Here’s a summary of how the payroll tax rates for Texas employers break down. Remember that these numbers change, so always check with a tax professional to get the most up-to-date amounts.

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• Social Security: Social Security is a federal insurance program that provides benefits to retired employees and the disabled. Employers must pay 6.2 percent of taxable wages up to $137,700. In some places, you might see this referred to as “FICA” or the “Federal Insurance Contributions Act,” and that refers to the combination of Social Security and Medicare.

• Medicare: Medicare is a federal system of health insurance for people over 65 and younger people with disabilities. Employers must pay 1.45 percent on all of an employee’s wages.

• Federal Unemployment: The Department of Labor oversees state programs that provide unemployment benefits to workers who become unemployed because of an incident out of their control (like a location closing) and meet certain other eligibility requirements. FUTA is 6 percent on the first $7,000 of an employee’s wages. However, most Texas employers are expected to pay 0.6 percent in 2019 because they pay state unemployment, too, which earns them a 5.4 percent credit against their FUTA.

• Texas Unemployment: A state-sponsored insurance program, Texas SUTA provides benefits to unemployed workers, the disabled, and those on paid family leave. The Texas SUTA rate is 0.46-6.46 percent on the first $9,000 of an employee’s wages. This rate is given to you by the state and can be influenced by how long you’ve been in business, the number of employees you have, the amount of unemployment benefits that have been charged to your account, as well as other factors. Because it varies for each business, we’ve used the standard rate assigned to new employers in our calculations above (Newquist , 2019).