The 10 Most Expensive States to Hire Employees (2026 Data)

Where you hire matters. While federal payroll taxes are the same everywhere, state-level obligations vary dramatically — from a few hundred dollars per employee per year in the cheapest states to several thousand in the most expensive.

We analyzed all 50 states and DC using 2026 SUTA rates, wage bases, disability insurance requirements, and paid family leave to rank where employer costs are highest. All calculations use a hypothetical $60,000 annual salary to allow direct comparison.

Methodology

For each state, we calculated annual employer costs beyond federal FICA ($4,590) and FUTA ($42) for a $60,000 salary employee:

• SUTA: New employer rate × MIN(salary, wage base)
• SDI: State disability insurance where employer-mandated
• PFL: Paid family leave employer contributions where applicable
• Workers' comp: Estimated at office/clerical rate for comparability

The 10 Most Expensive States to Hire In

Rank	State	SUTA Rate (new)	SUTA Wage Base	Annual SUTA	SDI/PFL	Total State Cost*
1	Washington	1.0%	$72,800	$728	~$360	~$1,088
2	Oregon	2.6%	$52,800	$1,373	~$200	~$1,573
3	New Jersey	2.8%	$42,300	$1,184	~$300	~$1,484
4	Hawaii	3.0%	$56,700	$1,701	$0	~$1,701
5	Alaska	1.0%	$49,700	$497	$0	~$497
6	Minnesota	1.0%	$42,000	$420	~$200	~$620
7	New York	4.025%	$12,500	$503	~$350	~$853
8	Massachusetts	2.42%	$15,000	$363	~$400	~$763
9	Colorado	1.7%	$23,800	$405	~$200	~$605
10	Connecticut	3.0%	$25,000	$750	~$200	~$950

*Total State Cost includes SUTA and estimated SDI/PFL employer contributions. Workers' comp and benefits not included for comparability. Figures are approximate — use our calculator for exact amounts.

State Profiles: Why Each Made the List

#1 Washington — High Wage Base, Plus PFML

Washington's SUTA wage base of $72,800 is one of the highest in the nation. Even at a modest 1.0% new employer rate, that's $728/year in SUTA per employee — more than states with higher rates but lower wage bases. Washington also has a Paid Family and Medical Leave program with employer contributions.

See full employer costs in Washington →

#2 Oregon — High Wage Base and New PFML

Oregon's SUTA wage base was increased significantly and its 2.6% new employer rate means substantial SUTA costs. Oregon also introduced a statewide Paid Leave Oregon program in 2023 that requires employer contributions for companies with 25+ employees.

See full employer costs in Oregon →

#3 New Jersey — Multiple Mandated Contributions

New Jersey has one of the more complex employer obligation structures: SUTA, plus state disability insurance, plus family leave insurance, plus the nation's highest workers' comp rates. The combined effect puts NJ employers among the highest-cost in the mid-Atlantic.

See full employer costs in New Jersey →

#4 Hawaii — Highest SUTA Wage Base in the Nation

Hawaii's SUTA wage base of $56,700 means that for employees earning above this threshold, you pay SUTA on significantly more wages than in most other states. The 3.0% new employer rate applied to $56,700 results in $1,701/year — the highest absolute SUTA cost for a new employer in our analysis.

See full employer costs in Hawaii →

#5 New York — PFL + High SUTA Rate

New York's combination of a 4.025% new employer SUTA rate and Paid Family Leave contributions make it one of the more expensive states, despite its $12,500 wage base limiting the SUTA to $503/year. Workers' comp in New York is also notoriously expensive in many industries.

See full employer costs in New York →

The 5 Cheapest States to Hire In

For comparison, here are the states where employer costs are lowest:

State	SUTA Rate (new)	SUTA Wage Base	Annual SUTA	SDI/PFL	Total State Cost
Florida	2.7%	$7,000	$189	$0	~$189
Texas	2.7%	$9,000	$243	$0	~$243
North Carolina	1.0%	$29,600	$296	$0	~$296
Tennessee	2.7%	$7,000	$189	$0	~$189
Georgia	2.7%	$9,500	$257	$0	~$257

The employer cost difference between hiring in Hawaii vs. Florida can exceed $1,500/year per employee — which scales dramatically across multiple hires. A 20-person team in Hawaii costs $30,000+ more annually than the same team in Florida, before workers' comp and benefits.

Explore All 50 States + DC

Our Employee Cost Calculator has real data for all 50 states and DC. Enter any salary level to see exact employer costs including FICA, FUTA, SUTA, and state-specific programs.

You can also browse individual state pages for deep dives on any state:

• California employer costs — SDI, SUTA, workers' comp
• New York employer costs — PFL, highest workers' comp in US
• Texas employer costs — no state income tax, lower SUTA base
• Florida employer costs — no state income tax, lowest SUTA base
• Washington employer costs — highest SUTA wage base

To compare two states head-to-head for hiring costs, try our state comparison tool.

What This Means for Your Hiring Strategy

For small businesses hiring 1-5 employees, state tax differences probably won't drive location decisions — but they should factor into remote work policy. If you're hiring remote workers, you may be able to hire in lower-cost states for the same talent level.

For businesses scaling to 20+ employees, the annual state tax differential can reach $50,000-$200,000/year — worth serious consideration in expansion planning.

Whatever your situation, knowing the full employer cost before making a hiring offer lets you price your products and services to maintain profitability. Run your numbers with our Employee Cost Calculator before you set a hiring budget.