Southwest Employee Cost by State (2026)
State-by-state employer payroll costs across the Southwest at all salary levels. Regional averages, state rankings, and key cost drivers.
Hiring a $60,000/year employee in the Southwest costs employers an average of $65,665 in 2026 — 0.2% below the national average of $65,802. The lowest-cost state is Texas ($65,337) and the highest is Nevada ($65,985).
The Southwest is a cost-competitive region for employers. Texas has no state income tax and maintains relatively low SUTA rates, making it one of the most business-friendly states for payroll costs. Colorado and Nevada have seen moderate increases in employer obligations in recent years.
Regional Average at $60K
$65,665
Across 7 states
Lowest-Cost State
Texas
$65,337 at $60K
Highest-Cost State
Nevada
$65,985 at $60K
Southwest is 0.2% below the national average
National average at $60K salary: $65,802. The Southwest average is $65,665 — a difference of $137/year per employee.
Regional Average Employer Cost by Salary Level
What employers in the Southwest pay on average at each salary tier (includes all mandatory taxes)
| Salary | Southwest Avg | National Avg | Overhead Cost | Multiplier |
|---|---|---|---|---|
| $30,000 | $32,982 | $33,027 | +$2,982 | 1.1x |
| $40,000 | $43,900 | $43,964 | +$3,900 | 1.1x |
| $50,000 | $54,794 | $54,890 | +$4,794 | 1.1x |
| $60,000 benchmark | $65,665 | $65,802 | +$5,665 | 1.09x |
| $75,000 | $81,971 | $82,153 | +$6,971 | 1.09x |
| $100,000 | $109,146 | $109,392 | +$9,146 | 1.09x |
| $125,000 | $136,322 | $136,630 | +$11,322 | 1.09x |
| $150,000 | $163,498 | $163,867 | +$13,498 | 1.09x |
Southwest States Ranked by Employer Cost
Cheapest to most expensive at $60K salary
| Rank | State | $30K | $50K | $60K | $75K | $100K | $150K | Multiplier | |
|---|---|---|---|---|---|---|---|---|---|
| #1 | Texas no income tax | $32,757 | $54,477 | $65,337 | $81,627 | $108,777 | $163,077 | 1.089x | Full breakdown → |
| #2 | Arizona | $32,782 | $54,502 | $65,362 | $81,652 | $108,802 | $163,102 | 1.089x | Full breakdown → |
| #3 | Utah | $32,892 | $54,792 | $65,649 | $81,924 | $109,049 | $163,299 | 1.094x | Full breakdown → |
| #4 | New Mexico | $32,973 | $54,775 | $65,652 | $81,968 | $109,160 | $163,545 | 1.094x | Full breakdown → |
| #5 | Oklahoma | $33,066 | $54,832 | $65,715 | $82,040 | $109,247 | $163,662 | 1.095x | Full breakdown → |
| #6 | Colorado + mandated programs | $33,249 | $55,057 | $65,956 | $82,305 | $109,552 | $164,047 | 1.099x | Full breakdown → |
| #7 | Nevada no income tax | $33,156 | $55,122 | $65,985 | $82,279 | $109,437 | $163,752 | 1.1x | Full breakdown → |
Key Findings: Southwest Employer Costs
- The regional average employer cost for a $60K employee is $65,665, 0.2% below the national average of $65,802.
- Texas is the most cost-effective state for employers at $65,337 per $60K employee (1.089x salary).
- Nevada has the highest employer costs at $65,985 per $60K employee (1.1x salary).
- Texas has no state income tax and competitive SUTA rates. Nevada also has no income tax. Colorado introduced paid family leave (FAMLI) in 2024. No mandatory disability programs across the region.
- The spread between lowest and highest cost states within the region is $648/year per $60K employee. At a 10-person team, that's a potential difference of $6,480/year.
Compare Other Regions
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