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Every attempt has been made to provide current, accurate, and consistent data in this database. There may be some differences due to sources, methodologies, or timing of data-assembly.
Texas Unemployment Tax Rate - 2007
The unemployment tax rate is the sum of four components. The sum of the four tax components multiplied by your taxable wages* computes the amount of unemployment taxes paid to the Unemployment Trust Fund. Each component has a role to play in ensuring adequate funding of benefit payment and ongoing solvency of the Unemployment Trust Fund.

The four components of the UI Tax rate are as follows:
    1.       GENERAL TAX RATE (GTR)

      The first component of the UI tax rate is the GTR, a tax that reflects the company’s individual responsibility for repaying benefits paid to former workers. The GTR is the experienced-rated portion of the UI tax. It is called experience-rated because it is based on benefits that have been paid to former employees of the business and charged to an account (chargebacks). The GTR is computed by multiplying the benefit ratio by the year’s replenishment ratio**. The benefit ratio is the result obtained by dividing the last three years of chargebacks to the account by the last three years of taxable wages that have been paid to the employees on which the taxes have been timely paid. The three-year period used to compute the 2007 tax rate was from the fourth quarter of 2003 to the third quarter of 2006. If there are no chargeback for the past three years and have timely reported and paid taxable wages for the same period, the general tax rate is zero (0.00%.). Each year, the TWC computes the GTR by using this formula:

      GTR Three Years of Chargebacks
      Three Years of Taxable Wages      		 X Replenishment


    2.       REPLENISHMENT TAX RATE (RTR)

      The second component of the UI tax rate is the RTR, a flat tax paid by all employers. Its purpose is to replenish the trust fund for one half** of the benefits paid to eligible workers that were not charged to any specific employer. Since no one employer can be held liable for these benefits, the Legislature decided to spread the cost among all experience-rated employers. Each year, the TWC computes the RTR by using this formula:

      RTR
      =      		 One-half paid but not charged to any employer
      One Year’s Total Taxable Wages


    3.       UNEMPLOYMENT OBLIGATION ASSESSMENT

      The third component of the tax rate is the Unemployment Obligation Assessment. The purpose of Unemployment Obligation Assessment is to collect amounts needed to pay bond obligations due in 2007 and interest due on loans from the federal government.

      The Unemployment Obligation Assessment is the sum of the Bond Obligation Assessment Rate and the Interest Tax Rate.

        1. Bond Obligation Assessment Rate

          The rate is determined by the following formula:

          (Prior Year Rate x Obligation Assessment Ratio (OA Ratio)) x Yield Margin (Percentage) this product rounded to the nearest hundredth.

          The Prior Year Rate is the sum of the 2006 GTR and 2006 RTR. The Commission sets the OA Ratio and the Yield Margin (Percentage). Those two factors are the same for all employers subject to the Unemployment Obligation Assessment.

          The 2007 OA Ratio is 0.24.

          The calculation of the OA Ratio is according to the Commission Rule:

          OA Ratio
          =          		 Principle, interest, and administrative expenses due in 2007 on outstanding bonds
          Tax due from the GTR and RTR for the four quarters Ending June 30th of the previous year.


          The result is rounded to the next hundredth.

          The 2007 Yield Margin (Percentage) is 0.98. The Yield Margin (Percentage) is determined by Commission resolution.


        2. Interest Tax Rate

          Interest Tax Rate is used to pay interest on loans from the federal government. This percentage will be the same for all employers in a given year. The Interest is calculated according to Commission Rule.

          The Interest Tax Rate for 2007 is 0.00%.


    4.       EMPLOYMENT AND TRAINING INVESTMENT ASSESSMENT

      The fourth component of the tax rate is the Employment and Training Investment Assessment. It is a fixed rate of 0.10% to fund the Skills Development Fund. By law, the RTR is reduced by the same amount, so there is no increase in the tax rate due to this assessment.

EFFECTIVE TAX RATE

The Effective Tax Rate for 2007 = General Tax Rate (GTR) + Replenishment Tax Rate (RTR) + Unemployment Obligation Assessment Rate + Employment Training Investment Assessment.

Minimum Tax Rate for 2007 is 0.29%.

Maximum Tax Rate for 2007 is 7.70%.

* Pay unemployment tax on the first $9000 that each employee earns during the calendar year. The taxable wages are the sum of the wages paid up to $9000 per employee per year.

**The 68th Legislature (1983) made the decision to recoup paid but “non-charged” benefits in two ways. The total amount owed to the Fund but not charged to any employer is divided in half and one half is collected by a multiplier (the replenishment ratio) applied to the GTR. The replenishment ratio for 2007 is 1.32. The other half is collected by the RTR itself. The RTR for 2007 is 0.14%.