True Cost of an Employee Calculator
What a hire actually costs once payroll taxes, benefits, equipment, and paid time off are added to the salary.
Your details
Pay
Benefits
The employer's share
Taxes and insurance
Applied to the first $7,000 — varies widely by state
Other
Holiday and public holidays — used for the productive-hour rate
This calculator runs entirely on your device. Nothing you enter is uploaded, stored, or sold. How this works
True annual cost
$112,216
1.25× the $90,000 of cash pay — $22,216 on top
Includes your inputs, the full breakdown, and every row of the table.
Cost per hour
$53.95
Across 2,080 paid hours
Cost per productive hour
$58.45
1,920 hours after 20 days off
Employment burden
$22,216
24.7% on top of pay
Monthly cost
$9,351
- Salary and bonus
- $90,000
- Employer FICA (7.65%)
- $6,885
- Unemployment tax (FUTA and SUTA)
- $231
- Workers' compensation
- $900
- Health insurance
- $7,800
- Retirement match
- $3,400
- Equipment and software
- $3,000
- Total cost to employ
- $112,216
| Salary | Employer taxes | Total cost | Multiplier |
|---|---|---|---|
| $50,000 | $4,439 | $72,789 | 1.32× |
| $75,000 | $6,351 | $100,951 | 1.26× |
| $100,000 | $8,264 | $129,114 | 1.23× |
| $150,000 | $12,089 | $185,439 | 1.20× |
| $200,000 | $14,122 | $239,972 | 1.17× |
| $300,000 | $15,572 | $346,422 | 1.14× |
What this means
- Employment burden here is 24.7% of cash pay. The usual range is 25% to 40%, so a rough planning multiplier of 1.25 to 1.4 times salary holds up well for most US employers.
- Employer FICA is 6.2% for Social Security up to the $176,100 wage base for 2025, plus 1.45% for Medicare with no ceiling. The Social Security portion stops above the base, which is why the multiplier falls at higher salaries.
- FUTA is 6% of the first $7,000 but a standard state credit reduces it to 0.6% for most employers. State unemployment rates vary enormously — by state, by industry, and by your own claims history — so replace the default with your actual rate if you know it.
- Paid time off does not add to cost, it removes productive hours. The salary is the same whether someone works 260 days or 240, so time off raises the effective cost of each hour actually worked rather than the annual total.
- Not included: recruiting fees, onboarding time, office space, training, and management overhead. Fully loaded costing at larger firms often adds another 10% to 20% on top of the figure here.
How the true cost of an employee calculation works
Salary is the number in the offer letter and roughly three quarters of what the hire actually costs. The rest is employment burden: the employer's share of payroll taxes, unemployment insurance, workers' compensation, health coverage, retirement contributions, and the equipment someone needs to do the job. For most US employers the total lands between 1.25 and 1.4 times cash compensation.
Payroll taxes are the unavoidable part. Employers match the employee's 6.2% Social Security contribution up to the annual wage base and their 1.45% Medicare contribution with no ceiling, which is the 7.65% employer FICA figure. Federal unemployment tax is nominally 6% of the first $7,000 of wages but drops to 0.6% for employers in good standing with their state system. State unemployment varies more than any other line — rates differ by state, by industry, and by how many former employees have claimed benefits.
One consequence worth noticing is that the multiplier falls as salaries rise. Social Security stops at the wage base and unemployment taxes apply only to the first few thousand dollars, so those costs are effectively flat above a certain point while salary keeps climbing. A $200,000 hire costs proportionally less to employ than a $50,000 one, even though the absolute burden is larger.
Paid time off works differently from every other item here. It does not increase the annual cost at all — the salary is the same regardless. What it does is reduce the hours worked across which that cost is spread, which is why the cost per productive hour is a more honest basis for pricing client work than the cost per paid hour.
Frequently asked questions
How much does an employee really cost?
Typically 1.25 to 1.4 times their salary once payroll taxes, benefits, and equipment are counted. An $85,000 salary usually lands somewhere between $106,000 and $119,000 a year. The range depends mostly on how generous the health and retirement benefits are, since payroll taxes are fairly consistent.
What is employer FICA?
The employer's matching half of Social Security and Medicare: 6.2% on wages up to the annual Social Security wage base, which is $176,100 for 2025, plus 1.45% on all wages with no cap. The employee pays the same amounts from their side, which is why self-employed people owe the full 15.3%.
Why does the multiplier drop at higher salaries?
Because several costs are capped. Social Security stops at the wage base, and unemployment taxes apply only to the first $7,000 of wages. Fixed-dollar benefits like health insurance also stay flat. Above those thresholds the extra salary carries only Medicare and percentage-based costs, so the ratio of total cost to salary falls.
Is a contractor cheaper than an employee?
On paper often yes, because you pay no employer taxes or benefits — which is exactly why a contractor's rate is higher, since they carry those costs themselves. Comparing an hourly contract rate against an hourly salary rate is the wrong comparison; compare it against the fully burdened cost per productive hour. Misclassifying an employee as a contractor also carries serious penalties, and the test is about control over the work, not what the contract says.
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Disclaimer. This calculator is provided for general information and educational purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Results are estimates based on the inputs you provide and the assumptions described above. Confirm any figure with a qualified professional before acting on it.