How much does it really cost to hire an employee?

The true cost of an employee is typically 1.25x to 1.4x their base salary. This includes employer-paid payroll taxes (FICA, FUTA, SUTA), workers' compensation insurance, benefits, and overhead costs like equipment and workspace.

What payroll taxes does an employer pay?

Employers pay Social Security tax (6.2% up to the wage base), Medicare tax (1.45% of all wages), Federal Unemployment Tax (FUTA, 0.6% on first $7,000), and State Unemployment Tax (SUTA, varies by state). Some states also require disability insurance or paid family leave contributions.

Employee Cost Calculator

Find the true cost of hiring an employee including payroll taxes, benefits, and overhead. State-specific rates included.

Employee Details

Annual Salary

State

Benefits Package

Number of Employees

Cost Component	Annual Cost
Social Security (6.2%)	-
Medicare (1.45%)	-
FUTA (0.6%)	-
SUTA (state unemployment)	-
Workers' Compensation	-
Benefits	-
Overhead (equipment, workspace)	-

Understanding the True Cost of an Employee

Base salary is just the starting point. Every employer pays additional mandatory taxes and costs on top of wages. The "multiplier" shows how much total compensation costs relative to salary alone.

FICA taxes (Social Security + Medicare) are the largest mandatory cost at 7.65% of wages. Social Security is capped at $176,100 for 2026.

SUTA rates vary dramatically by state — from under 1% to over 8% — and apply to different wage bases. A state with a high rate but low wage base may cost less than one with a moderate rate but high wage base.

Benefits are often the largest variable cost. Health insurance alone averages $7,000-$8,000 per employee for single coverage. Adding dental, vision, and retirement matching can push total benefits past $15,000 per employee per year.

Employee Costs by State

See detailed payroll tax breakdowns and example calculations for your state.

Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii

View all 51 states →

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Tools and services that pair well with this calculator.

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All-in-one payroll, benefits, and HR for small businesses. Handles FICA, SUTA, and workers' comp automatically.

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