Unemployment Insurance Tax Rates Decrease for Texas Employers

Date: January 14, 2020

The new year kicks off lower costs and big savings.

In December 2019, the Texas Workforce Commission (TWC) announced the average unemployment insurance (UI) tax rate for all employers will be 1.14 percent for Calendar Year (CY) 2020, dropping from 1.25 percent in CY 2019 to its lowest point since 2009. 

According to the TWC, the minimum tax rate is paid by 355,072 employers, which represents 66.8 percent of experience-rated employers. The standard minimum UI tax rate paid by Texas employers in CY 2020 will be 0.31 percent, which is down from 0.36 percent in CY 2019. 

These employer-paid UI taxes replenish the Texas Unemployment Compensation Trust Fund, which provides temporary income for Texas workers who lose their jobs through no fault of their own. The average tax rate for experience-rated employers is .93 percent for CY 2020, and is down from 1.06 percent in CY 2019. Components of the CY 2020 tax rate include: 

  • The general tax rate is based on claims against an employer’s account. If TWC has paid benefits to former employees who were laid off or separated through no fault of their own in the past three years, then those employers will pay a general tax.
  • The replenishment tax rate is charged to all experience-rated employers to cover unemployment claims not charged to a specific employer. This tax tends to rise following economic slowdowns when claims increase and businesses close.
  • The employment training assessment is imposed on each employer paying contributions under the Texas Unemployment Compensation Act as a separate assessment of 0.10 percent of wages paid by an employer. Money from the assessment is deposited to the credit of the employment and training investment holding fund.

Because the Texas Unemployment Compensation Trust Fund has risen above its statutory minimum required balance, TWC will not charge employers any deficit tax in 2020. To learn more about UI tax rates for Texas employers from calendar years 2003 to 2020, click here.

Related Content: News | Economy | Taxes | Texas

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