True Cost of an Employee Calculator

Enter the pay, the hours, the paid days off and what you spend per employee on benefits, workers' comp and other costs. The calculator adds the federal employer payroll taxes and your state unemployment rate and shows the fully loaded cost.

Hourly pay is this × 52 weeks; for a salary it sets the cost per hour.
Vacation, holidays and sick days paid but not worked. Already inside the pay above.
Sets the Social Security wage base.
6% less the state credit of up to 5.4%; 0.6% is the usual net rate. Higher in credit-reduction states.
Your state's rate for your business. Illustrative default.
Wages per employee your state taxes each year. Illustrative default; it varies widely by state.
Employer share of health insurance, retirement match and other benefits. Illustrative default.
Your premium rate for this job class. Illustrative default.
Equipment, software, training, payroll service. Illustrative default.

Total annual cost

$79,421.00

Labor burden

32.37%

Fully loaded multiplier

1.3237 × base pay

Base pay

$60,000.00

Employer payroll taxes

$4,821.00

Cost per paid hour

$38.18 / h

Cost per hour worked

$40.52 / h

Hours worked per year

1,960

Paid time off (inside base pay)

$3,461.54

How it works

An employee costs more than their pay. On top of wages the employer pays its own share of Social Security and Medicare, federal and state unemployment tax, workers' compensation insurance, benefits, and the equipment and services each person needs. The labor burden is all of that as a percent of base pay; the fully loaded cost is base pay times one plus the burden.

The federal payroll taxes are fixed by law: 6.2% Social Security on pay up to the wage base ($184,500 for 2026) and 1.45% Medicare on all pay, matched by the employer (IRS Publication 15), and FUTA at 6% of the first $7,000 of each employee's pay, reduced to 0.6% when the full 5.4% credit for state unemployment tax applies (IRS Tax Topic 759). State unemployment rates and wage bases are set per employer by each state, so they are your inputs.

Paid time off is already inside base pay, so it is not added again. It does mean fewer hours worked for the same cost, so the calculator shows the cost per hour actually worked alongside the cost per paid hour.

Formula

base pay          = salary, or hourly wage × hours per week × 52
Social Security   = 6.2% × min(base pay, wage base)
Medicare          = 1.45% × base pay
FUTA              = FUTA rate × min(base pay, $7,000)
SUTA              = SUTA rate × min(base pay, SUTA wage base)
workers' comp     = rate ÷ 100 × base pay
total cost        = base pay + payroll taxes + benefits + workers' comp + other
burden %          = (total cost − base pay) ÷ base pay
cost per hour worked = total cost ÷ (hours per week × (260 − paid days off) ÷ 5)

Example

A $60,000 salary carries $3,720 of employer Social Security, $870 of Medicare, $42 of FUTA (0.6% of $7,000) and $189 of SUTA (2.7% of $7,000): $4,821 of payroll taxes. Adding $12,000 of benefits, $600 of workers' comp at $1 per $100 and $2,000 of other costs gives a total annual cost of $79,421, a labor burden of 32.37%.

Over 2,080 paid hours that is $38.18 an hour. With 15 paid days off the employee works 1,960 hours, so each hour worked costs $40.52; the paid time off is worth $3,461.54 of the salary.

Assumptions and limitations

  • Results are for informational and educational purposes and are not tax, legal, accounting or employment advice.
  • The defaults for SUTA, benefits, workers' comp and other costs are illustrative; figures from your state rate notice, insurance premium and benefit costs replace them.
  • Federal figures are from IRS Publication 15 (2025 and 2026) and IRS Tax Topic 759 (reviewed September 2026). The FUTA rate is the net rate after the state credit; employers in a credit-reduction state pay more, which you can enter.
  • Pay is assumed to be paid evenly across a full year to one employee by one employer. A partial year, overtime, bonuses and pre-tax deductions that change taxable wages are not modelled.
  • HiBob ("Fully burdened labor rate") puts the fully burdened cost at 25–40% above salary, but it depends heavily on benefits and industry; it is a reference range, not a target.
  • Workers' comp is modelled as a rate per $100 of pay, the way most premiums are quoted; minimum premiums and experience modifiers are not.

Frequently asked questions

Does the employer pay the 0.9% Additional Medicare Tax?

No. The employer withholds it from the employee's wages over $200,000 but does not match it, so it is not an employer cost and is not included here.

Why is FUTA so small?

FUTA applies to the first $7,000 of each employee's pay. At the usual net rate of 0.6% after the state credit, that is at most $42 per employee per year, however much the employee earns.

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