Cost of an employee calculator 2026
The true cost of an employee is salary plus employer payroll taxes and benefits: 7.65% employer FICA, FUTA of 0.6% on the first $7,000 of wages after the state credit, state unemployment tax at your assigned rate and wage base, and benefits such as health insurance and 401(k) match. It typically runs 1.15–1.4 times base salary.
See what a hire really costs: salary plus the employer’s Social Security and Medicare, federal and state unemployment tax and benefits. Get the fully loaded annual cost, the hourly cost and the multiplier over base pay.
What goes into the cost of an employee
- Employer FICA: 6.2% Social Security up to $184,500 of wages and 1.45% Medicare on all wages.
- FUTA: 6.0% on the first $7,000, minus the 5.4% state credit, so 0.6% ($42) per employee. The calculator assumes your state is not a credit-reduction state.
- SUTA: your state’s rate on wages up to its wage base. 2.7% on $7,000 is only a starting point; enter the rate and base from your notice.
- Workers’ comp, benefits and other costs as you enter them. Office space and management time are not included.
Worked example
$60,000 salary, SUTA 2.7% on a $7,000 wage base, $6,000 of benefits:
| Cost | Per year |
|---|---|
| Salary | $60,000.00 |
| Social Security (6.2%) | $3,720.00 |
| Medicare (1.45%) | $870.00 |
| FUTA (0.6% × $7,000) | $42.00 |
| SUTA (2.7% × $7,000) | $189.00 |
| Benefits | $6,000.00 |
| Total annual cost | $70,821.00 |
| Cost per hour (2,080 hours) | $34.05 |
This employee costs 1.18 times their salary.
Hiring a salesperson
For a sales rep, add the commission plan to the salary, the CRM and other tools to the other costs, and remember the ramp: a new rep often takes three to six months to reach quota, so the first year costs more than it returns. Compare the total with the pipeline the rep is expected to close.
Frequently asked questions
How much does an employee cost on top of salary?
Usually 15–40% more than base pay, depending mostly on benefits. Employer payroll taxes alone add about 8–9% at typical wages: 7.65% FICA plus federal and state unemployment tax.
What payroll taxes does an employer pay?
The employer pays 6.2% Social Security on wages up to $184,500, 1.45% Medicare on all wages (the 0.9% Additional Medicare Tax is employee-only), FUTA and state unemployment tax (SUTA). A few states add employer paid-leave or training contributions.
What is the FUTA rate for 2026?
FUTA is 6.0% on the first $7,000 of each employee’s wages. Employers that pay state unemployment tax on time get a credit of up to 5.4%, so the usual net rate is 0.6%, or $42 per employee a year. Employers in credit-reduction states pay more.
What is SUTA and how is my rate set?
SUTA is state unemployment insurance tax. Each state assigns new employers a starting rate, later adjusted by their layoff history, and taxes wages up to its own wage base, which ranges from $7,000 to more than $70,000. Your state workforce agency sends the rate notice.
How do I calculate an employee’s hourly cost?
Divide the total annual cost by paid hours, 2,080 for a full-time year. To price your services, divide by productive hours instead, after vacation, holidays, training and admin time.
Is a 1099 contractor cheaper than an employee?
A contractor costs no employer payroll taxes or benefits, but usually charges a higher rate and pays self-employment tax themselves. Treating a worker as a contractor when the IRS common-law test points to an employee can bring back taxes and penalties.
Related tools: payroll calculator, 1099 and self-employment tax calculator. More on sales and running a sales team on the SalesBond blog and the home page.
Official sources
- IRS Publication 15 (Circular E) — employer Social Security, Medicare and FUTA.
- IRS Form 940 — federal unemployment (FUTA) tax return.
- U.S. Department of Labor — FUTA credit reductions by state.
- SSA contribution and benefit base — $184,500 for 2026.
Updated on Nov 5, 2026. This calculator is for information only and is not tax, legal or payroll advice. Results are estimates based on the official 2026 figures above; check your situation with the IRS, your state or a tax professional.
