Unemployment Tax Requirements for Texas Businesses

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Any employer who is subject to the rules outlined in the Federal Unemployment Tax Act (FUTA) is liable to pay unemployment taxes. In addition to FUTA’s rules, every state has its own set of unemployment tax requirements. Below, we highlight the various unemployment tax requirements for organizations located in Texas. If your company is located outside of Texas, we highly recommend looking into your specific state’s requirements.

Unemployment Tax Requirements for Organizations in Texas

Any employer in Texas that falls under one or more of the following categories would be liable to pay unemployment taxes:

  • An employing unit that’s liable under FUTA and has Texas employees.
  • An employing unit that pays $1,500 or more in total gross wages in a calendar quarter or has at least one employee during 20 different weeks in a calendar year regardless of the wages. It’s important to note that the employee does not have to be the same person for 20 weeks, regardless of whether the employee is full time or part time.
  • An individual or employing unit that acquires or otherwise receives, through any means, all or part of the organization, trade, business, or workforce of another that was a liable employer at the time of the acquisition.
  • An employing unit that is a nonprofit organization as described under section 501(c) (3) of the IRS code and has four or more employees during 20 different weeks in a calendar year.
  • An employing unit that volunteers to become liable even though they don’t currently meet the required criteria.
  • All political subdivisions of the state of Texas, including municipalities, counties, utility districts, public education institutions, etc.
  • An employing unit that paid cash wages of $1,000 or more within a calendar quarter for domestic services.
  • An employing unit engaged in farm and ranch labor if:
    • It employs three or more employees for 20 weeks or more in a calendar year, or pays at least $6,250 in total gross wages in a calendar quarter.
    • The service is performed on a truck farm, orchard, or vineyard and is performed by a seasonal worker.
    • The worker is a migrant or a seasonal worker who works for a farmer, ranch operator, or labor agent who employs migrant workers.

For additional information on unemployment tax requirements within the state of Texas, review this helpful overview from the Texas Workforce Commission. For further information regarding FUTA rules, or to navigate other states’ requirements, contact SST today.

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