates than the same person's wage.

Tax	Employer rate, 2026	Notes
Social Security	6.2% of wages up to $184,500	Matches the employee's 6.2%.
Medicare	1.45% of all wages	No employer share of the 0.9% Additional Medicare Tax.
FUTA	0.6% of the first $7,000	Full 5.4% state credit; not a credit reduction state.
TX SUTA	2.7% of the first $9,000 (new employer)	Experienced employers get their own rate each year.

Texas Payroll Tax Calculator

Breakdown per employee, per year

Withheld from each employee (not an employer cost)

Payroll Taxes Texas Employers Pay in 2026

What Changes for Texas Employers in 2027

Texas Payroll Tax FAQ

More Payroll Tools for Texas

Payroll Tax Calculators for Other States

Official References

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