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Texas is one of the most employer-friendly payroll states in the US — no state income tax, no SDI, and optional workers' comp. Rippling handles federal requirements and TWC filings with minimal state-level complexity.
Texas is the second-largest US economy and one of the most employer-friendly states. No state income tax, no mandatory state disability insurance, and optional workers' compensation make Texas payroll substantially simpler than California, New York, or Washington. The Texas Workforce Commission (TWC) administers unemployment insurance — the primary state-level payroll obligation beyond federal requirements.
Texas follows federal FLSA with no state-specific overtime rules, no local minimum wage laws (state preempts local), and strong at-will employment.
Rippling's Texas payroll module provides:
| Contribution | Rate | Notes |
|---|---|---|
| FUTA | 0.6% | Net rate on first $7,000 wages per employee. |
| TX SUTA (TWC) | 0.25%–6.25% | On first $9,000 wages. New employer rate: 2.7%. |
| Social Security (OASDI) | 6.2% | On wages up to $168,600. |
| Medicare (HI) | 1.45% | No wage base limit. |
| Workers' Comp Insurance | Variable | Optional for private employers. Non-subscribers lose common law defenses. Most employers maintain coverage. |
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| Contribution | Rate | Notes |
|---|---|---|
| Federal Income Tax | 10%–37% | Per W-4 elections. No Texas state income tax. |
| Social Security (OASDI) | 6.2% | On wages up to $168,600 (2024). |
| Medicare (HI) | 1.45% | No wage base limit. 0.9% additional on wages over $200,000. |
No Texas state income tax. No Texas SDI equivalent. Significantly simpler than California or New York.
No Texas state income tax. Employees pay only federal income tax (10%-37% progressive) and FICA (6.2% Social Security + 1.45% Medicare). A meaningful recruiting and retention advantage over high-tax states.
Final Pay (Texas Payday Law): Involuntary: next regular payday. Voluntary: next regular payday or within 6 days, whichever is later. No immediate final pay requirement. PTO payout required only if employer's written policy states so.
At-Will: Strong at-will state. No notice requirement absent a contract.
Statutory: Workers' comp (optional but strongly recommended), unemployment insurance (TWC), no state income tax.
Market standard: Medical/dental/vision, 401(k) with 3-5% match, 10-15 days PTO, 10 paid holidays. Texas employers often compete on generous benefits given no state income tax advantage already factored into compensation discussions.
Texas is the only US state where workers' compensation insurance is optional for private employers. Employers who opt out ('non-subscribers') lose statutory defenses against employee injury lawsuits and face potentially unlimited liability. In practice, most Texas employers maintain workers' comp coverage. Rippling tracks workers' comp policy information for both subscriber and non-subscriber arrangements.
No. Texas has no state income tax, no state SDI equivalent, and no state-mandated disability or paid family leave program. Texas payroll is significantly simpler than most other states — the only state-level payroll obligation beyond federal is SUTA (Texas Workforce Commission unemployment tax). Texas employees enjoy higher take-home pay relative to comparable salaries in high-tax states.
Texas follows federal FLSA: overtime at 1.5× after 40 hours/week. No Texas daily overtime requirement. Texas minimum wage equals the federal minimum of $7.25/hour — there are no local minimum wage laws in Texas as state law preempts local ordinances.
Yes. Rippling's Texas payroll module handles federal income tax withholding, FICA, FUTA, and TWC SUTA quarterly filings. Texas is among the simplest Rippling payroll configurations. thePeopleStack configures Texas payroll including TWC account setup and workers' comp coordination.
