Unemployment Tax

The Texas unemployment tax program is designed to collect unemployment taxes from employers who are subject to the Texas Unemployment Compensation Act. The taxes support a reserve fund from which unemployment benefits are paid to eligible workers who are unemployed through no fault of their own. Unemployment taxes are not deducted from an employee’s wages.

The majority of Texas employers are required to pay unemployment insurance (UI) taxes. The Texas Workforce Commission uses three employment categories, regular, domestic, and agricultural to determine employer tax liability which differs for each type of employment.