Texas Payroll Tax Overview: What Businesses Need to Know

Texas Payroll Tax Overview: What Businesses Need to Know

As one of the world’s largest economies and the second-largest in the United States, Texas is an appealing location for starting or expanding a business. However, it’s crucial to meet Texas payroll tax obligations by understanding both federal laws and how Texas Workforce Commission (TWC) unemployment taxes work. Efficiently managing these state-specific payroll tax issues ensures smooth operations. Here’s what you need to know about Texas payroll tax obligations.

Understanding Texas Payroll Taxes

Texas residents need federal income taxes withheld from their paychecks, as required of most American employees. The withholding rate is determined by the IRS Form W-4, based on the employee’s filing status, dependents, and other income sources.

However, Texas does not have a state income tax. There are also no municipal income taxes since the Texas state constitution explicitly prohibits taxes on personal income. This equates to higher take-home pay for most Texas employees and one less withholding item for Texas employers to be concerned with.

The primary employer payroll responsibilities are the Federal Insurance Contributions Act (FICA), which encompasses Social Security and Medicare, the Federal Unemployment Tax Act (FUTA), and the Texas Workforce Commission (TWC) Unemployment Tax, or SUTA.

FICA (Federal Insurance Contributions Act)

  • Employer Contribution: 7.65% of each employee’s wages, with 6.2% for Social Security and 1.45% for Medicare.
  • Earnings Cap: Social Security contributions cap at $168,600 for 2024. There is no cap on Medicare contributions.

FUTA (Federal Unemployment Tax Act)

  • Employer Contribution: 6% on the first $7,000 of each employee’s wages annually.
  • Potential Reduction: Texas employers may qualify for a reduced FUTA rate if they pay Texas unemployment taxes (TWC/SUTA) on time, lowering the net FUTA rate to 0.06%.

TWC/SUTA (Texas Workforce Commission/State Unemployment Tax Act)

  • Employer Contribution: Based on the first $9,000 of an employee’s wages annually.
  • Tax Rates: Vary depending on the employer’s status (new or existing), timeliness of payments, and chargebacks. The general tax rate for 2024 is 1.22%.

Texas Unemployment Tax

The Texas Unemployment Tax is comprised of several components:

  1. General Tax Rate (GTR): 1.22% for 2024.
  2. Replenishment Tax Rate (RTR): 0.15% for 2024.
  3. Obligation Assessment Rate (OA): 0% for 2024.
  4. Deficit Tax Rate (DTR): 0% for 2024.
  5. Employment and Training Investment Assessment (ETIA): 0.1%.

Combining all five components, the total unemployment tax rate for Texas employers in 2024 ranges from a minimum of 0.25% to a maximum of 6.25%.

State-Specific Deductions

Texas does not impose state-specific payroll taxes, such as mandatory contributions for disability insurance, which are required in some other states. However, employers must still manage federal deductions, including student loan garnishments, child support, tax levies, and other court-ordered payments. It is crucial for employers to ensure that these wage garnishments are correctly paid to the appropriate authorities to avoid penalties.

Employer Responsibilities and Best Practices

Employers must accurately report employee compensation and payroll taxes, including both mandatory and voluntary deductions. Key practices to ensure compliance include maintaining accurate reporting, which involves ensuring that all compensation and tax information is correctly reported to tax authorities.

Efficient record-keeping is also essential, and using cloud-based systems can provide secure, real-time updates, making it easier to manage changing tax rates and employee data. Additionally, staying compliant by filing early and paying on time helps avoid costly penalties and disruptions. 

Outsourcing Payroll

Outsourcing payroll to professionals can provide additional support, allowing you to focus on growing your business. Payroll experts stay updated on tax changes, including state-specific issues, and offer tailored solutions for your business needs.

While Texas may have fewer payroll taxes and regulations than other states, staying on top of TWC rates and policy changes is crucial. By complying and paying early, you can save money and avoid disruptions. Contact Affiliated HR & Payroll Services for expert assistance with managing your payroll taxes and ensuring compliance with Texas regulations.


