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Capital City
Austin
Timezone
CST
(
GMT-6
)
Paid Leave
None
Income Tax
0%
Employer Tax
0.31% - 6.31%
Capital City
Austin
Timezone
CST
(
GMT-6
)
Paid Leave
None
Income Tax
0%
Employer Tax
0.31% - 6.31%
Texas is one of the few states with no personal income tax, making it appealing for both employees and employers.
Texas is an at-will employment state, allowing employers to terminate employment for any reason not prohibited by law.
Texas has a diverse economy with major industries in energy, technology, and healthcare, Texas attracts a skilled workforce, especially in cities like Austin, Houston, and Dallas.
In Texas, workers’ rights are protected by numerous employment and labor laws, at both the state and federal level. As a result, employees enjoy protection from discrimination based on age, religion, sexual orientation, gender, and race.Here are the key things you need to know about hiring in Texas.
Employers must obtain an Employer Identification Number from the IRS for federal tax purposes and register with the Texas Workforce Commission for state unemployment tax. Employees do not need an EIN but must have a Social Security Number or an Individual Taxpayer Identification Number for tax reporting.
The standard workweek is 40 hours, with overtime pay required for hours worked beyond 40 in a week, paid at 1.5 times the regular rate. There are no specific restrictions on daily hours for adult employees, but there are stricter limits and time-of-day restrictions for minors.
Texas does not define full-time employment by hours. Employers usually consider 30 to 40 hours per week as full-time, but the exact definition may vary based on company policy and benefits eligibility.
There is no state-mandated probation period for new hires. Probationary periods, if used, are set at the employer’s discretion and outlined in company policy.
Texas follows federal law, with a minimum wage of $7.25 per hour. There is no state-specific law to raise this amount.
Protected classes include race, colour, religion, sex (including pregnancy), national origin, age (40 and older), disability, and genetic information. Employers are prohibited from discriminatory practices in hiring, firing, promotion, and other employment-related decisions.
Texas allows various payroll cycles, including weekly, bi-weekly, semi-monthly, or monthly. For non-exempt employees, pay must occur at least semi-monthly; exempt employees may be paid monthly.
Employment taxes and statutory fees affect both your payroll and your employees’ paychecks in Texas . Understanding the tax obligations for both employers and employees is crucial when operating in Texas's business landscape. This section explains how taxes and statutory fees affect payroll and individual earnings in Texas. Note that employees may be liable for additional local taxes in certain cities and jurisdictions.
Texas does not impose a state income tax on employees, so the primary contributions are federal payroll taxes. These deductions fund Social Security, Medicare, and federal revenue, ensuring compliance with federal law and supporting employee benefits.
While Texas doesn't have a state income tax, residents are still subject to federal income tax obligations.The federal deadline for filing is typically on April 15. If April 15 falls on a weekend or federal holiday, the deadline is extended to the next business day.
Texas does not require private-sector employers to offer pension or retirement plans.
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It should be noted that in the US, typical benefits such as vacation time, maternity leave, health insurance, etc. aren't usually legally required. However, it’s standard practice to offer them. As part of our global employment services, Playroll can create a globally compliant and competitive compensation package that can help you attract and retain top talent in the US.
Competitive benefits are essential for attracting and retaining top talent in Texas. Offering the right package helps employees feel valued and motivated. Our benefits experts understand the local labor market's trends, requirements, and expectations, ensuring your employees feel valued and supported. Common benefits in our Texas packages include:
Employers are not legally required by Texas law to provide health insurance. However, under the Affordable Care Act, employers with 50 or more full-time equivalent employees must offer health insurance or face penalties.
There is no law requiring benefits for part-time employees. Eligibility for benefits, such as health insurance or paid time off, depends on the employer’s policies. Employers can choose to extend benefits to part-time employees but are not obligated to do so.
Employers are not required to offer a 401(k) or other retirement plans in Texas. The decision to provide such benefits is at the employer’s discretion. If offered, they must comply with federal regulations under the Employee Retirement Income Security Act (ERISA).
In Texas, private-sector employers are not legally required to provide vacation leave, whether paid or unpaid. The decision to offer vacation benefits is at the employer's discretion. If an employer chooses to provide such benefits, they must comply with their established policies or employment contracts regarding accrual, usage, and payment of vacation leave.
Below are the mandatory leave entitlements for full-time employees in Texas.
Texas does not require employers to provide paid time off. Employers may offer PTO based on their policies, and if they do, they must follow the terms established in those policies.
The leave is a federal requirement. Under the Family and Medical Leave Act (FMLA), employers with 50 or more employees must provide unpaid, job-protected leave for eligible employees. This leave can be taken for:
In Texas, there is no state-mandated paternity leave. Eligible employees may qualify for unpaid, job-protected leave under the federal Family and Medical Leave Act (FMLA) to care for a newborn, adopted child, or newly placed foster child. If FMLA doesn’t apply, any paternity leave would depend on the employer’s specific policies, as Texan law does not provide additional leave requirements for paternity.
Texas does not mandate paid or unpaid sick leave. Employers may choose to provide sick leave, but it is not required by law.
Under the federal Uniformed Services Employment and Reemployment Rights Act (USERRA), employers must grant unpaid leave and protect the job status of employees serving in the military. USERRA ensures reemployment rights upon completion of military service.
Employers must provide unpaid leave for employees called to jury duty. Employers cannot penalise employees for taking leave to fulfil jury service obligations.
Texas law requires employers to provide paid time off for voting if polls are not open for at least two consecutive hours outside of the employee's work hours.
When it comes to terminating employment in Texas, understanding the legal obligations regarding severance pay and contributions is essential. Below is a detailed overview of the key considerations for both employers and employees.
Texas follows an "at-will" employment policy, meaning employers can terminate employees for any lawful reason, at any time, without prior notice. However, terminations cannot be based on discrimination (race, colour, sex, religion, national origin, age, disability) or retaliation (for reporting legal violations or participating in investigations).
There is no requirement for a notice period before termination. Employers and employees can end the employment relationship immediately unless specified otherwise in a contract.
Texas law does not require employers to provide severance pay. If offered, severance pay is based on company policy or employment contracts.
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As of January 1, 2024, Texas’s minimum wage rates are:
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