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Employee Cost Calculator
Estimate what an employee really costs each year: wages plus employer Social Security and Medicare, federal and state unemployment tax, benefits and other costs, using 2026 federal rates.
Free to use. No sign-up. Your figures stay in your browser.
The employee
Your result
Enter your figures and select Calculate. Your result appears here.
How to use this calculator
- Enter the employee's annual gross wages.
- Check the FUTA rate and add your state unemployment rate and wage base if you know them.
- Add any workers' compensation, benefits and other costs. Leave blank anything that doesn't apply.
- Optionally add hours and weeks worked to see the cost per hour worked. Select Calculate.
How it works
Total cost = wages + payroll taxes + workers' comp + benefits + other costs
Social Security = 6.2% × min(wages, $184,500)
Medicare = 1.45% × wages
FUTA = FUTA rate × min(wages, $7,000)
SUTA = SUTA rate × min(wages, state wage base)
Retirement = contribution % × wages · Health = monthly cost × 12
Employer Social Security and Medicare are the employer's own share and are paid on top of wages. The 0.9% Additional Medicare Tax isn't included because it's paid by the employee only. Federal unemployment tax is 6.0% on the first $7,000 of wages, reduced by up to 5.4% for state unemployment tax paid, which usually leaves 0.6%. State unemployment rates and wage bases vary by state and by employer, so enter your own.
The calculator also compares your result with the latest national benchmark. In June 2026, wages and salaries made up 70.0% of employer compensation costs for private industry workers, according to the Bureau of Labor Statistics. That figure covers all workers and includes benefits such as paid leave, so treat it as a rough guide.
Worked example
A business pays an employee $55,000 a year. Its state unemployment rate is 2.7% on a $9,000 wage base (example figures). It pays $550 a month for health insurance, a 4% retirement match and $600 a year for workers' comp.
| Cost | Amount |
|---|---|
| Wages | $55,000.00 |
| Social Security: 6.2% × $55,000 | $3,410.00 |
| Medicare: 1.45% × $55,000 | $797.50 |
| FUTA: 0.6% × $7,000 | $42.00 |
| SUTA: 2.7% × $9,000 | $243.00 |
| Workers' comp | $600.00 |
| Health insurance: $550 × 12 | $6,600.00 |
| Retirement: 4% × $55,000 | $2,200.00 |
| Total | $68,892.50 |
That's about 1.25 times wages. The state figures here are for illustration only. Use your own rate and wage base from your state agency.
Frequently asked questions
How much does an employee cost on top of salary?
It depends on benefits, state taxes and other costs. National data gives a rough guide: in June 2026, benefits made up 30.0% of private-industry employer compensation costs, with wages and salaries at 70.0% (Bureau of Labor Statistics). Use this calculator with your own figures for a specific employee.
What payroll taxes do employers pay?
At the federal level, employers pay 6.2% Social Security tax on wages up to $184,500 in 2026, 1.45% Medicare tax on all wages, and federal unemployment (FUTA) tax on the first $7,000 of each employee's wages. Most states also charge state unemployment tax, and some have other employer taxes.
Why is FUTA usually 0.6%?
FUTA is 6.0% of the first $7,000 of wages, but employers who pay state unemployment tax on time can usually take a credit of up to 5.4%, leaving 0.6%, or $42 per employee. Employers in a credit reduction state get a smaller credit. For 2025 these were California and the U.S. Virgin Islands. The 2026 list is confirmed in November 2026.
Where do I find my state unemployment rate?
Your state's unemployment insurance or workforce agency sends each employer its rate, usually once a year. New employers often get a standard new-employer rate. Taxable wage bases also differ by state.
Does this work for contractors?
No. Independent contractors aren't employees, so employers don't pay payroll taxes or benefits for them in the same way. This calculator is for W-2 employees.
Is paid time off included?
Paid vacation, holidays and sick days are usually already part of an employee's annual wages, so they're included if you enter the full annual pay. To see the cost per hour actually worked, enter the weeks worked, not the weeks paid.
Sources
Federal payroll tax figures are for 2026 and are stored in one place in the calculator so they can be updated each year. State figures vary, so you enter your own.
- Social Security Administration: Contribution and benefit base. 2026 Social Security wage base of $184,500; 6.2% Social Security and 1.45% Medicare, each for employer and employee.
- IRS Topic 751: Social Security and Medicare Withholding Rates. Employer and employee Social Security and Medicare rates.
- IRS Topic 759: Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. FUTA is 6.0% on the first $7,000 of each employee's wages; employers can generally take a credit of up to 5.4% for state unemployment tax paid.
- IRS: About Form 940 and Schedule A (credit reduction states). For 2025, California (1.2%) and the U.S. Virgin Islands (4.5%) were FUTA credit reduction states. The 2026 list is set in November 2026.
- BLS Employer Costs for Employee Compensation, June 2026. For private industry workers, wages and salaries were 70.0% of employer compensation costs and benefits 30.0%. Next release December 16, 2026.
Last reviewed: . This tool is not an official government calculator, and it is not tax, legal or financial advice. See the resources disclaimer.
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