Payroll in Texas

Payroll services for Texas businesses.

Visory provides payroll services for Texas businesses with staff across the state. A dedicated Payroll Specialist runs each pay run remotely in your own payroll platform, applying the Texas Payday Law’s paydays and final pay deadlines, unemployment tax, and new-hire reporting. Delphi AI takes the repetitive parts, overseen by the team. You approve each run before anyone is paid. One flat monthly fee.

  • A dedicated team you know by name
  • Texas rules in every pay run and close
  • One flat monthly fee for the agreed scope
Downtown Austin in late-afternoon sun, looking up Congress Avenue from the Lady Bird Lake bridge to the Texas State Capitol.
Photo: Mitchell Kmetz, Unsplash License

Payroll in Texas

What every Texas pay run covers.

A dedicated team prepares each pay run, checks it, and sends it to you to approve before anyone is paid. Six things are right every time.

  • Withholding, every run Federal withholding, and state and local taxes where they apply, worked out in every run from each employee’s own forms.
  • Filed on schedule Quarterly and annual payroll tax filings prepared from the same runs and filed on schedule by your payroll platform, so nothing is rebuilt at the deadline.
  • Unemployment insurance Texas contributions worked out on each employee’s wages, up to the state’s taxable wage base.
  • Leave that adds up Paid leave accrued in the file to your own leave policy, so balances are right when someone asks.
  • Paid on the right day Pay frequency and final pay set to the state’s rules, and every run approved by you before anyone is paid.
  • New hires, set up properly New employees reported to the state and set up before their first pay run.

Texas rules

The Texas rules every pay run works to.

Eight rules set by Texas, each with the law that sets it and what it does to your month. Your team works to them every pay run and every close.

Payroll carries one income tax, not two.

Pay runs withhold federal tax only for staff working in Texas, so the state cost of employing people sits in unemployment tax, and the state tax on the business itself arrives once a year as the franchise tax.

Set by Texas Constitution, Article 8, Section 24-a

The Texas Constitution bars the legislature from imposing a tax on the net incomes of individuals, including an individual’s share of partnership and unincorporated association income, so there is no Texas income tax to withhold from wages. Employers withhold federal income tax only. What Texas levies instead is the franchise tax on taxable entities, the state and local sales tax, and unemployment tax on wages.

Texas Constitution, Article 8, Section 24-a; prohibition added to the constitution November 5, 2019.

The cost lands early in the year.

Tax stops once an employee’s wages pass $9,000, so the first quarter carries most of the year’s cost, and a budget that spreads it evenly overstates every quarter after it.

Set by Texas Labor Code, Sections 201.082, 204.003, 204.006, and 204.121

Employers pay unemployment tax on the first $9,000 of each employee’s wages in a calendar year, and it may not be deducted from wages. A new employer pays the greater of 2.6% or its industry’s average rate less 0.1 percentage point until it earns an experience rate, plus an employment and training investment assessment of 0.1% of wages. The US Department of Labor reports 2.70% as the base new-employer rate, and experience rates from 0.00% to 6.00% before surtaxes, effective July 2026.

Texas Labor Code, Sections 201.082, 204.003, 204.006, and 204.121; initial rate rule and training assessment from January 1, 2006; rates as summarized by the US Department of Labor effective July 2026.

A computer does not make it data processing.

An architect’s drawings or a firm’s financial reports are not data processing just because a computer produces them, but software sold as a service is, so invoices separate the two and the tax collected is held for the report due on the 20th.

Set by Texas Tax Code, Chapter 151, Sections 151.0101, 151.051, 151.351, and 151.401

Texas imposes a 6.25% state sales and use tax on retail sales, leases, and rentals of most goods, and on taxable services in 16 broad categories, among them data processing, information services, and insurance services. Cities, counties, special purpose districts, and transit authorities can add up to 2%, for a maximum combined rate of 8.25%. Twenty percent of the charge for data processing and information services is exempt. Reports are due on the 20th of the month after each month, or after each quarter for a seller owing less than $500 a month or $1,500 a quarter.

Texas Tax Code, Chapter 151, Sections 151.0101, 151.051, 151.351, and 151.401.

The threshold is a cliff, not a bracket.

Revenue one dollar above $2.65 million brings tax on the whole margin, not on the excess, so the books need revenue tracked against the threshold all year and the margin method chosen before the May report.

