Paycheck Calculator Texas - TX

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Texas - TX Paycheck Calculator: Hourly and Salary

Texas, also known as The Lone Star State, is one of the most popular, second-biggest State by area and population in the United States. The State is located in the South Central region, and share its borders with Louisiana to the east, New Mexico to the west, Oklahoma to the north, Arkansas to the northeast, and the four Mexican states to the southwest, and Gulf of Mexico's coastline to the southeast.

Austin is the State's capital, besides Houston is the largest city and the Dallas–Fort Worth Metroplex is the largest metro of the Texas State.

So if you find yourself considering to make a move to Texas, for an appealing job offer, business idea, or to start your new life, this Texas guide will help you explore key elements of the state by covering the following topics:

  • The thing you must know before moving to Texas
  • Texas Payroll Facts
  • How to Calculate Paycheck in Texas? – This section would benefit both employers and employees in the following ways:
    • Help job seekers to compare several job offers in terms of take-home pay and choose the best one.
    • Help entrepreneurs to compare different business opportunities in terms of employment cost.
    • Help employees of Texas to calculate their upcoming Paycheck amount for verifying and budgeting.
    • Help employers in Texas to calculate Paycheck amounts for multiple employees instantly using our Texas Paycheck Calculator.
  • Federal and Texas Payroll Laws to ensure your paycheck complies with the law.
  • Frequently Asked Questions

We hope all of the topics, as mentioned earlier, will help you to complete your move in the most efficient way possible. So let's get started!


Things You Must Know Before Moving To Texas

Whether you are mulling over to move to Texas or already made up your mind, you must be aware of some essential factors about the state before packing up your stuff:

Cost of Living

You'll be pleased by your reduced costs in Texas as the cost of the living index here is 93.9 points, which is significantly lower than the national average of 100 points. Lower housing cost contributes the most to overall low living costs. In contrast, other cost factors like grocery, health, utilities, transportation, and miscellaneous expenses are somewhat similar to the rest of the states.

Cost of Housing

According to the research, buying a house is more cost-effective than renting in Texas. The median home value in the state is $195,000, which is significantly lower than the national median home value of $231,200. Whereas, the Median rent in the state is $987, which is comparatively lower than the US median rent of $1012. So, whether its buying or renting, you are going to save considerably.

Some of the cheapest cities to live in terms of housing cost include Progreso, Breckenridge, Sweetwater, Pecos, Vernon, and La Feria.

Weather

Due to the large area, Texas has multiple climate zones. So you can experience a different type of weather in different parts of the state. Some areas experience cold winters with shocking cold fronts while other parts remain below freezing all winter.

On the other hand, most areas of Texas see consistent summer with high temperatures in the 90 °F (32 °C) range, while mountains of West Texas have 80s °F (26 °C). Moreover, the mountainous western regions of Texas are much drier, whereas the southeast region is more humid and wet.

Besides, you must also be prepared for natural disasters like droughts, thunderstorms, triple-digit heat, tornadoes, hurricanes as well as flash flooding possibilities.

Education

Texas is home to over 200 renowned colleges and universities and ranked in 36th position among 50 states for its quality of public education. Some of the best school districts, colleges, and universities in Texas include Eanes Independent School District (Austin), South Texas Independent School District (Mercedes), Texas Tech, and Texas A&M.

Business and Job Opportunities

Texas has a trillion-dollar booming economy and a flourishing job market. More than 50+ companies in this state are also part of the 2017 Fortune 500 list. The unemployment rate in the Lone Star State is 3.4%. The minimum wage rate is $7.25. Moreover, the state levy NO state income tax. All of these perks are definitely appealing enough for the job seekers to settle in Texas and start their new job career.

The fastest-growing jobs in Texas (according to Zippia.com) include Wind Turbine Technician, Statistician, Occupational Therapy Assistant, and Nurse Practitioner. Moreover, the top highest paying jobs in the state include Anesthesiologists, Chief Executives, Obstetricians, and Gynecologists.

