Cost of an Employee Calculator (US)
This cost of an employee calculator estimates the full annual cost of a US hire: base salary plus employer FICA, FUTA and benefits.
What it does
The Cost of an Employee Calculator estimates the true annual cost of a US employee: base salary plus employer payroll taxes plus benefits.
Data sources & parameters
The figures below drive this calculator. We keep them aligned with the latest official guidance, and each result recalculates automatically whenever a value changes.
| Parameter | Value | Source | Last updated |
|---|---|---|---|
| Social Security (OASDI) rate | 0.062 | irs.gov | Effective 2026-01-01Made open-ended (was valid to 2026-12-31): the 6.2% OASDI rate is fixed by statute (IRC 3101(a)/3111(a)); unchanged for 2027. audit 2026-09-23 |
| Medicare rate | 0.0145 | irs.gov | Effective 2026-01-01Made open-ended (was valid to 2026-12-31): the 1.45% HI rate is fixed by statute (IRC 3101(b)(1)/3111(b)); unchanged for 2027. audit 2026-09-23 |
| FUTA effective rate | 0.006 | irs.gov | Effective 2026-01-01Made open-ended (was valid to 2026-12-31): the 0.6% net FUTA rate (6.0% less the 5.4% credit) is fixed by statute (IRC 3301/3302); unchanged for 2027. audit 2026-09-23 |
| FUTA wage base | 7,000 | irs.gov | Effective 2026-01-01Made open-ended (was valid to 2026-12-31): the 7,000 FUTA wage base is fixed by statute and not indexed (IRC 3306(b)(1)); unchanged for 2027. audit 2026-09-23 |
| Social Security (OASDI) contribution and benefit base, 2026 | 184,500 | federalregister.gov, ssa.gov | Effective 2026-01-01Auto-update: replaced dead source link |
We always strive to use the latest data for every variable so our results and reports are as accurate as possible. Even so, errors are possible — you should not rely on this tool or its report alone, and we accept no liability for any decision made based on it.
The formula
Total cost = salary + employer FICA + FUTA + benefits + other costs
How it works
It adds the employer's Social Security, Medicare, and FUTA taxes to the salary, then adds the benefits and other costs you enter.
Where it is used
- Budgeting a new hire's fully loaded cost
- Pricing services against employee overhead
- Comparing employee cost with contractor cost
Worked example
A $60,000.00 salary with $12,000.00 of benefits carries … in employer payroll taxes, for a total employer cost of … — … over the base salary.
What the cost of an employee calculator does
The cost of an employee calculator estimates the full annual cost of hiring someone in the United States. On top of the base wage, an employer pays mandatory payroll taxes and usually a package of benefits. The tool adds these to the salary so you see the fully loaded figure, not only the number on the offer letter.
Employers often underestimate headcount cost because the salary is the most visible part. Knowing the total up front helps with budgeting, pricing, and deciding whether a role is affordable.
Why salary is only part of the cost
With a salary you also take on the employer share of federal payroll taxes and any benefits you provide. These are cash costs every pay period, even though they never appear on the employee’s paycheck. The percentage they add on top of base pay is often called the burden rate, and the calculator works it out for your numbers.
The employer payroll taxes
- Social Security (OASDI): the employer pays a percentage of wages up to an annual wage base. Wages above the cap are not taxed, so very high salaries carry a proportionally smaller Social Security cost.
- Medicare: the employer pays a flat percentage on all wages with no cap. The Additional Medicare Tax on high earners is withheld from the employee only, so it is not an employer cost and is excluded.
- FUTA: the federal unemployment tax applies only to the first part of each employee’s wages each year, up to the FUTA wage base. The base is low, so FUTA is usually a small fixed amount per employee.
The employer shares of Social Security and Medicare together are called employer FICA. The calculator shows employer FICA and FUTA separately.
Benefits and other costs
Most employers also provide benefits such as health insurance premiums, a retirement plan match, paid time off, and life and disability insurance. These vary widely, so you enter your own benefit cost.
Separate fields cover an employer retirement match and other costs such as equipment, software licenses, training, workers’ compensation insurance and state unemployment tax. If you are unsure of a figure, a reasonable estimate gives a more accurate total than leaving it out.
How the calculation works
- It computes the employer Social Security tax on wages up to the wage base cap.
- It computes the employer Medicare tax on all wages.
- It computes the FUTA tax on wages up to the FUTA wage base.
- It adds your benefits, retirement match and other costs.
- It sums everything for the total annual employer cost.
The result also shows the markup over salary as a percentage, the monthly cost, and an approximate hourly cost based on a 2,080-hour work year, which helps when comparing a salaried role with contractor rates or with the revenue the role needs to bring in.
What you need to enter
- The annual base salary for the role.
- Your total annual benefits cost, such as health insurance premiums.
- Any employer retirement match you provide.
- Other costs such as equipment, workers’ compensation and state unemployment tax.
Benefits are often the largest cost after salary, so accurate benefit figures matter most. If several employees get the same package, reuse the benefit figure and change only the salary to compare roles.
Reading your result
The output separates base salary, employer payroll taxes and benefits, then combines them into the total employer cost, so you can see how much is mandatory tax and how much is discretionary benefits. The markup percentage shows how much more than the salary the role costs.
State unemployment rates, local taxes and the structure of your benefits plan can change the actual figure. Use the total for planning, confirm specifics with your payroll provider or an accountant, and recalculate when salaries, benefit costs or wage bases change.
This is general information only and not financial or tax advice.
About This Cost of an Employee Calculator
Use this cost of an employee calculator to get an instant, accurate estimate. The figures follow official SSA guidance and every rate and threshold is kept up to date for 2026. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.
Tax year 2026
Frequently asked questions
What does the cost of an employee calculator do?
Which employer payroll taxes are included?
Does it include state unemployment tax?
How much more than salary does an employee cost?
Are the tax figures current?
Is my data private?
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