Texas Employer Registration: TWC Account, Unemployment Tax and New Hire Reporting
Texas Employer Registration: TWC Account, Unemployment Tax and New Hire Reporting
Hiring your first employee in Texas adds registrations that many owners only discover after they miss a deadline. Three state or federal agencies are involved. The Texas Workforce Commission (TWC) runs the state unemployment tax account and handles Texas Payday Law wage claims. The Office of the Attorney General receives new hire reports. Federal agencies handle the income tax withholding and payroll taxes that Texas does not replace. This guide covers what you need to register, when each filing is due, and where Texas is simpler than most owners expect.
Disclaimer: This guide is informational content, not legal or tax advice. Payroll obligations depend on your entity, headcount, and pay practices. The figures here were verified on October 14, 2026, but rates and thresholds change. Confirm current amounts with the agency named in each section, and have a CPA or employment attorney review your setup before you run your first payroll.
What Texas does not require
Texas is one of the lighter states for new business paperwork. Texas does not issue or require a general state business license, and it has no statewide general contractor or roofing license. Counties license nothing except the assumed name filing that sole proprietors make with the county clerk. LLCs and corporations file their assumed name certificate with the Texas Secretary of State instead, for a $25 fee, and county clerk fees do not apply to them. Texas also has no state income tax and no publication requirement for a new entity.
Texas has no state withholding, but federal payroll taxes still apply
Because Texas has no state income tax, you do not withhold state income tax from paychecks and you do not file a state withholding return. That is the simple part. Federal income tax withholding, Social Security and Medicare taxes, and federal unemployment tax still apply to your payroll under federal law. Confirm current federal rates and deposit schedules with the IRS before you pay your first employee. Texas also levies a franchise tax, covered below, which is a privilege tax and not an income tax on wages.
When you become liable for TWC unemployment tax
You become an employer for Texas unemployment tax purposes when either of these tests is met:
- You pay $1,500 or more in gross wages in any calendar quarter.
- You have at least one employee in 20 different weeks of a calendar year. The weeks do not need to be consecutive.
Once either test is met, you must register with TWC within 10 days. The clock starts when you become liable, not when you file your first payroll report. Owners who hire one part-time worker in the spring often cross the $1,500 quarterly line without noticing, so track gross wages every quarter. Track your weeks with at least one employee too, because the 20 week test can be met slowly across the year.
Registering your TWC employer account
Register with TWC through its employer registration process. Before you start, have your legal entity name exactly as it appears in Secretary of State records, your federal Employer Identification Number (EIN), and the date you first paid wages in Texas. You can check the entity name in the Texas Secretary of State business search at https://www.sos.state.tx.us/corp/searches.shtml. A mismatch between your TWC filing and your state record creates reconciliation problems later, so fix it before you register.
The 2026 unemployment tax rate and wage base
For 2026, new employers pay a state unemployment tax (SUTA) rate of 2.70% in every industry group. The rate applies to the first $9,000 of each employee's wages for the year. Wages above $9,000 per employee are not taxed for SUTA purposes. For example, an employee paid $30,000 in 2026 produces $9,000 of taxable wages, and the state tax on that employee is $243 ($9,000 times 2.70%). Your rate in later years can differ from the new employer rate, so confirm the rate on your TWC account each year.
Because the wage base applies to each employee, total unemployment tax rises with headcount, but the cost per worker stops growing once that worker's wages pass $9,000 in the year.
Quarterly reports and payments
You file a unemployment tax report and make payment every quarter. Reports and payments are due by the end of the month after each quarter ends.
| Quarter | Months covered | Report and payment due |
|---|---|---|
| Q1 | January to March | April 30 |
| Q2 | April to June | July 31 |
| Q3 | July to September | October 31 |
| Q4 | October to December | January 31 |
Late filings are avoidable, so put all four dates on your calendar the day you register.
New hire reporting: 20 calendar days
Separate from unemployment tax, Texas requires employers to report each new hire and rehire to the Office of the Attorney General within 20 calendar days of the date the employee starts receiving wages. The trigger is the Form W-4. Report anyone who completes a W-4 for you, including rehires. This report goes to the Attorney General, not to TWC.
Your quarterly wage report to TWC does not replace new hire reporting. The two filings serve different purposes, and filing one does not satisfy the other. Build the new hire report into your onboarding checklist so it happens in week one. Check the Office of the Attorney General's new hire reporting page for current submission methods and required fields.
Texas Payday Law: final pay and wage claims
The Texas Payday Law sets the timing for final pay, and TWC handles wage claims under it. Build these rules into your offboarding process:
- Discharged employee: final pay is due within 6 calendar days of the discharge.
- Employee who resigns: final pay is due by the next regular payday.
- Wage claims: an employee must file a wage claim with TWC within 180 days of the date the wages were due.
Missed final pay is one of the easiest disputes to avoid. Pay final wages on a fixed schedule, keep accurate time records, and document the separation date for every departing worker.
Franchise tax and the Public Information Report
The Texas franchise tax is administered by the Texas Comptroller of Public Accounts. For the 2026 and 2027 report years, the no tax due revenue threshold is $2,650,000. Entities at or below that total revenue owe no franchise tax, but they must still file a Public Information Report (PIR) each year, due May 15 to the Comptroller. The PIR is not filed with the Secretary of State.
Entities above the threshold pay 0.375% on retail and wholesale margin and 0.75% on other entities. A 0.331% EZ Computation rate applies to entities under $20 million in total revenue. Confirm which rate fits your entity with the Comptroller before you file. Start at https://comptroller.texas.gov/taxes/.
Step-by-step checklist
- Form your entity. An LLC Certificate of Formation (Form 205) costs $300 with the Secretary of State.
- Obtain a federal EIN from the IRS if you do not already have one.
- Track gross wages every calendar quarter, and count the weeks with at least one employee.
- Register with TWC within 10 days after you become liable.
- Have each new hire complete a W-4 and report them to the Office of the Attorney General within 20 calendar days of starting wages.
- File TWC quarterly reports and payments by the end of the month after each quarter.
- File your Public Information Report with the Comptroller by May 15 each year.
- Build final pay timing into offboarding: 6 calendar days after a discharge, or the next regular payday after a resignation.
Common mistakes to avoid
- Counting only annual wages. The $1,500 quarterly test can make you liable within a single quarter.
- Treating the TWC quarterly report as your new hire report. They are separate filings.
- Waiting for your first paycheck to register. The 10 day window runs from the date you become liable.
- Assuming no state income tax means no payroll obligations. Federal taxes and TWC reporting still apply.
- Forgetting rehires. Rehires count for new hire reporting.
Where to get help
Start with the agency that owns each rule: TWC for unemployment tax and Payday Law wage claims, the Office of the Attorney General for new hire reports, the Comptroller for franchise tax, and the IRS for federal payroll taxes. For a broader business review, the Texas Small Business Development Center Network at https://www.sbdctexas.org/ connects owners with advisors. For payroll setup and tax elections, work with a CPA. For termination or wage disputes, talk to an employment attorney.
This guide is informational content, not legal or tax advice. Verify current requirements with the named agencies before you act on any figure here.