Employee Cost Calculator (True Cost of an Employee)
An employee's true cost is well above their salary. Payroll taxes, benefits, and overhead typically push the total to 1.25 to 1.4 times base pay. This calculator itemizes it (US figures).
- True annual cost
- $79,090.00
- Employer FICA (7.65%)
- $4,590.00
- Other payroll taxes
- $1,500.00
- Multiplier over salary
- 1.32
- Loaded hourly cost
- $38.02
How it works
True Cost = Salary + FICA (7.65%) + Other Payroll Taxes + Benefits + Overhead
Enter the annual salary. The calculator applies the employer share of FICA at 7.65% (Social Security 6.2% plus Medicare 1.45%), your estimate for other payroll taxes (FUTA plus your state's SUTA rate), annual benefits (health insurance, retirement match, PTO backfill), and overhead (equipment, software seats, office space).
It returns the total annual cost, the cost multiplier over salary, and the loaded hourly rate, which is the figure to use when pricing work or comparing a hire against software or outsourcing.
Worked example
A $60,000 salary with 2.5% other payroll taxes, $9,000 of benefits, and $4,000 of overhead costs $79,090 a year, a 1.32x multiplier. Over 2,080 hours the loaded rate is about $38 per hour.
The true cost of a US employee typically runs 1.25 to 1.4 times base salary once employer payroll taxes, benefits, and overhead are included.
Frequently asked questions
- What payroll taxes does a US employer pay?
- FICA at 7.65% of wages (Social Security 6.2% up to the annual wage base, Medicare 1.45% with no cap), FUTA of $42 per employee in practice (0.6% on the first $7,000), and state unemployment insurance that varies by state and claims history.
- How much does a $20 per hour employee really cost?
- $20 per hour is $41,600 a year at full time. At a 1.3x multiplier the true cost is around $54,000, or $26 per hour worked.
- What should I include in overhead?
- Anything the role consumes: laptop, software seats, desk space, training, and recruiting amortized over expected tenure. Firms often use a flat $3,000 to $6,000 a year for office roles.
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