If your Texas LLC has W-2 employees, you owe quarterly Unemployment Insurance (UI) tax to the Texas Workforce Commission — even in quarters where you had no taxable wages. Missing a quarterly deadline triggers penalties, interest, and potential tax liens. New Texas employers are assigned a starting rate of approximately 2.7%.
Quick reference
| Detail | Info |
|---|---|
| What | Unemployment Insurance (UI) Tax — quarterly wage report + payment |
| Who | Any LLC, corporation, or business with W-2 employees in Texas |
| When | April 30 (Q1), July 31 (Q2), October 31 (Q3), January 31 (Q4) |
| Where | Texas Workforce Commission — twc.texas.gov |
| Form | C-3 (Employer's Quarterly Report) |
| Cost | $0 to file; tax amount varies by payroll and rate |
| Penalty | Interest accrues immediately; TWC assessment and tax liens for non-payment |
Step 1 — Register with TWC before your first payroll
As soon as you hire your first W-2 employee, register with TWC online at twc.texas.gov/businesses/unemployment-tax-registration. TWC will assign you an employer account number and an initial UI tax rate.
Common mistake: Many LLCs wait until they receive a notice. Don't — you must register proactively. Penalties begin accruing from the date you should have registered.
Your starting rate as a new employer is typically 2.7% on the first $9,000 of each employee's wages per calendar year (the "taxable wage base"). After you've been registered for several years, TWC recalculates your rate based on your claims experience — rates can range from 0.23% to 6.23%.
Step 2 — Track wages each quarter
Each quarter, keep a record of:
- Each employee's name and Social Security Number
- Total wages paid that quarter
- Wages subject to UI tax (first $9,000 of annual wages per employee)
Note: Texas has no state income tax, so there is no employee income tax withholding. But UI tax is entirely the employer's obligation — you cannot deduct it from employee paychecks.
Step 3 — File Form C-3 each quarter
Log in to the TWC employer portal and submit the C-3 (Employer's Quarterly Report) by the deadline for each quarter:
| Quarter | Wages Covered | Deadline |
|---|---|---|
| Q1 | Jan–Mar | April 30 |
| Q2 | Apr–Jun | July 31 |
| Q3 | Jul–Sep | October 31 |
| Q4 | Oct–Dec | January 31 |
The report includes each employee's name, SSN, and wages paid. If you had no employees that quarter, you may still need to file a zero-wage report depending on your account status — check your TWC account for confirmation.
This should take about 20 minutes for an LLC with fewer than five employees.
Step 4 — Pay your UI tax
Payment is due at the same time as the quarterly report. You can pay by:
- ACH debit through the TWC employer portal (recommended)
- Check mailed with a payment voucher
Interest begins accruing the day after the deadline if payment is late. TWC can issue assessments, file tax liens, and — for responsible persons who willfully fail to pay — pursue personal liability.
Step 5 — Verify your rate annually
TWC mails a Notice of Tax Rate each year, usually in January. Review it to confirm your new rate for the upcoming year. If you believe the rate is incorrect (for example, due to a data error in your claims history), you can protest within 30 days of the notice.
FAQ
Do I have to file UI tax returns if I have no employees this quarter?
It depends on your account status. If you have an active employer account with TWC and had employees in prior quarters, you may need to file a zero-wage report to avoid penalties. Check your TWC online account or call TWC at (512) 463-2222 to confirm your filing requirements.
What happens if I miss a Texas UI tax deadline?
Interest begins accruing immediately on any unpaid balance. TWC can issue an assessment, file a tax lien against your business assets, and in some cases hold responsible corporate officers personally liable for unpaid UI taxes.
Does Texas UI tax apply to independent contractors (1099 workers)?
No. UI tax only applies to W-2 employees. Independent contractors are not covered. However, if TWC determines you misclassified an employee as a contractor, you could owe back taxes, penalties, and interest.
What is the Texas UI taxable wage base?
The taxable wage base is $9,000 per employee per calendar year. Once an employee's cumulative wages reach $9,000 in a calendar year, no further UI tax is owed on that employee for the remainder of that year.
Where do I file Texas UI tax?
Online through the TWC employer portal at twc.texas.gov. Paper filing is available but not recommended due to processing delays.
Not sure what else your Texas LLC owes?
Most business owners are surprised by how many filing obligations they have. Ortholo's free compliance checker shows you everything you owe, when it's due, and what happens if you miss it — personalized to your entity.
Last verified: 2026-06-08
Sources: Texas Workforce Commission — Unemployment Tax, TWC Employer Registration
Related guides: Texas employer requirements when you hire your first employee · Texas new hire reporting