New rates effective October 1, 2025 affect every Texas worker and business
If you work in Texas, pay attention. The Division of Workers’ Compensation (DWC) just set new rates that could significantly impact what you receive if you’re injured on the job – or what your employer pays for coverage.
Every October 1st, DWC updates the state’s average weekly wage and the maximum and minimum weekly benefits based on Texas Workforce Commission data. This year’s changes reflect the economic reality of 2025 wages and affect every single person in the Texas workers’ compensation system.
Who This Affects
Every Texas worker covered by workers’ compensation – which includes most employees across the state. Whether you’re in construction, healthcare, retail, manufacturing, or office work, these rates determine your benefits if you’re hurt at work.
Every Texas employer who carries workers’ compensation insurance will see premium changes based on these new calculations.
Sole proprietors, partners, and their working spouses get special treatment with fixed annual payroll amounts based on the state average weekly wage.
The Numbers That Matter
Based on recent DWC data, here’s how the system works:
State Average Weekly Wage (SAWW) is calculated as 88% of the average weekly wage in covered employment for the preceding year, as computed by the Texas Workforce Commission.
Maximum weekly benefits cannot exceed the SAWW (rounded to the nearest dollar).
Minimum weekly benefits equal 15% of the SAWW (rounded to the nearest dollar).
For context, the 2025 SAWW was $1,218.62, which meant maximum benefits of $1,219 per week and minimum benefits of $183 per week for injuries occurring between October 2024 and September 2025.
How Your Benefits Are Calculated
Your Average Weekly Wage (AWW) is the average amount your employer paid you each week in the 13 weeks before your injury. This includes overtime, bonuses, and non-cash benefits like health insurance premiums.
Temporary Income Benefits equal 70% of your pre-injury average weekly wage, subject to the maximum and minimum limits.
Example: If you earned $600 per week before injury and can’t work at all, you’d receive $420 per week (70% of $600) in temporary benefits – assuming that falls within the maximum and minimum ranges.
The Pros of Higher Rates
Better protection for injured workers: Higher maximum benefits mean workers with higher incomes get more adequate compensation when injured. Previously, high earners hit the benefit cap quickly, leaving them with insufficient income replacement.
Keeps pace with inflation: Regular adjustments ensure benefits maintain purchasing power as living costs rise.
More attractive coverage for employers: Higher wage bases for sole proprietors and partners reflect current economic conditions, making coverage more realistic for business owners.
Improved system credibility: Benefits that align with actual wages maintain public trust in the workers’ compensation system.
The Cons of Higher Rates
Increased insurance costs: Employers face higher premiums as maximum benefits rise, which can strain business budgets, especially for smaller companies.
Potential job impact: Higher workers’ comp costs might cause some employers to reduce hiring or shift to independent contractors to avoid coverage requirements.
Administrative burden: Payroll calculations become more complex as rates change annually, requiring updates to systems and training.
Competitive disadvantage: Texas employers might face higher labor costs compared to states with lower workers’ comp requirements.
Special Considerations
School district employees have different calculation methods. Their AWW is based on wages earned (not wages paid) and calculated over 12 months divided by 50, rather than the standard 13-week calculation.
Multiple job holders can include wages from other employers if their injury prevents them from working those jobs too.
Sole proprietors and partners get fixed annual payroll amounts regardless of their actual earnings – providing predictable premium calculations.
What This Means for Different Groups
High-wage earners: Benefit from increased maximum rates, getting more adequate income replacement.
Low-wage workers: Protected by minimum benefit floors, ensuring a basic level of support.
Employers: Face increased premium costs but get more comprehensive coverage for their workforce.
Insurance companies: Must adjust their rates and reserves to account for higher potential payouts.
Looking Ahead
These annual adjustments reflect Texas’s growing economy and rising wages. As the state continues to attract businesses and workers, the workers’ compensation system evolves to provide appropriate protection.
For workers: Know your rights and understand how benefits are calculated. The new rates provide better protection, but you still need to report injuries promptly and follow proper procedures.
For employers: Budget for increased workers’ comp costs and consider safety programs that can reduce claims and potentially lower premiums through experience rating.
For everyone: The October 1st effective date means any injury occurring after that date falls under the new rate structure.
Bottom Line
Higher workers’ compensation rates reflect economic reality – wages have grown, and benefits need to keep pace. While employers face increased costs, workers get better protection when they need it most.
The annual adjustment system ensures Texas maintains a balanced approach, protecting injured workers while keeping the business climate competitive.
If you’re hurt at work after October 1, 2025, these new rates determine your benefits. If you’re an employer, these rates affect your insurance costs starting with your next policy renewal.
Key Resources:
- Questions about benefits: 800-252-7031, option 1
- DWC website: tdi.texas.gov/wc
- Maximum/Minimum Benefits: tdi.texas.gov/wc/employee/maxminbens.html
- Report workplace injuries: Contact your employer immediately
- Disputes: DWC provides resolution services
The workers’ compensation system only works when everyone understands their rights and responsibilities under the current rates.
