Employee Cost Calculator

How do you calculate the true cost of an employee?

Add four layers to the base salary: employer payroll taxes, benefits, overhead and any one-time hiring cost. With this calculator's US defaults, a $60,000 salary costs $83,921 a year in total, a 1.40x multiplier, or $6,993 a month. The formula the engine runs is:

Total cost = salary + Social Security % × min(salary, its wage base) + Medicare % × salary + FUTA % × min(salary, $7,000) + state unemployment % × min(salary, state wage base) + workers' comp % × salary + health insurance + salary × retirement match % + equipment + software + office + training + recruiting

The cost multiplier is total cost divided by salary. The effective hourly cost divides the total by hours actually worked, (52 − PTO weeks) × 40, so paid time off raises the hourly figure instead of being added as a second wage line. Every line is rounded to the cent, and every total is the sum of its rounded lines.

Worked examples, computed by this calculator

Each row is the calculator's own output for the stated inputs. Everything not named uses the defaults: Social Security 6.2% up to $184,500, Medicare 1.45%, federal unemployment 0.6% of the first $7,000, state unemployment 2.7% of the first $7,000, 1% workers' compensation, $7,000 health insurance, 3% retirement match, 3 weeks PTO and $9,700 of equipment, software, office and training.

Two patterns show up. The multiplier falls as salary rises, because health insurance and overhead are flat dollar amounts: the $60,000 hire carries a 1.40x multiplier, the $150,000 hire 1.27x. And one-time costs matter in year one: a $15,000 recruiter fee lifts a $100,000 hire from $128,581 to $143,581 in its first year.

US employer payroll taxes in 2026

• Social Security: 6.2% paid by the employer on wages up to the 2026 wage base of $184,500, so at most $11,439 per employee. Above the base, the employer's 6.2% stops.
• Medicare: 1.45% on all wages with no cap. The 0.9% Additional Medicare tax on wages above $200,000 is withheld from the employee; there is no employer match.
• Federal unemployment (FUTA): 6.0% on the first $7,000 of each employee's wages, reduced to 0.6% ($42 a year) when you earn the full 5.4% state credit.
• State unemployment (SUTA): your state's rate on its own wage base. In January 2026 state wage bases ran from $7,000 to $78,200 (Washington), and the commonest new-employer rate was 2.7%, in 10 of 53 jurisdictions. The calculator's default, 2.7% of the first $7,000, is an assumption: enter your state's assigned rate and wage base.
• Workers' compensation: priced by your insurer from the job's class code; the default is 1% of salary.

The calculator applies each tax to its own wage base. On the defaults, a $100,000 hire carries $7,881 of employer payroll taxes: Social Security $6,200 (6.20% of $100,000), Medicare $1,450 (1.45% of $100,000), Federal unemployment (FUTA) $42 (0.60% of $7,000), State unemployment (SUTA) $189 (2.70% of $7,000). Workers' compensation is insurance, not a tax, and comes on top: $1,000 (1.00% of $100,000). Every rate and wage base is an input, so a credit-reduction state's higher FUTA or a high-base state can be entered directly. Sources: IRS Publication 15 (2026), IRS Topic 759, the IRS Additional Medicare Tax questions and the DOL's January 2026 table of state unemployment laws, checked 2026-11-02.

What the official data says: benefits are 30% of compensation

The Bureau of Labor Statistics' Employer Costs for Employee Compensation survey for June 2026 (released September 9, 2026) put private-industry compensation at $46.89 per hour worked: $32.82 in wages and salaries (70.0%) and $14.07 in benefits (30.0%). For full-time private workers, paid leave was 8.1% of compensation and legally required benefits such as Social Security and Medicare 7.0%.

Read as a multiplier, $46.89 ÷ $32.82 = 1.43x wages. That is an upper anchor for a salaried hire, because BLS counts paid leave as a benefit on top of wages for hours worked, while a salary already pays for leave. The BLS figures also exclude overhead such as laptops, software and office space, which this calculator adds separately. See the BLS loaded-cost breakdown for the full category detail.

Common mistakes when estimating employee cost

• Adding PTO as a separate cost. The salary already pays for paid time off. Counting it again double-counts wages; PTO belongs in the hours-worked denominator.
• Using salary ÷ 2,080 as the hourly cost. With the defaults, a $60,000 hire costs $42.82 per hour actually worked, not $28.85.
• Applying 6.2% Social Security above the wage base. It stops at $184,500 in 2026, so very high salaries carry a lower effective payroll tax rate; the calculator applies the cap.
• Charging unemployment tax on the whole salary. FUTA and state unemployment apply only to a wage base: on a $100,000 salary, 2% of the whole salary would be $2,000, against $231 on the default bases.
• Forgetting year-one costs. Recruiting fees, onboarding time and equipment purchases land in the first year and make the first-year multiplier higher than the steady state.
• Assuming remote means no overhead. Remote removes the office line, not laptops, software seats or a home-office stipend.

Variations: contractors, other countries and part-time

A 1099 contractor's rate already includes their own taxes and benefits, so compare it with this calculator's effective hourly cost, not with salary; the contractor vs employee calculator does that side by side. Outside the US, enter your country's employer social charge as the Social Security rate with its ceiling as the wage base (or a wage base above the salary when there is no ceiling), and set Medicare, federal and state unemployment and workers' compensation to whatever your system charges separately, or to 0. For a part-time role, enter the prorated salary and only the benefits that role actually receives. To see how one hire changes your cash position, run the result through the startup runway calculator, and see how to calculate true employee cost for a line-by-line walkthrough.