Revolutionizing Recruitment: Innovative Strategies for Modern Talent Acquisition

Revolutionizing Recruitment: Innovative Strategies for Modern Talent Acquisition

Gone are the days of running a “Help Wanted” ad in the local newspaper and waiting for resumes to come in. In today’s competitive hiring market, modern recruitment strategies are essential to attract and hire the best talent. Social recruiting, data-driven hiring practices, and advanced applicant tracking systems all play a crucial role. Let’s explore how you can use these innovative strategies to revolutionize your recruitment process.

The Rise of Social Recruiting

Social recruiting involves using social media apps like Twitter, Facebook, and LinkedIn to find new hires. According to data from Insight Global, 56 percent of recruiters say they find their best hires through social recruiting. More than 70 percent of job hunters between 18 and 34 found their most recent job through one of these social sites. It’s clear that social recruiting is beneficial for both recruiters and job seekers.

Engaging consistently with potential candidates is important for success in social recruiting. Some companies even involve their own employees in these efforts. This approach casts a wider net and allows potential applicants to network with peers who already work for you. Social media posts should either openly or implicitly convey your company’s culture and core values.

Leveraging Data-Driven Hiring Practices

Recruiters today have access to a global talent pool, which means they often receive more applications than they can reasonably screen. Data analytics software offers a solution.

These tools help your HR team streamline hiring and make more informed decisions. Sophisticated tools can analyze candidate behavior, compare it to market trends, and predict better hiring outcomes. For instance, you can identify which qualifications or experiences are most correlated with success in your roles, allowing you to prioritize candidates with these attributes. Data analytics software simplifies the entire hiring cycle for your team.

Innovative Recruitment Technologies

When faced with hundreds or even thousands of applicants, automated screening tools and AI-driven applicant tracking systems (ATS) can help. These tools can screen applicants for specific skills and competencies while filtering out unqualified candidates. They allow you to search through large volumes of applications quickly and automate repetitive tasks, saving your organization time and money.

Digital hiring platforms are another recent innovation. These platforms enable you to request and review video-recorded answers to questions from applicants at your convenience, simplifying the traditional hiring process. This can be particularly useful for initial screening interviews, allowing you to assess candidates’ communication skills and enthusiasm before scheduling in-person or live video interviews.

Integrating Applicant Tracking Systems

A sophisticated applicant tracking system (ATS) can help manage candidate flow through the hiring process. These systems keep everything organized, so you always know exactly where candidates are in the process and who you will be interviewing next. They also allow total customization of the questions you want to ask job applicants.

Utilizing an ATS also improves the candidate experience. An ATS keeps candidates in the loop and informs them of the next steps in the process so they always know whether they are still under consideration. This system makes your entire hiring process more seamless and transparent, which can enhance your employer brand.

Transforming the Recruitment Process

Due to the global talent pool available today, companies need to take advantage of cutting-edge recruitment technologies. These technologies can streamline your hiring process, improve the quality of new hires, and increase the efficiency of your HR team.

If you’re ready to transform your recruitment process, Affiliated HR & Payroll has the advanced talent solutions you’re looking for. Visit our recruitment solutions page to learn more and get started today!

Tailoring HR Solutions for Diverse Texas Industries

Tailoring HR Solutions for Diverse Texas Industries

Texas, with its massive and diverse economy, offers a wealth of opportunities for employers. The state is continually growing, attracting talent from all over. However, each industry in Texas has its own set of challenges. Whether you’re in oil and gas, technology, or healthcare, understanding these unique needs is key to effective HR management. Let’s dive into how tailored HR solutions can make a difference.

Challenges in Each Industry

Oil and Gas

The oil and gas industry is a cornerstone of the Texas economy, providing more than two million jobs. This sector offers high pay and job stability but comes with its own set of challenges. The industry plays a vital role in not only providing employment but also contributing significantly to the state’s overall economic growth.

