Free Tool · Updated for 2026

Free True Cost of an Employee Calculator

See what an employee really costs your business in 2026: wages plus employer payroll taxes, unemployment tax, workers’ comp, benefits and overhead, as a yearly total and a fully loaded hourly rate.

Private by design. Your numbers never leave your browser, nothing is uploaded or stored.

Try an example:

Hourly rate ($, optional)

Hours per week

Annual wages ($)

State unemployment (SUTA) rate (%)

SUTA taxable wage base ($)

Workers’ comp rate (% of wages)

Retirement match (% of wages)

Employer health insurance ($ per month)

Other yearly costs: equipment, software, training ($)

Defaults: 2026 Social Security wage base $184,500; FUTA 0.6% on the first $7,000 after the standard state credit; SUTA example uses a Texas new-employer rate (2.7% on $9,000). Replace with your state’s rate.

True yearly cost of this employee

Employer payroll taxes$0

Benefits$0

Workers’ comp + other$0

Fully loaded hourly cost$0

How it works

What goes into the true cost of an employee

Cost	2026 rule used
Social Security (employer)	6.2% of wages up to $184,500
Medicare (employer)	1.45% of all wages
Federal unemployment (FUTA)	6.0% of the first $7,000, usually 0.6% after the state credit (max $42). Credit reduction states pay more.
State unemployment (SUTA)	Rate and wage base set by your state and your claims history
Workers’ compensation	Priced by job class; office roles cost far less than trades
Benefits and overhead	Health insurance, retirement match, equipment, software, training

The fully loaded hourly cost divides the total by 2,080 hours (40 hours × 52 weeks). Paid time off means fewer productive hours, so your real cost per working hour is higher still. Read the guide: the true cost of hiring an employee.

Employee or contractor?

Compare before you hire

A 1099 contractor carries no employer payroll tax or benefits, but classification depends on how the work is controlled, not on preference. See our 1099 vs W-2 guide, and let our payroll management service run payroll and filings once you hire.

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FAQ

Employee cost questions

How much does an employee really cost on top of salary?+

Employer payroll taxes alone add about 7.65% plus unemployment taxes. With benefits, workers’ comp and equipment, many small businesses pay 1.25 to 1.4 times the base wage. The calculator shows your own multiplier.

What payroll taxes does an employer pay in 2026?+

Employers pay 6.2% Social Security on wages up to $184,500, 1.45% Medicare on all wages, federal unemployment tax (usually 0.6% of the first $7,000) and state unemployment tax at the rate their state assigns.

What is the fully loaded cost of an employee?+

It is the total yearly cost of wages, employer taxes, benefits, insurance and overhead, often shown per hour. It is the number to use when pricing jobs or comparing an employee with a contractor.

Is it cheaper to hire a contractor than an employee?+

A contractor avoids employer payroll taxes and benefits, but you cannot choose classification to save money. If you control how, when and where the work is done, the worker is likely an employee.

Ready to hire, but not to run payroll?

Book a free consultation. We set up payroll, handle filings and keep labor costs visible in your monthly reports.

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