No Tax on Overtime HelpFor Texas owners.

The half does not grow a state income line.

Texas does not tax personal wages with a state income tax. The premium half, when it qualifies, is claimed on the federal return, on Schedule 1-A, for tax years 2025 through 2028. A worker in Dallas and a worker in a town far from Dallas and Fort Worth are reading the same federal notice.

If you are reading from outside those two cities, we are all Texans, and the miles do not change the half on the stub. An overtime crew can be on a ranch road or inside a warehouse, and the video call does not change. The call is still one week, with the books you choose to share.

Notice 2025-69 is the IRS writing for a 2025 wage form that did not have to isolate the premium. A letter from the Texas Comptroller is a different envelope. That letter is about the till, or about the company's May report. The notice that tells a worker how to split time and a half is the IRS notice, and the two envelopes should not be stacked as if they were one.

Social Security tax and Medicare tax still come out of the overtime wage on Friday. The deduction, when the cap and the phaseout leave room, is a computation on the federal return. Withholding on the paycheck and the line on Schedule 1-A are not required to match. A worker who wants the Friday check itself to drop the premium is looking at the wrong paper, in Texas and in every other state.

The company's May report is not the worker's half.

A Texas company writes one yearly check for the privilege of doing business, called the franchise tax, and a week of overtime does not file that report. The ordinary franchise day is May 15. When that date lands on a weekend or a holiday, the on-time filing moves to the following business day. The premium half on a stub cannot take the place of that yearly report.

For report years 2026 and 2027, a company whose yearly revenue is at or under two million six hundred fifty thousand dollars owes no franchise tax and does not file the tax report. The short report can still be due, unless the company is already on the Comptroller skip list. Form 05-102 carries the public information report, and Form 05-167 carries who owns the company, and neither form is where a worker claims the premium half. We link the filing page rather than reciting a skip list from memory.

Those report years price retail and wholesale at 0.375 percent and price every other line of work at 0.75 percent, which is a company figure and not a slice of anyone's overtime deduction. When annualized total revenue is twenty million dollars or under, the company may use the EZ computation at 0.331 percent and give up the margin deductions. The long report is what a company files when it is over the no-tax threshold and it is not taking the EZ computation, or when it wants a margin deduction. The worker's half is not one of those margin methods.

Compensation on that report can include W-2 wages, and the per-person limit for those report years is four hundred eighty thousand dollars. Pay reported on a 1099 stays out of that compensation figure. The overtime premium that landed on a W-2 can sit inside the wages the company lists. That listing does not move the worker's deduction onto the company. Each person who was paid claims their own half, subject to the federal cap of 12500 dollars, or 25000 dollars on a joint return.

An information report that shows up late on the franchise side costs fifty dollars, and that fine is not a payroll penalty. Franchise tax that arrives 1 to 30 days late picks up 5 percent, and franchise tax after that picks up 10 percent. The franchise interest clock waits until day 61 before it starts. Because that interest percent changes, this page links the Comptroller interest page and refuses to freeze a number next to a stub. The report itself is described on the Comptroller franchise page and on the filing requirements page.

The till is a third paper.

Texas sales tax on most goods starts at 6.25 percent from the state, and a local piece can add as much as 2 percent more. State plus local stops at 8.25 percent on one sale, and that ceiling is not a tax on the overtime wage. There is no city income tax on the paycheck hiding inside that ceiling. The rate for a particular counter is the one on the Comptroller rate locator the day of the sale. We do not memorize a town's rate on this page.

The Comptroller's letter after a permit is approved is what tells the seller to file monthly or quarterly. Monthly sales reports are due on the 20th of the next month, so April's till is due May 20. Quarterly sales reports come due in April, July, October, and January, on a calendar that has nothing to do with Schedule 1-A. A report and a payment that arrive on time can take a discount of 0.5 percent of the tax. Miss the sales-report date and the till penalty is fifty dollars, counted apart from any overtime week you brought us. Sales tax that is 1 to 30 days late picks up 5 percent, and sales tax after that picks up 10 percent. Sales-tax interest also waits until day 61, and the overtime deduction never pays that interest.

Whether a sale is taxable, and whether a service is exempt, is a till ruling we leave entirely to the seller instructions at the Comptroller. This overtime page will not label a sale for you. The instructions sit on the seller pages the Comptroller publishes. A sales letter and Notice 2025-69 can arrive in the same season. They answer different questions. One is about the till. One is about the premium half.

Hiring in Texas is setup, not a payday we press.

A new hire or a rehire is reported to the Texas Attorney General's Child Support Division within 20 calendar days of the day wages start, when a Form W-4 is required. Texas still wants the employer's quarterly wage report, and sending that report never covers the separate 20-day new-hire notice. The same federal employer identification number is used on both. The employer page for that 20-day report is the Attorney General's new-hire page.

The owner chooses the payroll provider and presses the runs. We open the provider in the owner's name and post the wages into the books. We do not operate payday, in Dallas or in any other Texas town. Federal deposits of withheld income tax, and of Social Security and Medicare tax, are electronic. The quarterly federal employment return for those withheld taxes is Form 941, and the owner still presses the payroll runs that feed it.

Federal unemployment tax is reported on Form 940. A deposit is required for a quarter in which that tax is more than five hundred dollars, and the deposit is due by the end of the month after the quarter ends. Form 940 is the company's unemployment tax, paid by the employer and never taken from the premium half a worker may claim on Schedule 1-A.

The quarterly wage report that goes to the Texas Workforce Commission is the state's employer filing. The rate and the wage base live on the commission's letter to the company. We do not print a rate on this page, because that letter is the one that is current for the year you are in.

Most private employers in Texas may choose workers' compensation coverage, and coverage is not required in most cases. The owner tells each employee whether coverage exists, including a new employee at hire, and posts the notice where people will see it. If coverage starts, stops, or is canceled, the employees are told within 15 days. That choice is not the overtime deduction, and it is not the May franchise report. The notice text belongs to the Division of Workers' Compensation, not to a sentence we draft here.

The federal dates still sit on a Texas calendar.

Personal federal estimates still come due in April, June, September, and January even though Texas has no personal income tax. A closed month is what makes the estimate less of a guess. The premium half, if it will be claimed, belongs in that guess only after the stub has been split the way Notice 2025-69 describes.

Publication guidance keeps employment-tax records for at least four years after the tax is due or paid, whichever is later. A pocket note about one overtime week is not that record. The note only helps you see whether the wage form, when it arrives, matches the weeks a worker remembers.

A report that carries assurance is signed by a firm that holds that license. The sentence that draws the line on those reports is on the disclosures page, written in this practice's words, and an overtime reading does not move that line. This page prepares no such report.

How a Texas week starts.

Bring one week. Say the year. Say whether the half is already on its own line, in box 14, on a separate statement, or nowhere. The crew can work in any Texas county. You do not tour a room in Dallas, and we do not pretend to keep an office in your town.

If the fit is wrong, the first conversation says so. One week, or one sentence about whether the half is labeled, is a complete first message. The doubts that apply in every state are on the questions page, and the paper we can actually use is on one week you can hand over.

Name the Texas year