Photoshop Text Effects
Making knockout text in Photoshop usually means making the text with a layer mask — making the text non-editable. Don't fear! There's a way to keep the text fully editable while getting the same beautiful effect, and all you have to do is keep reading to learn how.
Open the image that you will use as a background in Photoshop.
In a new layer draw the shape that you will use as a background for your text. In this case it is a simple rectangle with rounded corners but you can use any shape that you like.
Select the Type Tool (T) and in a new layer, type your text. You are free to use any font and any color.
With the text layer selected go to Layer > Layer Style > Blending Options.
Under the Advanced Blending options set the Fill Opacity to 0%.
In the Knockout dropdown menu select “Shallow” and click OK.
To make the text a bit more interesting, we will add a drop shadow to it. Hold Shift on your keyboard and select both the Background Shape and the Text layers.
Go to Layer > New > Group from Layers. Name this group as Knockout and click OK.
With the layer group selected, go to Layer > Layer Style > Drop Shadow. Apply the following settings and click OK.
Besides changing the background shape and the drop shadow effect to any other shape, opacity or effect that you want, now you can easily change the initial text (while keeping all the effects we already made intact) to any other text that you want and using any font. Simply select the Type Tool and replace the initial text with your own.