  • Safety Concerns: Safety is a major issue. Workers often operate in remote and hazardous conditions. Ensuring their safety requires strong safety programs and compliance with regulations. Noncompliance can lead to significant risks and liabilities. For example, a worker handling machinery alone in an oil field needs robust lone-worker safety solutions to ensure their well-being.

  • High Turnover: Due to the demanding nature of the work, employees often leave quickly, making it hard to predict staffing needs. This high turnover rate means that HR must constantly be looking for qualified replacements, which can drain resources.


Texas has emerged as a significant tech hub, ranking second only to California. The city of Austin, in particular, has become a thriving tech hotspot, drawing in a substantial influx of thousands of tech workers due to its vibrant tech ecosystem and numerous job opportunities.

  • Talent Acquisition: Although the talent pool is large, finding the right skills can be tough. The tech industry faces waves of layoffs and restructuring, which can lead to a mismatch between the skills employers need and what job seekers offer. This makes the recruitment process challenging as HR must sift through numerous candidates to find the right fit.

  • Retention Issues: Keeping tech workers is challenging, especially with ongoing debates about remote work. Many workers are unsure about job security and may return to other states. Additionally, the fast-paced nature of the tech industry means that employees are always looking for the next best opportunity, making retention a constant challenge. Companies need to offer competitive salaries and a work environment that aligns with the expectations and lifestyles of tech professionals.


The healthcare industry plays a crucial role in Texas, with a wide array of insurance companies, academic institutions, and healthcare service providers contributing to the sector’s prominence and impact on the state’s economy and well-being.

  • Staffing Shortages: There’s a significant shortage of healthcare workers, from nurses to support staff. This makes it hard to predict and meet staffing needs. Hospitals and clinics often struggle to maintain adequate staffing levels, leading to overworked employees and potential burnout.

  • Regulatory Compliance: Healthcare workers must consistently be trained on regulations like HIPAA. Noncompliance can lead to serious liabilities. For instance, a single HIPAA violation can result in hefty fines and damage to the healthcare provider’s reputation. Ensuring all employees are up-to-date with compliance training is an ongoing challenge for HR departments.

Customized HR Solutions

Oil and Gas

For the oil and gas sector, HR solutions need to focus on safety and remote workforce management.

  • Safety Programs: It is crucial to implement robust safety programs that track compliance for each employee. These programs should include regular safety drills, proper equipment maintenance, and clear communication channels for reporting hazards.

  • Remote Management Tools: These tools help communicate and monitor activities across various job sites, ensuring worker safety and efficiency. For instance, GPS tracking and digital check-ins can ensure that lone workers are safe and accounted for throughout their shifts.


In the tech industry, attracting and retaining talent is key.

  • Workplace Culture: Developing a workplace culture that aligns with tech workers’ expectations can help retain them longer. This includes promoting a flexible work environment, fostering innovation, and encouraging a healthy work-life balance.

  • Innovative Recruitment: Using advanced recruitment processes ensures that the right skills are identified and hired and that their talents are further developed. Leveraging data analytics can help identify candidates who fit not only the technical requirements but also the company’s cultural fit.


For healthcare, the focus is on filling positions quickly and maintaining compliance.

  • Staffing Solutions: Tailored HR solutions can help find workers for unfilled roles swiftly. This might include partnerships with nursing schools, offering signing bonuses, or utilizing temporary staffing agencies to fill immediate needs.

  • Training and Compliance: Implementing effective training programs for compliance ensures that all workers are up-to-date with necessary regulations. Regular workshops and online training modules can keep staff informed about the latest healthcare laws and best practices.

  • Efficient Scheduling: Improved scheduling systems can reduce worker burnout and miscommunications. Utilizing advanced scheduling software can help ensure that shifts are covered adequately without overburdening individual employees.

Benefits of Tailored HR Services

Implementing HR solutions tailored to specific industries can lead to increased efficiency, stronger compliance, and happier employees. Texas employers can overcome industry challenges by partnering with experts like Affiliated HR and Payroll. We help create a roadmap for a stronger workplace culture and retention strategy.