Set by Texas Tax Code, Chapter 171

The franchise tax applies to corporations, LLCs, partnerships, and most other entities formed or doing business in Texas, but not sole proprietorships or general partnerships of natural persons. For 2026 and 2027 reports, entities with revenue at or below $2,650,000 owe no tax and file only a Public Information or Ownership Information Report. Above it, the rate is 0.75% of taxable margin (0.375% for retail or wholesale), or 0.331% of revenue under the EZ computation up to $20 million. Reports are due May 15.

Texas Tax Code, Chapter 171; rates and thresholds for the 2026 and 2027 report years.

Overtime status sets the pay calendar.

Salaried exempt staff can share a monthly run, while hourly staff need at least two a month, and a dismissal starts a six-day clock that can fall before the next scheduled pay run.

Set by Texas Payday Law, Texas Labor Code, Sections 61.011 to 61.015

Employees exempt from overtime under the Fair Labor Standards Act are paid at least once a month, and all other employees at least twice a month, with twice-monthly pay periods as nearly equal in length as possible. Paydays must be designated and posted in the workplace; if none are designated, they are the 1st and 15th. An employee who is discharged is paid in full by the sixth day after discharge, and one who quits by the next regularly scheduled payday.

Texas Payday Law, Texas Labor Code, Sections 61.011 to 61.015; paydays and final pay rules in force from September 1, 1993.

The report starts with the first wages.

The 20-day clock runs from the day someone starts earning, not from the first payday, so the report is prepared the day the employee is added to the payroll file.

Set by Federal and Texas new hire reporting law

Employers report new hires and rehires to the Child Support Division of the Office of the Attorney General within 20 calendar days from the date the employee starts earning wages. Every newly hired or rehired employee who lives or works in any state is reported; anyone required to fill out a Form W-4 must be. A multi-state employer that chooses Texas as its reporting state lets the Texas Workforce Commission see hires of Texas residents.

Federal and Texas new hire reporting law.

One wage floor across the state.

A business with staff in Houston, Austin, and El Paso pays the same legal minimum in each, so pay above it is set by the market, and any wage commitment in a city contract is tracked as a term of that contract.

Set by Texas Minimum Wage Act, Texas Labor Code, Chapter 62

The Texas minimum wage is the federal minimum wage, which the state adopts by reference rather than setting its own dollar figure, so employers pay at least $7.25 an hour. For tipped employees, who customarily receive more than $20 a month in tips, the cash wage may be $2.13. The state minimum wage supersedes any wage set in a local ordinance for private employment, other than wages under a public contract.

Texas Minimum Wage Act, Texas Labor Code, Chapter 62; Section 62.051 as amended effective September 1, 2003.

Every deduction needs paper behind it.

Benefit premiums, equipment charges, and repayments of advances are taken only with the employee’s written consent on file, so the payroll file holds the authorization alongside the deduction.

Set by Texas Payday Law, Texas Labor Code, Sections 61.015 and 61.018

An employer may not withhold or divert any part of an employee’s wages unless a court orders it, state or federal law authorizes it, or the employee has given written authorization to deduct part of the wages for a lawful purpose. Wages paid as commissions and bonuses are due under the terms of the agreement with the employee and must be paid as promptly as other wages.

Texas Payday Law, Texas Labor Code, Sections 61.015 and 61.018; in force from September 1, 1993.

Rules last checked October 9, 2026 against the sources at the foot of this page. General information only. It does not take your circumstances into account.

Local rules

Why the rules stay the same across Texas.

Texas law sets one wage floor and keeps cities and counties from adding leave and other employment rules for private employers, so the same rules run every Texas pay run.

Austin, Dallas, and San Antonio

Austin, Dallas, and San Antonio each passed a paid sick leave ordinance, and courts have blocked all three.

  • Courts held that each ordinance sets a wage the Texas Minimum Wage Act preempts: Austin’s in 2018, with review denied by the Supreme Court of Texas on June 5, 2020, San Antonio’s on March 10, 2021, and Dallas’s, permanently enjoined by a federal court on March 31, 2021.
  • Since September 1, 2023, the Labor Code has barred cities and counties from regulating employment leave, hiring practices, breaks, employment benefits, scheduling practices, and other terms of employment beyond federal or state law for private employers.
  • A Travis County court declared that law unconstitutional in 2023, but the Third Court of Appeals reversed in 2025 and dismissed the cities’ challenge for lack of standing, and a petition for review was filed in the Supreme Court of Texas on June 29, 2026.

