Texas Workers’ Compensation Guide

How Texas Calculates Workers’ Comp Benefits

Texas calculates workers’ compensation benefits as a percentage of your average weekly wage (AWW) in the 13 weeks immediately before your injury. Unlike most states, Texas uses a 70% replacement rate — slightly higher than the 66.67% (two-thirds) used in most other states — subject to a minimum and maximum weekly cap that the Texas Department of Insurance (TDI) Division of Workers’ Compensation (DWC) adjusts each September 1.

For 2026 injuries, the Texas DWC has set:

• Maximum weekly TTD/IIB rate: $1,105 (effective Sept 1, 2025)
• Minimum weekly TTD/IIB rate: $250 (effective Sept 1, 2025)

Texas is the only large U.S. state with no state-run workers’ comp fund. All Texas workers’ comp coverage is provided by private insurance carriers licensed by the TDI. Employers may also qualify as “self-insured” if they can demonstrate strong financial standing to the DWC. About 80% of Texas employers carry private coverage; the rest are either self-insured or — in some cases — not covered at all.

Important: Texas does not require private employers to carry workers’ comp insurance. Non-subscribing employers can be sued in civil court for workplace injuries, but the employee loses access to the streamlined workers’ comp system. Always confirm your employer carries coverage before relying on the workers’ comp process.

The Texas Workers’ Compensation Act is codified in Texas Labor Code, Title 5, and the implementing rules live in 28 Texas Administrative Code, Chapter 127 (DWC Rules).

Weekly Benefit Formula

The Texas TTD formula is:

TTD weekly rate = min(max, max(min, 0.70 × AWW))

Where:

• AWW = average weekly wage over the 13 weeks immediately before the injury date. If the worker had unusual overtime or bonuses, the DWC rules may annualize or normalize the AWW. See 28 TAC §127.100 for the exact rules.
• min = the current minimum TTD rate ($250/week for 2026)
• max = the current maximum TTD rate ($1,105/week for 2026)

The 0.70 (70%) replacement rate is higher than the 66.67% rate used in most other states. Texas is one of roughly 10 states that pay 70% or more. The tradeoff is that Texas’s maximum weekly rate of $1,105 is lower than many states — workers earning above ~$1,580/week hit the cap.

Worked example (2026 injury, Houston ISD custodian)

A school custodian in Houston earning $950/week is injured and cannot work:

• 0.70 × $950 = $665/week raw rate
• $665 is below the 2026 max of $1,105, and above the 2026 min of $250
• The custodian receives $665/week in TTD benefits

A higher-earning electrician at $2,000/week:

• 0.70 × $2,000 = $1,400/week raw rate
• $1,400 is above the 2026 max of $1,105
• The electrician receives the capped $1,105/week in TTD

Permanent Impairment (PI / PPD)

Texas uses the AMA Guides, 4th Edition to assign impairment ratings (the percentage of whole-body impairment from a work injury). Texas is one of the few large states still using the 4th Edition as of 2026 — most have moved to the 5th or 6th Edition.

The PI weekly rate is the same as the TTD rate. The total number of weeks payable depends on the impairment rating, multiplied by 401 weeks (the Texas maximum for PI). The formula:

PI total benefit = impairment rating × 401 × weekly rate

A 25% impairment rating × 401 weeks = 100.25 weeks of benefits. At the 2026 max rate of $1,105/week, that would equal $110,776 total. However, Texas has a 104-week cap on the cumulative total of income benefits (TIBs) for most non-catastrophic injuries — so a worker with high impairment and an extended injury may be capped at 104 weeks of TTD/IIB combined, even though the impairment formula suggests more weeks.

Catastrophic injuries

For catastrophic injuries (e.g., loss of both hands, paraplegia, severe brain injury), the 104-week cap is waived, and lifetime income benefits (LIB) may be paid at 70% of AWW (capped at the max). LIB is paid for the duration of the disability.

Max Weekly Benefit (2026)

Source: Texas Department of Insurance, Division of Workers’ Compensation, “Maximum and Minimum Weekly Income Benefit Rates” — verified at tdi.texas.gov/wc each September.

For TPD (Temporary Partial Disability) the rate is 70% of the difference between your pre-injury AWW and your post-injury earnings, capped at the standard max.

How to File a Workers’ Comp Claim in Texas

Texas has a structured, multi-step process for filing a workers’ comp claim. Missing any step can delay benefits or result in denial.

1. Report the injury to your employer immediately. Texas Labor Code Section 409.001 requires you to notify your employer within 30 days of the injury. In practice, report the same day if possible. Verbal notice is acceptable initially, but follow up in writing.

2. Seek medical treatment from a TDI-approved doctor. Under Texas law, your employer controls the choice of doctor through a DWC Certified Workers’ Compensation Health Care Network (a network of approved physicians). If your employer does not have a network, you may choose from the DWC Approved Doctor List searchable at twcc.texas.gov.

3. Employer reports to the insurance carrier. Your employer has 7 days to report the injury to their workers’ comp insurance carrier. The carrier has 15 days to accept or deny the claim (after receiving the employer’s report). You should be notified in writing of the decision.

4. File a DWC Form-041 (Employee’s Claim for Compensation). Even if the insurer accepts the claim, you should file the Employee’s Claim form with the DWC to start the formal administrative record. This form triggers the DWC’s tracking and dispute-resolution timelines.

5. If denied, request a Benefit Review Conference (BRC). File a DWC Form-049 (Request for Benefit Review Conference) within 90 days of the denial. A BRC is an informal dispute resolution meeting with a DWC ombudsman, attended by you, the carrier, and the carrier’s attorney. Most denials are resolved or partially overturned at the BRC stage.

