Employee Cost Calculator

Wages plus employer payroll taxes, workers' comp, and benefits — per year and per hour worked

Updated 2026-09-28

Annual wages

State unemployment rate

State unemployment wage base

Workers' comp (% of wages)

Benefits per year

Hours per week

Paid weeks off (holiday + leave)

Social Security (6.2%): $2,790.00
Medicare (1.45%): $652.50
FUTA (0.6% of first $7,000): $42.00
State unemployment: $189.00
Workers' comp: $450.00
Total cost per year: $55,123.50
Cost vs wages: 122.5%
Cost per hour worked: $28.12

2026 federal employer rates (IRS Pub. 15; Social Security wage base $184,500). State figures are yours to enter. Estimate for planning — not payroll or tax advice.

Your numbers stay on this device. The page link keeps your inputs, so a bookmark or shared link reopens these results.

An employee costs more than their pay. On top of wages, the employer pays its own share of payroll taxes, unemployment insurance, and workers' compensation, and often benefits. And paid holidays mean you pay for more hours than are actually worked. The calculator adds it all up so you can price your work, plan a hire, or compare a hire with a contractor.

Federal employer payroll taxes for 2026

US employers pay these on top of the employee's wages. The rates below are the 2026 federal figures from the IRS (Publication 15, Employer's Tax Guide) and the Social Security Administration's 2026 wage base. They are prefilled in the calculator; state figures are entered by you.

Employer-paid federal payroll taxes, 2026
Tax	Employer rate	Applies to
Social Security (OASDI)	6.2%	Wages up to $184,500 per employee
Medicare	1.45%	All wages, no cap
FUTA (federal unemployment)	0.6% net (6.0% less up to 5.4% state credit)	First $7,000 per employee — $42 max

State costs you need to look up

State unemployment insurance (SUI or SUTA) rates depend on your state, your industry, and your claims history. New employers get a starter rate, and the taxable wage base ranges from $7,000 in some states to well over $50,000 in others. Your state workforce agency sends your rate each year.

Workers' compensation insurance is priced per $100 of payroll by job classification: office work is cheap, roofing is not. Your insurer's quote gives the figure. Some states and cities also charge disability, family-leave, or local payroll taxes.

FUTA's net 0.6% assumes your state is not a "credit reduction" state. When a state owes the federal unemployment fund, employers there pay more; the IRS publishes the list each November.

A worked example

A $45,000 salary with the 2026 federal rates, a 2.7% state unemployment rate on a $7,000 wage base, workers' comp at 1% of wages, and $6,000 a year of benefits:

Social Security: $2,790.00 · Medicare: $652.50 · FUTA: $42.00
State unemployment: $189.00 · Workers' comp: $450.00 · Benefits: $6,000.00
Total yearly cost: $55,123.50 — about 22.5% more than the salary
With 3 weeks of paid holiday and leave, 40 hours a week is 1,960 hours actually worked, so the cost per hour worked is $28.12 against a $21.63 nominal hourly wage

Employee versus contractor

A contractor's rate usually looks higher because it has to cover the payroll taxes, insurance, equipment, and unpaid time that an employer would otherwise cover. Compare the contractor's hourly rate with the cost per hour worked from this calculator, not with the employee's wage.

Whether someone can be treated as a contractor is a legal test, not a pricing choice. The IRS and your state labor department set the rules, and misclassification carries penalties.

Using the number

If the employee's time is billed to customers, their cost per hour worked is the floor for what you charge — the hourly rate calculator builds your overhead and margin on top. For a new hire, add the yearly total to your cash flow forecast before the start date, including the first-quarter bump when Social Security and unemployment taxes are all still being charged.

Keep the numbers in a spreadsheet

Ready-made Excel and Google Sheets templates that pick up where this calculator stops. One-off purchase, instant download.

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Frequently asked questions

How much does an employee cost on top of salary?

Employer payroll taxes alone add about 7.65% plus unemployment insurance. With workers' comp and typical benefits, total cost commonly runs 1.2 to 1.4 times the salary, depending heavily on benefits.

What is the Social Security wage base for 2026?

$184,500. The 6.2% employer Social Security tax stops once an employee's wages for the year pass that amount. Medicare has no cap.

Is the employee's own share of FICA included?

No. The employee's 7.65% (and any additional Medicare tax) is withheld from their pay, so it is already inside the salary. This calculator adds only what the employer pays on top.

Where do I find my state unemployment rate?

Your state workforce or employment agency assigns it and mails a rate notice, usually once a year. New businesses receive a standard new-employer rate.

Is this payroll or tax advice?

No. It is an estimate for planning. Your payroll provider or accountant will calculate the exact amounts for each pay period.

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As an Amazon Associate, ExpressBizTools earns from qualifying purchases. Product links are affiliate links. Calculations are for general planning and are not tax, legal, or financial advice.