Employee cost calculator
This employee cost calculator shows the true cost of an employee in the US, not just the wage. It adds the employer's payroll taxes (Social Security, Medicare, FUTA and your state unemployment rate), workers' comp, benefits and other overhead. You get the yearly and monthly total, the burden rate on top of wages, and the cost for each hour actually worked after paid time off. Uses 2026 rates.
How to use the employee cost calculator
- Choose hourly or salary and enter the pay.
- For hourly staff, enter hours per week and weeks worked per year.
- Enter your state unemployment (SUTA) rate and wage base from your state notice, and your workers' comp rate.
- Add monthly benefits you pay and yearly costs like equipment and software.
- Enter paid days off to see the cost per hour actually worked.
Formulas
| Social Security (employer) | 6.2% of wages up to $184,500 (2026) |
|---|---|
| Medicare (employer) | 1.45% of all wages |
| FUTA | 0.6% of the first $7,000 per employee 6.0% less the 5.4% credit for paying state unemployment on time; higher in credit-reduction states. |
| Burden rate | (total cost − wages) ÷ wages |
Questions
What is the true cost of an employee?
The true cost of an employee is their wages plus everything the employer pays on top: payroll taxes, workers' comp, benefits, and equipment or software. A $20/hour full-time worker ($41,600) with $500/month benefits and typical taxes costs about $52,900 a year, roughly 27% more than the wage.
What payroll taxes does an employer pay?
Employer payroll taxes in the US are 6.2% Social Security (on wages up to $184,500 in 2026), 1.45% Medicare on all wages, federal unemployment (FUTA, usually 0.6% of the first $7,000), and state unemployment (SUTA) at a rate your state assigns. Some states add disability or training taxes.
What is a burden rate?
A burden rate, or labor burden, is the extra an employee costs beyond wages, shown as a percent of wages. If wages are $41,600 and the total is $52,900, the burden rate is about 27%. Use it to price jobs so labor is fully covered.
Does this include overtime or 1099 contractors?
This calculator covers W-2 employees at a set number of hours and doesn't add overtime pay. 1099 contractors don't get employer payroll taxes, workers' comp or benefits from you, so their cost is mainly what you pay them. Check your state's rules before classifying anyone as a contractor.
Track the hours you're paying for
- Crew clock in from their phone, with GPS job sites
- California and federal overtime worked out for you
- Payroll export for QuickBooks; $6 per active worker a month