Texas: Unemployment Insurance Tax Rate to Drop in 2015

By SHRM Online staff

The average unemployment insurance (UI) tax rate for all employers will drop to 1.54 percent for 2015, which is down from 1.66 percent in 2014, according to the Texas Workforce Commission (TWC). The average tax rate for experience-rated employers is 1.40 percent for 2015, which is also down from 1.54 percent in 2014. The standard minimum UI tax rate paid by Texas employers in 2015 will be 0.47 percent, a drop from 0.51 percent in 2014. The minimum tax rate is paid by 277,846 employers, which represents 67 percent of experience-rated employers. 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.

An experience rating is determined by the amount of an employers taxable wages and the amount of UI benefits that have been paid to former employees and charged to the employers account for the last three years. An employer paying the standard minimum tax will pay $42.30 per employee in 2015 compared with $45.90 per employee last year. The maximum UI tax rate, paid by 4.5 percent of Texas employers, will be 7.49 percent.

In setting tax rates for 2015, TWC sought to minimize the effects of any increases and exercise the authority given to it by state law to hold the tax rates to the lowest and most predictable rates possible. There are several components to the 2015 tax rate. The general tax rate is based on claims against an employers account. If TWC 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 charged to all employers who are eligible for a computed tax rate to finance the Skills Development Fund. The employment training assessment calculation is a separate line item on the Employers Quarterly Tax Report. Finally, the obligation assessment tax rate is collected to repay bond obligations. This tax is experience-rated and based on an employers tax rate from the prior year.


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