Average Unemployment Insurance Tax Rates Decrease for Texas Employers

Texas Workforce Commission sets employer tax rates for 2018

Texas Insider Report: AUSTIN, Texas –  With the continued positive economic growth in Texas, the Texas Workforce Commission (TWC) today announced the average Unemployment Insurance (UI) tax rate for all employers will be 1.37 percent for Calendar Year (CY) 2018, dropping from 1.64 percent in CY2017 to its lowest point since 2009. The average tax rate for experience-rated employers is 1.20 percent for CY 2018, and is down from 1.51 percent in CY 2017.

The minimum tax rate is paid by 327,483 employers, which represents 64.9 percent of experience-rated employers. The standard minimum UI tax rate paid by Texas employers in CY 2018 will be 0.46 percent, which is down from 0.59 percent in CY 2017. These employer-paid UItaxes replenish the Texas Unemployment Compensation Trust Fund, which provides temporary income for Texas workers who lose their jobs through no fault of their own.

An experience rating is determined by the amount of an employer’s taxable wages and the amount of UI benefits that have been paid to former employees and charged to the employer’s account for the last three years. An employer paying the standard minimum tax will pay $41.40 per employee in CY 2018 compared with $53.10 per employee in CY 2017. The maximum UI tax rate, paid by 5.8 percent of Texas employers, will be 6.46 percent, decreasing from CY 2017 at 8.21 percent.

TWC is dedicated to finding ways to lower the financial impact of UI taxes on Texas employers. TWC and its 28 local workforce boards also are committed to helping UI claimants return to work as soon as possible. Through automated processes and database cross matches with state and federal agencies, TWC  continues to strengthen and improve efforts to detect and prevent UI fraud. TWC  pledges to continue efforts to keep taxes as low as possible and minimize the effects on Texas employers.

TWC retired bonds earlier this year, eliminating the need for an assessment tax that has been collected to repay such obligations in previous years. Additionally, because the Texas Unemployment Compensation Trust Fund has risen above its statutory minimum required balance, TWC will not charge employers any deficit tax in 2018. The components of the CY 2018 tax rate are as follows:

  • The general tax rate is based on claims against an employer’s account. If TWChas 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.

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