Oil and gas industries, the primary contributor to this Texas's economy, besides other industries like agriculture, IT, energy, aeronautics, and tourism, are also booming here, giving endless opportunities for entrepreneurs and job seekers.

Outdoor Activities

Texas is abundant in outdoor attractions and is known as home to an uncountable of historical, urban entertainment, natural outdoor leisure, and nightlife opportunities. Millions of tourists come in Texas to explore the incredible cave system, mountainous areas, desert regions, canyons, coastal beaches, and other diverse landscapes. Besides, you can also enjoy several recreational activities like hiking, boating, camping, fishing, and swimming.

The fun doesn't end here! You can also make your weekend and vacations memorable, exploring numerous state and national parks, visit River Walk, the historic site Alamo in San Antonio, the Space Center Houston, Big Bend National Park, and Padre Island National Seashore.


Pros and Cons

As we are done with essential factors, here is the quick round-up of all the lovely and hateful things about the Texas State:

Pros:
  • No warm weather
  • No state income tax
  • Low cost of living
  • Low housing cost
  • Booming job market
  • Variety of delicious food
  • Everything is bigger in Texas
  • Excellent schools
  • Family-friendly environment and activities
Cons:
  • Heavy traffic
  • High property tax
  • High humidity
  • Severe winters
  • Tornados and hurricanes

Texas Payroll Facts:

  • The federal income tax charged on employee's paycheck while working in Texas, ranges between 0% and 37%, sorted in seven tax brackets according to income level and filing status.
  • The FICA tax charged on both employers and employees of Texas consists of Social Security and Medicare Tax. Social Security is charged on employees at a rate of 6.2% of each employee's taxable wages up to $137,700 for 2020, while employers pay an equal amount for each employee. Moreover, Medicare Tax is charged at 1.45% of each employee's taxable wages up to $200,000 for 2020, while employers pay an equal amount for each employee. However, if the employee taxable earning exceeds $200,000 threshold, the employee only is charged with Additional Medicare Surtax at 0.9%.
  • Employers of Texas are responsible for paying FUTA taxes, which is charged at a rate of 6% of the first $7,000 of taxable income. Besides, they also have to pay State Unemployment Insurance (SUI) tax, which is charged at a rate ranging from 0.31% to 6.31% on a taxable wage of each employee up to $9,000 per year. However, new employers are required to pay a flat rate of 2.7%. Fortunately, if the SUI tax is paid in full and on time, employers are eligible for a tax credit of up to 5.4%.
  • Luckily, Texas State doesn't levy State income tax on employee's paychecks. Moreover, no city or county of the state charges any Local income tax.
  • Texas Minimum Wage rate is similar to the Federal Minimum wage rate of $7.25 per hour for all employees, unless or otherwise exempted. The Cash Minimum wage rate for Tipped Employees is $2.13, with a maximum tip credit of $5.12. Moreover, for Youth employees, it is $4.25.
  • Texas employers pay time and a half over 40 hours of work/week as overtime to their non-exempted employees.
  • The livable wage for a couple (one working) with two children in Texas is $25.67, while for a single adult is $11.74, according to the Massachusetts Institute of Technology.
  • The median household income for Texas residents is $59,570, according to United States Census Bureau.

How to Calculate Paycheck in Texas?

As we are done with relocation to Texas and its payroll facts, now it's time to calculate paycheck.


Step 1 - Calculating Gross Pay:

The very first step to calculating the paycheck amount is to determine Gross Pay. It is a wage that an employee earned in the last pay period.

Gross Pay is calculated differently for both hourly and salary-based employees, which is discussed in detail as follow:


Gross Pay for Hourly Employee

Hourly Employees are paid at a mutually agreed pay rate for each hour they work in a pay period. Usually, Pay periods for Hourly employees are Hourly, Daily, Weekly, and Bi-Weekly. However, the Federal, State, and Local Wage law requires the employers to set the pay rate equals to or more than the defined Minimum Wage Law for the non-exempted employees.

