Employer Payroll Cost Calculator
An employee costs considerably more than their salary. This calculates your true employer cost — gross wages plus your share of FICA, federal and state unemployment tax, workers' compensation and benefits — and shows the burden as a percentage on top of pay.
Book a Free 30-Minute Call
Most owners underestimate payroll burden by 15-25%, which quietly wrecks their hiring plan. Book a free 30-minute call and we'll model what your next hire actually costs against your cash flow.
Book Your Free 30-Min Call →What Goes Into Employer Payroll Cost
- Employer FICA — 6.2% Social Security on wages up to the annual wage base, plus 1.45% Medicare on all wages with no cap. You match what the employee pays.
- FUTA — federal unemployment tax, 6.0% on the first $7,000 of wages, reduced to 0.6% for employers in good standing with their state programme. This calculator uses the 0.6% net rate.
- SUTA — state unemployment tax. Both the rate and the wage base vary widely by state and by your claims history, which is why both are inputs here.
- Workers' compensation — priced per $100 of payroll and driven by job classification. An office role might sit near 0.3%; roofing can exceed 10%.
- Benefits — health insurance, retirement matching, paid leave, equipment, software seats.
The Social Security wage base is adjusted annually. Check the current year's figure and update the input rather than relying on the default.
Why the Burden Percentage Matters More Than the Total
Burden is the multiplier you should be applying to every hiring conversation. If your burden runs at 22%, a $70,000 hire is an $85,400 commitment, and a five-person team you thought cost $350,000 actually costs $427,000. That gap is the single most common reason a hiring plan that looked affordable in a spreadsheet turns into a cash flow problem two quarters later.
It also changes how you price. If you bill client work by the hour, your effective hourly cost above — not the employee's hourly wage — is the floor your rate has to clear before you have covered anything else. Our hourly rate calculator works the other direction, from target income back to a billable rate.
Contractors Are Not Automatically Cheaper
A 1099 contractor carries no employer FICA, no unemployment tax and usually no benefits, which is why the headline saving looks like 20-30%. But contractors typically charge more per hour precisely because they carry those costs themselves, and misclassifying an employee as a contractor exposes you to back taxes, penalties and interest. The test is about control and the nature of the relationship, not what the contract says. If you are unsure which side of the line a role falls on, get it reviewed before the first payment, not after an audit.
Full guide: 1099 vs W-2 — how to classify a worker correctly.
Frequently Asked Questions
Is the FUTA rate 6% or 0.6%?
The statutory rate is 6.0% on the first $7,000 of wages, but employers who pay state unemployment tax on time receive a 5.4% credit, bringing the effective rate to 0.6%. This calculator uses 0.6%. Employers in credit-reduction states pay more.
What is a typical payroll burden percentage?
Most US small businesses land between 18% and 30% on top of gross pay. Below 15% usually means benefits are minimal; above 35% usually means either rich benefits or a high workers' comp classification.
Does this include the employee's own tax withholding?
No, and it shouldn't. Income tax and the employee's half of FICA come out of their gross pay — that money is already inside the salary figure. This calculates only what you pay on top.
Why is the Social Security wage base an input?
It changes every year with wage inflation. Rather than hard-code a figure that goes stale, the calculator lets you enter the current year's base so the result stays accurate.