Employer Cost Calculator

Name: Employer Cost Calculator
Author: Jacob McEwen

Calculate the true cost of hiring an employee. See the full breakdown of employer taxes, benefits, and overhead beyond base salary.

By Jacob McEwen·Updated for 2026 tax year·Editorial standards

Business calculation for employee true cost — representing employer FICA, benefits, workers comp, and unemployment insurance — Photo by Bench Accounting on Unsplash

Interactive Calculator

All inputs adjust the result in real time. No data leaves your browser.

Tax Year

Employee Base Salary

State

Health Insurance (per month)

401(k) Match %

Workers Comp Rate %

Unemployment Insurance Rate %

Total Cost to Employ

$91,11321.5% overhead

$43.80/hr equivalent cost (2,080 hrs/yr)

Base Salary

$75,000

Employer Taxes

$5,913

Benefits Cost

$10,200

Overhead %

21.5%

Cost Breakdown

Base Salary$75,000

Employer Social Security (6.2%)+$4,650

Employer Medicare (1.45%)+$1,088

Health Insurance+$7,200

401(k) Match (3%)+$2,250

Workers Comp (1%)+$750

Unemployment Insurance (2.5%)+$175

Total Employer Cost$91,113

Cost per Hour (2,080 hrs)$43.80

Bottom line: A $75,000 employee actually costs $91,113 per year — that is $16,113 more than their salary (21.5% overhead).

The Background

The true cost to employ someone is always higher than their base salary. Employers must match the employee's Social Security (6.2% up to the wage base of $184,500) and Medicare (1.45%) contributions. This employer-side FICA alone adds 7.65% to your costs.

Federal Unemployment Tax (FUTA) applies to the first $7,000 of each employee's wages. The base rate is 6.0%, but most employers receive a credit of up to 5.4%, bringing the effective rate down. State unemployment insurance (SUTA) rates vary by state and employer history.

Benefits like health insurance, 401(k) matching, and workers compensation add significantly to the total cost. A typical employer spends 20-40% above the base salary on taxes and benefits combined.

If you are a freelancer or consultant, this calculator helps you understand what to charge. Your rate needs to cover not just the equivalent salary, but also the employer-side taxes and benefits you would otherwise receive as a W-2 employee.

1099 vs W-2 in 2026: The Real Take-Home Pay Comparison

Total Compensation vs Salary 2026: What Your Package Is Really Worth

Frequently Asked

What does an employee really cost beyond salary?+

Typically 1.25 to 1.4 times base pay. Employer payroll taxes alone are 7.65% for Social Security and Medicare (Social Security stopping at $184,500), federal unemployment tax of $42 per employee after the state credit, and state unemployment insurance of roughly 1% to 4% on the first several thousand dollars of wages. Health insurance averages $7,000 to $9,000 a year for single coverage and over $20,000 for family coverage, before a 401(k) match, workers' compensation and overhead.

How much is employer FICA?+

6.2% of wages up to $184,500 for Social Security in 2026 and 1.45% of all wages for Medicare — $5,738 on a $75,000 salary. Unlike the employee, the employer does not pay the 0.9% additional Medicare tax. The calculator applies the wage base correctly, so the percentage falls for salaries above it.

What is workers' compensation and how is it priced?+

State-mandated insurance covering workplace injury, priced per $100 of payroll by job classification: well under $0.50 for office work, $5 to $15 for construction and trucking. Enter your rate as a percentage; the default is a clerical rate. Texas is the only state that does not require it.

Is a contractor cheaper than an employee?+

On the employer's side, usually yes — no payroll tax, no benefits, no unemployment insurance — which is why the IRS and state agencies police misclassification. If a worker is controlled like an employee, back taxes, penalties and benefit claims follow. The 1099 vs W-2 calculator shows the same comparison from the worker's side.

How should I use the total cost figure?+

Divide it by billable or productive hours to set rates and bids: a $75,000 employee costing $97,000 with benefits, working 1,800 productive hours, costs about $54 an hour before profit. For a hiring budget, the fully loaded figure is the number to put against revenue, not the salary.

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