Payroll Texas Unique Aspects of Texas Payroll Law and Practice
Below is a MRR and PLR article in category Business -> subcategory Other.
Payroll in Texas: A Guide to Unique Aspects of Texas Payroll Law and Practice
Texas payroll has several distinctive aspects and regulations. This guide highlights key details about tax withholding and reporting, unemployment insurance taxes, wage and hour laws, and child support withholding.
No State Income Tax
Texas stands out by not having a personal state income tax, which means there's no requirement to withhold state income taxes from employee paychecks.
Wage and Hour Laws
Enforcement Agency:
Texas Workforce Commission
101 East 15th St.
Austin, Texas 78778-0001
512-837-9559
[twc.state.tx.us](http://www.twc.state.tx.us)
- Texas law prohibits garnishments for creditors except for taxes and student loans. Only the IRS or student loan agencies can garnish wages.
- No state requirement for overtime; only federal FLSA laws apply.
- The state minimum wage is $5.15 per hour.
- Payment must occur at least semi-monthly, except FLSA-exempt employees can be paid monthly.
Unemployment Insurance
Managing Agency:
Texas Workforce Commission
101 East 15th Street
Austin, Texas 78778-0001
512-837-9559
[twc.state.tx.us](http://www.twc.state.tx.us)
- Initial unemployment tax rate: 2.7% on the first $9,000 of wages per employee.
- Workers' Compensation Insurance is not mandatory in Texas, unique to the state.
Direct Deposit
Employers can mandate direct deposit, but employees choose their financial institution. No extra fees should apply to employees.
Termination of Employment
- Involuntary terminations require payment within six days.
- Voluntary resignations are paid on the next regular payday.
Paystub Requirements
Paystubs in Texas must include:
- Employee's name
- Pay rate
- Gross and net earnings
- Deductions and their purpose
- Hours worked or piecework done
Escheat Laws
Unclaimed wages revert to the state after one year, or 180 days for amounts under $100. Employers must keep records of abandoned wages for 10 years.
New Hire Reporting
Every new hire or rehire must be reported with:
- Employee’s name, address, and social security number
- Employer’s name, address, and EIN
Optional information includes birth date, hire date, and payroll address for child support notices. Reports are due within 20 days and can be submitted by mail, fax, or electronically.
Contact:
888-839-4473
[newhire.org/tx](http://www.newhire.org/tx)
Child Support Withholding
Enforcement Agency:
Child Support Division
Office of the Attorney General
300 W. 15th Street
Austin, TX 78701
512-460-6000
[oag.state.tx.us/child/
services](http://www.oag.state.tx.us/child/#services)
- Start Withholding: Immediately upon order receipt.
- Send Payment: Within 7 days of payday.
- Termination Notice: Within 7 days of termination.
- Administrative Fee: Maximum $2 per month.
- Withholding Limits: Follows federal CCPA guidelines.
Additional Considerations
- No state provisions for mandatory rest or meal breaks.
- Cafeteria Plan and 401(k) deferrals taxable for unemployment insurance.
- Magnetic media reporting is required for employers with at least 250 employees.
- No state W2s are necessary due to the lack of state income tax.
Understanding these unique aspects of Texas payroll law and practice can help ensure compliance and smooth management of your payroll processes.
You can find the original non-AI version of this article here: Payroll Texas Unique Aspects of Texas Payroll Law and Practice.
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