6. Escalate to a Contested Case Hearing (CCH) if needed. If the BRC is unsatisfactory, you can request a CCH before a DWC administrative law judge. The CCH is a more formal hearing, with testimony, evidence, and a binding decision. Decisions can be appealed to the Texas Court of Appeals.

7. Track all paperwork. Keep copies of: DWC-041 form, all medical reports, pay stubs (pre and post injury), correspondence with the insurer, and any witness statements. The DWC Electronic Claim File allows online access to your claim records.

8. Consult a Texas workers’ comp attorney if:

   • Your claim is denied
   • You have a permanent impairment rating
   • You are offered a settlement (Texas calls this a Compromise Settlement Agreement, or CSA)
   • Your employer is retaliating against you
   • You disagree with the impairment rating

   Most Texas workers’ comp attorneys offer free consultations and work on contingency (typically 15–25% of settlement, subject to DWC fee approval).

FAQ

How long do TTD benefits last in Texas?

TTD (called Temporary Income Benefits, or TIBs in Texas) continues until you reach Maximum Medical Improvement (MMI) — the point at which your condition is not expected to improve further with treatment — or until you return to work.

For most non-catastrophic injuries, TIBs are capped at 104 weeks (2 years). This is a hard cap that began as part of the 2005 reforms to the Texas Workers’ Compensation Act.

For catastrophic injuries (spinal cord injuries resulting in paraplegia/quadriplegia, severe burns covering 30%+ of the body, loss of both hands/feet, severe traumatic brain injury, or legally blindness), the 104-week cap is waived. Lifetime Income Benefits (LIB) are paid for the duration of the disability, at 70% of AWW (capped at the 2026 max of $1,105/week), plus a 3% annual COLA adjustment.

Are Texas workers’ comp benefits taxable?

No. Workers’ compensation benefits in Texas are not subject to federal or Texas state income tax under Internal Revenue Code Section 104(a)(1). They also do not count as earned income for Social Security purposes. You will not receive a W-2 or 1099 for TIB/LIB payments, but structured settlements may have different tax treatment if you assign the future payments to a third party.

Can I be fired for filing a workers’ comp claim in Texas?

Texas Labor Code Section 451.001 prohibits employers from discriminating or retaliating against an employee for filing a workers’ comp claim in good faith. If you are fired, demoted, harassed, or have hours cut after filing, you may have a separate workers’ comp retaliation claim with damages including reinstatement, back pay, lost benefits, and (in some cases) punitive damages.

The statute of limitations on a Section 451.001 retaliation claim is 180 days from the retaliatory act — contact an employment attorney promptly if you suspect retaliation.

How do Texas workers’ comp settlements work?

Texas has two main settlement types:

• Compromise Settlement Agreement (CSA): A negotiated lump-sum payment that closes your medical and income benefits. The carrier typically requires you to sign a release waiving future medical treatment for the injury. Never sign a CSA without consulting an attorney — the first offer is rarely the best deal, especially for injuries requiring future medical care (back injuries, joint replacements, etc.).

• Stipulated (Stips) Settlement: A negotiated lump-sum payment for the future income benefits portion of your claim, but medical benefits remain open. The carrier typically accepts a reduced amount in exchange for a fixed future obligation. This is the more conservative option and often the default recommendation for workers with uncertain future medical needs.

For both settlement types, an attorney is highly recommended. DWC must approve all settlements involving an attorney, and a DWC administrative law judge reviews the settlement to ensure it is in the worker’s interest.

What is the difference between TIB, IIB, LIB, and death benefits?

• TIB (Temporary Income Benefits): Paid when you are completely unable to work for a temporary period. 70% of AWW, capped. Paid until MMI, subject to the 104-week cap for non-catastrophic injuries.
• IIB (Impairment Income Benefits): Paid after MMI based on your impairment rating. Same weekly rate as TIB. Total = impairment% × 401 weeks. Subject to the 104-week cap.
• LIB (Lifetime Income Benefits): Paid for catastrophic injuries with no time limit. 70% of AWW (capped at max), plus 3% annual COLA.
• SIB (Supplemental Income Benefits): For workers earning less than 80% of pre-injury AWW after MMI. Tied to a wage-loss formula.
• Death benefits: Paid to dependents if a work injury causes death. Burial allowance up to $10,000 plus 70% of AWW to surviving spouse, until remarriage. Children share in the benefit until age 18 (or 25 if a full-time student).

What is the Texas workers’ comp appeals process?

If your claim is denied or you disagree with a benefit amount, the process is:

1. Benefit Review Conference (BRC) — informal dispute resolution with a DWC ombudsman (typically 60–90 days from request)
2. Contested Case Hearing (CCH) — formal hearing before a DWC administrative law judge (typically 4–8 months from request)
3. DWC Appeals Panel — review of the CCH decision (typically 3–6 months)
4. Texas Court of Appeals — final appeal (typically 12–18 months)

Most claims settle before the CCH stage. The entire process from initial denial to final decision typically takes 12–24 months.

Sources

• Texas Labor Code, Title 5 — Workers’ Compensation — statutes.capitol.texas.gov
• 28 Texas Administrative Code, Chapter 127 (DWC Rules) — texreg.sos.state.tx.us
• Texas Department of Insurance, Division of Workers’ Compensation — tdi.texas.gov/wc
• Texas Workers’ Compensation Commission Approved Doctor List — twcc.texas.gov
• DWC Maximum and Minimum Weekly Income Benefit Rates (Sept 2025)
• AMA Guides to the Evaluation of Permanent Impairment, 4th Edition
• U.S. Bureau of Labor Statistics, Survey of Occupational Injuries and Illnesses (SOII) — Texas data series