Tax Rates

Historical Tax Rate Information

FOR DETAILS ON HOW THE 2008 ANNUAL TAX RATE IS CALCULATED,
SELECT THE 2008 LINK UNDER THE "YEAR" COLUMN.

New Employer Tax Rates

New employers who do not acquire an existing business start at a tax rate of 2.70% or the applicable industry average tax rate, whichever is higher. The industry average is based on the North American Industry Classification System (NAICS). The employer will keep the entry level tax rate for approximately 18 months, and will continue to pay at this rate until the employer's account is chargeable with claims for unemployment benefits for four complete quarters. This period generally extends six calendar quarters from the date that first wages are paid, but can be as long as eight quarters. At the end of this period and for each year thereafter, the employer's tax rate is computed based upon the amount of unemployment insurance benefits former employees receive along with a number of statewide factors. This computed rate is called the employer's Effective Tax Rate.

Experience Tax Rate Formula

Sum of General Tax Rate + Replenishment Tax Rate + Employment and Training Investment Assessment

Note: Prior years could also include Deficit Tax Rate.

Components of the Tax Rate

General Tax Rate - This rate is based on unemployment insurance claims charged to your account, and is the product of a Statewide multiplier called the Replenishment Ratio and your Benefit Ratio, multiplied by 100% and rounded up to the next tenth. The Replenishment Ratio is calculated each year based on total benefits paid Statewide for a four-quarter period. The Benefit Ratio is the total of your chargebacks of unemployment benefits paid to your former employees for the three years prior to the rate computation date divided by your employees' taxed wages for the same period. The ratio is multiplied by 100% and rounded up to the next hundredth. Change in an employer's general tax rate is directly related to staff patterns and restructuring to adjust to the marketplace.

It is important to note that the Commission can use in the calculation of the Benefit Ratio only taxed wages on which the tax due has been paid by the end of the month of the computation date. It is especially important for employers with chargebacks of benefits to pay their tax timely to divide the chargeback total by the largest possible taxed wage total.

Replenishment Tax Rate - This is a tax based on Statewide benefits and taxed wages and is applicable to all employers to cover unemployment claims not charged to a specific employer. This tax varies inversely from year to year, to statewide economic conditions.

Deficit Tax Rate - This tax is calculated by multiplying the statewide Deficit Ratio by the sum of your prior year's General, Deficit and Replenishment Tax Rates. The product is rounded to the nearest hundredth and may not exceed 2.00%. The Deficit Tax applies only to those employers who were experience rated in the previous year. A Deficit Tax was assessed in 2002 and 2003.

Employment and Training Investment Assessment - The rate of 0.10% is set according to State Law and is the same for each employer entitled to an experience rate.

Special Note About Chargebacks

A detailed listing of the individuals making up the three-year total of benefit chargebacks used in your Benefit Ratio may be viewed online by registering for access to Unemployment Tax Services or by:

Phone	(512) 305-8708
Fax	(512) 463-8185
Email	taxexperience.rating@twc.state.tx.us
Mail	Texas Workforce Commission Tax Department-Status Section - Rates Unit 101 E. 15th St Rm 514 Austin, Texas 78778-0001

If you have a question about an individual chargeback claim, include your account number, the claimant's Social Security Number and the initial claim date, and send the request to:

Please e-mail questions or comments to tax@twc.state.tx.us

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