Helpful Toolbox

Employee Cost Calculator

Salary is only part of the bill. Enter a salary and your tax, benefit and overhead assumptions to see the true annual cost of an employee — and how much more than base pay you're really spending.

📖 How it works & FAQ

What an employee really costs

The salary you offer is only the starting point. On top of base pay, employers owe payroll taxes: FICA (Social Security and Medicare) at 7.65% of wages, federal unemployment tax (FUTA, typically 0.6% on the first $7,000 of wages), and state unemployment tax (SUTA, commonly 1–6% on a state-specific wage base). Add benefits like health insurance and retirement matching, plus overhead — equipment, software seats, office space, training — and the true cost usually lands between 1.25× and 1.4× salary. This calculator adds each layer up so you can budget a hire with your eyes open. Figures are estimates only, not professional, financial, tax or legal advice — rates vary by state and year, so confirm with your accountant or payroll provider.

How to use it

  1. Enter the annual base salary you plan to pay.
  2. Check the employer FICA rate (7.65% is standard for most W-2 wages).
  3. Adjust the FUTA and SUTA rates and wage bases to match your state and your company's assigned unemployment rate.
  4. Enter the annual dollar value of benefits — health premiums you cover, 401(k) match, and similar.
  5. Set an overhead percentage for equipment, software, workspace and training, then read the total cost, multiplier and true hourly cost. Results update as you type.

FAQ

Why are FUTA and SUTA only applied to part of the salary?
Unemployment taxes are charged on a wage base, not the full salary. FUTA applies to the first $7,000 of wages; each state sets its own SUTA base, often $7,000–$15,000 or higher. The calculator caps both at the wage base you enter.
What counts as overhead?
Anything you spend because the employee exists: laptop and equipment, software licenses, desk or office space, recruiting, onboarding and training. 10–20% of salary is a common planning range.
What is a typical cost multiplier?
Most estimates put a full-time W-2 employee at 1.25× to 1.4× base salary. Rich benefits or expensive facilities can push it higher.
Does this work for contractors?
Not directly — 1099 contractors pay their own payroll taxes and benefits. Set the tax rates and benefits to zero to compare a contractor's invoice cost against an employee's loaded cost.