- GENERAL TAX RATE (GTR)
The first component of your UI tax rate is the GTR, a tax that reflects your company's individual responsibility for repaying benefits paid to former workers. The GTR is the experienced-rated portion of your UI tax. It is called experience-rated because it is based on benefits that have been paid to former employees of your business and charged to your account (chargebacks). Your GTR is computed by multiplying your benefit ratio by the year's replenishment ratio**. Your benefit ratio is the result obtained by dividing the last three years of chargebacks to your account by the last three years of taxable wages you have paid to your employees on which the taxes have been timely paid. The three-year period used to compute the 2013 tax rate was from the fourth quarter of 2009 to the third quarter of 2012. If you have no chargebacks for the past three years and have timely reported and paid taxable wages for the same period, your 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 WagesX Replenishment Ratio
- REPLENISHMENT TAX RATE (RTR)
The second component of your 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 benefits paid but not charged to any employer
One Year's Total Taxable Wages
- UNEMPLOYMENT OBLIGATION ASSESSMENT RATE (OA)
The third component of your tax rate is the Unemployment Obligation Assessment. The purpose of the Unemployment Obligation Assessment is to collect (1) amounts needed to pay bond obligations due in 2013 and (2) interest due on loans from the federal government.
The Unemployment Obligation Assessment is the sum of two parts:
-
Bond Obligation Assessment Rate
The Bond Obligation Assessment Rate is determined by this formula:
(Prior Year Rate x OA Ratio) x Yield Margin (Percentage) this product rounded to the nearest hundredth. The prior year rate is the sum of your 2013 General Tax, Replenishment Tax, and Deficit tax.
The Commission sets the Obligation Assessment Ratio and the Yield Margin (Percentage). Those two factors are the same for all employers subject to the Unemployment Obligation Assessment.
The 2013 Obligation Assessment Ratio (OA Ratio) is 0.15.
The calculation of the OA Ratio is according to Commission Rule:
OA RATIO = Principle, interest, and administrative expenses due in 2013 on outstanding bonds
Tax due from the General and Replenishment tax rates for the four quarters ending June 30th of the previous year.
The result is rounded to the next hundredth.
The 2013 Yield Margin (Percentage) is 0.90. The Yield Margin (Percentage) is determined by Commission resolution.
- 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 Tax is calculated according to Commission Rule.
The Interest Tax Rate for 2013 is 0.00%.
-
Bond Obligation Assessment Rate
- DEFICIT TAX RATE (DTR)
The fourth component of your tax rate is the Deficit Tax Rate. If the amount of money in the compensation fund on a tax rate computation date is less than the floor of the compensation fund, a DTR is added for the next calendar year to the GTR for each employer entitled to an experience rate for that year. There is no Deficit Tax for 2013.
- EMPLOYMENT AND TRAINING INVESTMENT ASSESSMENT (ETA)
The fifth component of your 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 your tax rate due to this assessment.
Your Effective Tax Rate for 2013 = General Tax Rate (GTR) + Replenishment Tax Rate (RTR) + Obligation
Assessment Rate (OA) + Deficit Tax Rate (DTR) + Employment Training Investment Assessment (ETA).
Minimum Tax Rate for 2013 is 0.54%.
Maximum Tax Rate for 2013 is 7.35%.
*You pay unemployment tax on the first $9000 that each employee earns during the calendar year. Your taxable wages are the sum of the wages you pay 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 2013 is 1.35. The other half is collected by the RTR itself. The RTR for 2013 is 0.38%.
Please e-mail questions or
comments to tax@twc.state.tx.usReturn to Tax Information