Discover how our tailored HR solutions can meet the unique needs of your industry. Contact us today to learn more and get started!


How to Effectively Manage Seasonal Workers’ Payroll

How to Effectively Manage Seasonal Workers’ Payroll

Managing seasonal workers’ payroll comes with unique challenges compared to handling payroll for full-time or part-time employees. Compliance with state labor laws is crucial, but opportunities exist to optimize labor costs and business efficiency. Streamlining your seasonal workers’ payroll with Affiliated HR and Payroll can ease the administrative burdens and enhance your business’s overall performance.

Understanding Seasonal Workforce Dynamics

Seasonal employees are different from full-time employees because their work is expected to end at a set time. This makes correctly classifying them very important. Will you hire them as employees for the duration of their contract, or will they be independent contractors? How they are classified affects payroll and tax withholding. Proper classification is essential to avoid issues with employment regulations.

Even though seasonal employment is short-term, employers still need to collect federal Forms W-4 and I-9 for tax purposes. Seasonal employees must have withholdings for federal income taxes, Medicare, Social Security, and unemployment. Depending on their status, there may also be benefits to consider, such as healthcare.

If you hire seasonal employees around holidays, like for the Christmas retail rush, they might expect quick payment so they can spend their earnings during the holidays. An on-demand payment system might be something to consider during these peak times to keep your workers happy.

All these factors contribute to the complexities of payroll for seasonal employees. While payroll for regular employees might be routine, you may need to make adjustments for seasonal workers.

Key Strategies for Effective Payroll Management

Several strategies can help streamline operations and manage seasonal workers’ payroll more efficiently:

  1. Use Specialized Payroll Software: This can help you classify seasonal workers correctly and reduce the time spent on payroll. An automated system makes tracking additional workers easier during a busy season.
  2. Stay Up-to-Date on Labor Laws: Knowing the latest state-specific labor laws will minimize errors in reporting and withholding, helping you avoid fines. For instance, different states might have varying regulations for overtime pay, and staying informed can prevent costly mistakes.
  3. Keep Accurate Records: Seasonal workers are often college students looking to make extra money during their breaks. Keeping accurate records and ensuring timely payment can keep them happy and willing to return for future seasonal work. This is especially true for businesses that rely on the same workers year after year, like summer camps or holiday retail stores.
  4. Consider Outsourcing Payroll: Affiliated HR and Payroll offers certified payroll services that keep you compliant with local, state, and federal laws, even as seasonal workers come and go. This can be a huge relief for businesses that experience fluctuating staffing needs throughout the year.

Benefits of Efficient Seasonal Payroll Management

Letting a payroll provider handle your seasonal employees’ payroll is a cost-efficient way to do business. The time you usually spend on payroll can be allocated to other important parts of your business. You also gain peace of mind, knowing you’ll always be in legal compliance, as they stay updated on labor law changes for you.

Efficient seasonal payroll management is crucial for keeping seasonal workers happy and motivated. Timely and accurate paychecks are one of the easiest ways to maintain high morale among your seasonal workforce, which is essential for your business’s success.

Moreover, happy seasonal workers are more likely to return the next time you need them. This can save you significant time and money on recruiting and training new staff. Consistency in your seasonal workforce can also improve the overall customer experience, as returning workers are already familiar with your business operations.

Seasonal Employment Payroll Solutions

Adding seasonal employees to your payroll adds complexity to your business. Managing payroll for these workers involves compliance with labor laws, proper worker classification, and ensuring timely and accurate paychecks.

Streamline your seasonal payroll process today! Contact Affiliated HR and Payroll for expert solutions tailored to your business needs.

Staying Ahead: Mastering Compliance in Texas’ Payroll and HR Landscape

Staying Ahead: Mastering Compliance in Texas’ Payroll and HR Landscape

As the 10th largest economy in the world with a GDP exceeding $2 trillion, Texas is an exciting place to start a new business or expand operations. While the Lone Star State is often considered more business-friendly than states like California and New York, companies still must comply with Texas HR regulations. Here’s what you need to know about Texas payroll & HR compliance and how to avoid common legal pitfalls.