Hourly employees are also entitled to receive overtime, for each excess hour worked after regular hours in a workday or a workweek. Remember, like Minimum wage, the employers are also required to follow Overtime wage law provided by the federal, state, and local authorities.


Note: All the relevant laws are discussed in detail ahead.

To calculate gross wage for an hourly employee:

  1. Calculate total hours worked in a Pay Period using the data from Timesheet or Timecard.
  2. Multiply Total Hours worked with the Hourly Rate (Pay Rate).
  3. Add overtime hours (if any) worked by the employee.

Quick Tip: You can also use our Timecard with overtime Calculator to calculate Gross Wage for Hourly Employee instantly.

Gross Pay for Salaried Employee

Salaried Employees are paid at the flat amount rather than on an hourly basis. The amount is usually mutually agreed as an Annual Salary, which is then paid in Semi-monthly or Monthly Pay periods.

Salaried employees are mostly exempted from overtime law. However, their salaries must be according to Federal and State Minimum Wage law.

To calculate Gross Pay for Salaried Employees:

  • Divide the "employee's salary" by "number of pay periods." For example: If the employee's annual salary is $50000 and is paid on a semi-monthly pay period, then the employee's Gross Pay would be: $50000 / 24 = $2083.

Don't forget that Supplemental Wages like Bonuses, commissions, tips, paid leaves, fringe benefits, or other taxable wages earned by the employee must be added into the Gross wages.


Step 2 – Subtracting Pre-Tax Deductions (If Any):

Once you are done with Gross Wages, it's time to subtract any Pre-Tax deductions from the gross wage to get taxable wages as Pre-tax deductions are not taxable for federal payroll taxes.

Pre-tax deductions are offered to the employees as benefits like fringe benefits, HSA plans, etc., to reduce their taxable income, hence, increasing their take-home pay amount. Remember, not all benefits are exempted from taxes, so choose the pre-tax deductions wisely.

Some of the common pre-tax deductible benefits are:

  • FSA - Flexible Spending Accounts
  • HSA - Health Savings Accounts
  • Retirement savings accounts like a traditional 401(k)
  • Some of the Fringe Benefits
  • health insurance
  • accident insurance
  • dental and vision insurance
  • Commuter Benefits
  • Short-Term Disability

Note: Pre-Tax deduction rate, contribution limits, special tax withholding rules change from year to year, according to inflation and costs of living by the federal government. Therefore, you must keep yourself updated with all rates before making any deductions.

Many Taxpayers find it hard to itemize their deductions to calculate taxable wages, for which they go for standard deductions, that varies according to the filing status, as shown in the table below:

All Filers(Updated Dec 2019)
Filing Status Standard Deduction Amount
Single Filers $12,200
Married, Filing Jointly $24,400
Married, Filing Separately $12,200
Head of Household $18,350

Step 3 – Calculate and Subtract Federal Taxes:

Once you have determined the taxable wages, it's time to deduct Federal Income taxes for the Taxable wages.

IRS requires the employers to withhold federal income tax from the employee's paycheck, according to the details provided by the employee on Form W-4. The employee fills this form at the start of the job. The form includes all the necessary information, including income, number of allowances to claim, number of dependents, amount of additional taxes to deduct, and much more.

The employees are required to keep their Form W-4 up to date with all their current information, especially marriage, divorce, or child's birth.