How it works from anywhere

Can a team outside Texas run a Texas business?

Yes. Visory’s US leadership team is in New York, and its teams work with businesses across the United States remotely, inside your own accounting file, so nothing about the work depends on where your office is.

Your own file

Your books stay in your own QuickBooks or Xero file. Your team works inside it, so you see the same numbers they do, whenever you look.

A team you know by name

A dedicated team runs the work, led by a Business Performance Partner. You meet them by video call, and you always know who to ask.

Texas rules, built in

Visory runs the finance function for growing businesses across the United States, with its US leadership team in New York. Your books stay in your own QuickBooks or Xero file, and your team works inside it with you. Every pay run and every close is checked against the rules on this page.

Business hours, and the platform after them

Your team works 9am to 5pm Eastern Time on business days, all year round, and the Visory platform is open to you around the clock for documents, approvals, and your numbers.

What customers say

In a customer’s words.

“I have enough people to manage, so it's nice having a partner that ensures nothing is missed when it comes to the very important process of remunerating our people.”

Rachelle Harper Co-founder and COO, BrandBossHQ

Common questions

Questions Texas businesses ask.

Straight answers about payroll for a Texas business, from a team that works remotely.

What does a Visory pay run for a Texas business include?

Your Payroll Specialist runs each pay run, with Delphi AI preparing and checking it in the background, and you approve it before anyone is paid. The Payroll Specialist handles new hires, leave, changes, and terminations, applies federal withholding and the Texas paydays and deduction rules, and posts the run to your books, so wages, deductions, and leave balances agree every month.

What hours does my payroll team work?

Your payroll team works 9am to 5pm Eastern Time on business days, all year round. Outside those hours, the Visory platform is your 24/7 access point, so your payroll information is there whenever you need it.

Do I withhold state income tax in Texas?

No. The Texas Constitution bars the legislature from taxing the net incomes of individuals, so there is no state income tax to withhold for work done in Texas, and employers withhold federal income tax only. Staff who work in another state may have that state’s tax withheld. This is general information; the Texas Comptroller and the IRS set the rules for your business.

How often do I have to pay employees in Texas?

Employees exempt from federal overtime rules are paid at least once a month, and everyone else at least twice a month, on paydays you designate and post in the workplace. If you designate none, the paydays are the 1st and the 15th. This is general information; the Texas Workforce Commission enforces the Texas Payday Law.

When is final pay due when someone leaves?

An employee who is discharged is paid in full by the sixth day after discharge. An employee who quits or leaves for any other reason is paid by the next regularly scheduled payday. Your Payroll Specialist runs the final pay to whichever deadline applies, including any commission or bonus due under the employee’s agreement. This is general information; the Texas Workforce Commission enforces the rules.

What do I have to do when I hire someone in Texas?

Report the new hire to the Child Support Division of the Office of the Attorney General within 20 calendar days from the date they start earning wages. Rehires are reported too, and so is anyone required to fill out a Form W-4. Your Payroll Specialist prepares the report when the employee is set up, before the first pay run.

What unemployment tax does a new Texas employer pay?

Tax is paid on the first $9,000 of each employee’s wages a year. A new employer pays the greater of 2.6% or its industry’s average rate less 0.1 percentage point, plus a 0.1% training assessment, so the starting rate is at least 2.7%: up to $243 per employee at that rate. The tax cannot be deducted from wages. This is general information; the Texas Workforce Commission sets the rules.

What is the minimum wage in Texas?

Texas adopts the federal minimum wage by reference rather than setting its own figure, so employers pay at least $7.25 an hour. Tipped employees, who customarily and regularly receive more than $20 a month in tips, may be paid a cash wage of $2.13 when tips make up the rest. The state minimum wage supersedes any wage a local ordinance sets for private employment, other than wages under a public contract, so the floor is the same in every Texas city. This is general information; the US Department of Labor’s Wage and Hour Division enforces the federal minimum wage that Texas adopts.

Can I deduct money from an employee’s pay in Texas?

Only with a court order, under state or federal law, or with the employee’s written authorization for a lawful purpose, so benefit premiums, equipment charges, and repayments of an advance are deducted only with that consent. Your Payroll Specialist keeps the signed authorization with the deduction in the payroll file. This is general information; the Texas Workforce Commission enforces the Texas Payday Law.

More questions, longer answers. Every question has its own link. See all common questions

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Sources (27) · rules last checked October 9, 2026

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