Average Unemployment Tax Rates Go Down for 2023

Good News for Texas Employers!

There are across-the-board reductions in the minimum and maximum rates and all of the variables that go into the State unemployment tax rate calculations.

Unemployment taxes in Texas have always been among the very lowest in the nation and for 2023, the minimum rate will decrease to 0.23%, and the maximum will be 6.23%. Given that the taxable wage base in Texas is $9,000, that means that an employer with the minimum tax rate will pay $20.70 per employee in 2023, while the tax for an employer with the maximum rate will pay $560.70 per employee.

Employers with no chargebacks from unemployment claims for the preceding three years will qualify for the minimum rate, while employers with some amount of chargebacks during that three-year period will have a higher rate that is capped at 6.31%. The exact formula for the unemployment tax rate in Texas is explained online at https://twc.texas.gov/businesses/your-tax-rates.
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Employers may “buy down” their chargebacks and achieve a tax rate reduction using the steps outlined on the TWC website at https://twc.texas.gov/voluntary-contribution-program. That page has a link to the Unemployment Tax Services online portal at https://twc.texas.gov/businesses/unemployment-tax-services, where there is a tab for using an estimator to determine whether and how much to pay toward such a reduction.

By Tommy Simmons
Senior Legal Counsel to Commissioner Aaron Demerson