The federal income tax is charged according to the tax brackets in which the taxpayer's income falls. The latest income tax brackets and rates are as follow:

Single Filers
Taxable Income Rate
$0 - $9,700 10%
$9,700 - $39,475 12%
$39,475 - $84,200 22%
$84,200 - $160,725 24%
$160,725 - $204,100 32%
$204,100 - $510,300 35%
$510,300+ 37%

Married, Filing Jointly
Taxable Income Rate
$0 - $19,400 10%
$19,400 - $78,950 12%
$78,950 - $168,400 22%
$168,400 - $321,450 24%
$321,450 - $408,200 32%
$408,200 - $612,350 35%
$612,350+ 37%

Married, Filing Separately
Taxable Income Rate
$0 - $9,700 10%
$9,700 - $39,475 12%
$39,475 - $84,200 22%
$84,200 - $160,725 24%
$160,725 - $204,100 32%
$204,100 - $306,175 35%
$306,175+ 37%

Head of Household
Taxable Income Rate
$0 - $13,850 10%
$13,850 - $52,850 12%
$52,850 - $84,200 22%
$84,200 - $160,700 24%
$160,700 - $204,100 32%
$204,100 - $510,300 35%
$510,300+ 37%

Step 4 – Deduct FICA Taxes:

Besides, Federal Income Tax, the IRS also requires the employer to withhold FICA tax (15.3%) for the employee's paycheck and also requires the employer to pay an equal amount for each employee.

Federal Insurance Contributions Act (FICA) Taxes comprises of two types of taxes which are as follow:


  1. Social Security:

A total of 12.4% of social security tax is charged from which 6.2% is withheld from the employee's gross, and the employer pays the matching 6.2%. However, Social Security is only charged on the maximum taxable earnings of $137,700 for 2020.


  1. Medicare:

A total of 2.9% of Medicare is charged, from which 1.45% is withheld from the employee's gross, and the employer pays the matching 1.45%. Unlike Social Security, there is no maximum table earning limit for this tax. However, an additional surtax of 0.9% is charged as Additional Medicare Surtax on the employees having income over the specified level along with filing status, which is as follow:

Income Over Filing Status
$250,000 Married Filing Jointly
$125,000 Married Filing Separately
$200,000 Single

Note: Employers are not required to pay an equal amount for Additional Medicare Surtax.

Step 5 – Payment of FUTA Taxes

IRS requires the employer to pay another tax, known as The Federal Unemployment Tax Act (FUTA) Tax. This tax is paid at the rate of 6% on the first $7000 earned by each employee in a year. However, the IRS doesn't require the employees to contribute to it.

The employers who pay State Unemployment Insurance (SUI) tax in full and on time are given relieving FUTA tax credit of up to 5.4%, which saves a whopping 90% from FUTA Tax.


Step 6 – Subtract Post-Tax Deductions (If any):

Post-tax deductions (after-tax deductions) is an amount the employer takes out from the employee's paycheck after taxes. Therefore, it does not affect taxable wages and the amount of tax payable.

Here are some of the types of post-tax deductions that employee may voluntarily choose:

  • Charitable contributions
  • Disability insurance
  • Garnishments
  • Specific Retirement Plans like Roth 401(k)
  • Life Insurance

Step 7 – Withhold State Payroll Taxes:

As you are done with Federal Payroll Taxes, now it's time to discuss State Payroll Taxes. Luckily, the Texas State doesn't charge State Income Tax on the employees. However, employers are required to pay State Unemployment Insurance Tax.


State Unemployment Insurance (SUI) Tax

The State Unemployment Insurance (SUI) Tax is an employer-funded program that provides temporary income to unemployed workers who have lost their job without fault of their own.

The state doesn't charge in Texas State Disability Insurance (SDI) tax on employers. However, it does require the employers to pay Texas State Unemployment Insurance (SUI) tax, at the rate ranging from 0.31% to 6.31% on a first $9,000 earned in wages by each employee in a year. However, new employers are given relief as they only have to pay a flat rate of 2.7% or greater of the average rate for all employers in the NAICS code.


Note: SUI Rates for Texas Employers change with time. Therefore, you are required to keep a check on notices to make sure you have paid the right amount.

Step 8 – Withhold Local Payroll Taxes:

No city or county in Texas levies Local Income Tax


Step 9 – Calculate Pay Check:

Now that you are done with all payroll taxes and calculated the net take-home pay of an employee, it's time to cut the paycheck. Moreover, you, as an employer, must pay your portion of FICA tax along with FUTA and SUI tax in full and on time regularly.