Key Provisions of Texas Payroll and HR Regulations

At-Will Employment

Texas is an at-will employment state, meaning that most employers can terminate an employee without providing advance notice or just cause. A few exceptions exist, such as an employee’s refusal to help an employer commit a crime. In Texas, employment laws give more leeway to employers than workers. For example, personnel policies, schedules, job descriptions, and pay can be changed at any time. Texas is also a right-to-work state, meaning that a worker’s union membership or lack thereof cannot be used against them in obtaining or retaining employment.

Minimum Wage in Texas

Texas follows the federal minimum wage rate of $7.25 per hour as of 2024. Some cities, like Austin, have set their own higher minimum wage rates, such as $20.80 per hour, effective since October 2023. Houston has committed to raising the minimum wage to $15 per hour by 2025, in line with the Raise the Wage Act of 2021. However, there are state-level exemptions from minimum wage laws:

  • Tipped Employees: They have a federal base minimum wage of $2.13 per hour, with employers eligible for a $5.12 per hour tip credit to ensure they earn at least $7.25 per hour.
  • Small Businesses: Employers with fewer than 25 employees can pay less than the federal minimum wage if they are not retail businesses with over $2 million in sales.
  • Agricultural Employees: Those working on farms or in processing plants are exempt from Texas minimum wage laws.
  • Domestic Service Workers: Nannies, housekeepers, and other household employees are exempt.
  • Students and Trainees: Students enrolled in specific programs and trainees in official programs are exempt.
  • Disabled Workers and Workers Under 16: They can also be paid below minimum wage under certain conditions.

Overtime Regulations

Overtime pay isn’t explicitly defined in Texas payroll compliance rules beyond the federal Fair Labor Standards Act (FLSA), which states that non-exempt employees must be paid 1.5 times their normal wage if they work more than 40 hours per week.

Worker Classification

The Texas Workforce Commission uses a 20-factor test similar to the IRS to classify workers. Employers must contribute to the Texas unemployment fund for employees but not for independent contractors. Misclassifying workers can result in fines of $200 per misclassified worker, especially if you have government contracts.

Common Compliance Challenges

Business Registration

Failing to properly register your business or import existing entity paperwork from other states is an oft-forgotten compliance issue when doing business in Texas. Not having your business registered can cause operations to halt and result in heavy fines.

Employees Owed Back Pay

While Texas is known for being business-friendly, with several carve-outs for minimum wage laws and fewer employee protection regulations compared to other large states, employees still have the right to sue employers for wrongfully applying for a sub-minimum wage exemption. Misclassified workers and workers subject to overtime rules under FLSA can take employers to court over violating these rules, and receive back pay owed plus applicable damages.

Safety Regulations

In Texas, there is a thriving and diverse economy with a wide range of sectors. While federal regulations under OSHA play a crucial role in ensuring worker safety standards, the state’s vast size and diverse environment can sometimes pose challenges for employers in maintaining consistent safety and environmental standards for their workers.

Actionable Compliance Strategies

  1. Conduct Regular Audits: Ensure your business complies with all applicable laws to minimize the risk of fines and legal action. Have safety checks performed by experts and ensure compliance with relevant environmental regulations for your region of Texas.
  2. Stay Up-to-Date with Legislative Changes: Legal changes often come with advance notice, but staying informed helps you prepare for compliance changes and mitigate associated costs and risks.
  3. Implement Robust Payroll Systems: Proper classification and accurate payment of employees are essential. Texas allows employers to change job duties, pay, and other aspects without notice, but accurate records must be maintained for tax purposes.

Expert Guidance and Solutions

Affiliated HR and Payroll can help you stay on top of Texas payroll compliance, whether you’re starting a new venture or expanding. Our software and consulting services ensure your business remains compliant with Texas payroll and HR regulations. Contact Affiliated HR and Payroll today for expert guidance and solutions.