Federal and Texas Payroll Laws

  • Texas Law requires the employers to pay their employees, unless or otherwise exempted from overtime law, on semi-monthly basic (twice a month) and on paydays that are equal to or less than 15 days. However, employees who are exempted from overtime law can be paid on monthly pay frequency.
  • The state law requires employers to pay at least the minimum wage rate of $7.25 per hour to their non-exempted employees. Moreover, they are also required to pay overtime to their employees, unless or otherwise exempted, at a time and half of their regular hourly rate for each excess hour they work after 40 hours in a workweek. Employees exempted from overtime, and minimum wage law includes:
    • Typically salaried employees
    • Seasonal workers
    • Railroads (most) and certain airline employees
    • Taxi drivers (most)
    • Delivery drivers paid on approved trip rate plans;
    • Farmworkers
    • Outside Salespersons
    • Salary Level Test (pay over federally determined wage)
    • A supervisory employee with management as a primary duty
  • Both Texas and Federal law doesn't require the employers to provide meals or lunch breaks to their employees. However, if the employers voluntarily provide the breaks, then it must be PAID if for 20 minutes or less and PAID if for 30 minutes or more.
  • Texas State doesn't require the employers to provide employees with either paid or unpaid vacation benefits, sick leave benefits, holiday leave, and bereavement leave. However, the law requires the employer to provide unpaid jury duty leave, and voting leave (on certain conditions).

FAQs

Answer: Following taxes are taken out of employee's paycheck while working in Texas:

  • Federal Income Tax: This tax is withheld by the employer at the rate range between 10% and 37%, sorted in seven tax brackets according to filing status and income level.
  • FICA Tax: This tax consist of Social Security Tax and Medicare Tax. Social Security Tax is charged at the rate of 6.2% on the maximum taxable earnings of $137,700 for 2020. Whereas, the Medicare tax is charged at the rate of 1.45%, on the taxable wages up to $200,000. However, if the annual earning of an employee exceeds $200,000 (Single Filer), then an additional Medicare Surtax of 0.9% is charged.

Answer: Luckily, Texas State doesn't levy State income tax on employee's paychecks. Moreover, no city or county of the state charges any Local income tax.

Answer: Following are the Payroll taxes paid by both employers and employees while working in Texas:

  1. Federal Income Tax: This tax is charged on employees at the rates ranging from 10% to 37%, sorted in seven tax brackets according to the filing status and income level.
  2. FICA Tax: This is another tax levied by the federal on both employers and employees. This tax comprises of two taxes, charged on the employees, and the employer pays the equal amount for each employee. The employee's portion comprises of 6.2% of Social Security tax on the taxable wages up to $137,700 (in 2020) and 1.45% of Medicare Tax on the taxable wages up to $200,000. Moreover, if the employee's income exceeds the $200,000 threshold, the only employee is charged with the additional Medicare tax of 0.9%.
  3. FUTA Tax: Only Texas employers pay FUTA taxes, at the rate of 6% of the first $7,000 of each employee's taxable income. However, if the employers pay State Unemployment Insurance (SUI) tax in full and on time, then they get a tax credit of up to 5.4% of the FUTA tax.
  4. State Unemployment Insurance (SUI) Tax: Only employers in Texas are required to pay State Unemployment Insurance (SUI) Tax at the rates ranging from rates range from 0.31% to 6.31% on the first $9,000 earned by each employee. However, new employers are only required to pay at a flat rate of 2.7% or greater of the average rate for all employers in the NAICS code.

Answer: Texas Minimum Wage rate is similar to the Federal Minimum wage rate of $7.25 per hour for all employees, unless or otherwise exempted. The Cash Minimum wage rate for Tipped Employees is $2.13, with a maximum tip credit of $5.12. Moreover, for Youth employees, it is $4.25.

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