True Cost of an Employee Calculator

What this calculator does

A salary is only part of what an employee costs. This tool adds the employer-side expenses most owners underestimate — payroll taxes, benefits, unemployment insurance, workers' comp, and equipment — to show the true annual cost of a hire. It's built for owners deciding whether they can actually afford to add a person, and what to budget beyond the offer letter.

How it works

It starts with base salary, then layers on the employer's share of payroll taxes (Social Security + Medicare is 7.65% by default), federal and state unemployment (FUTA/SUTA), benefits like health insurance and retirement match, workers' compensation as a percent of payroll, and other costs such as equipment, software, and training.

The total is your real annual cost; the 'cost above base salary' shows how much the loaded extras add as a percentage — often 25–40% on top of salary.

A worked example

For an $80,000 salary with 7.65% employer payroll tax, $500 FUTA/SUTA, $12,000 benefits, 1% workers' comp, and $3,000 in equipment/software:

That's about 28% above the headline salary — and it's the number you should actually budget for, not the $80,000.

How to read your result

Use the true cost — not the salary — when you model whether a hire pays for itself. A reasonable benchmark: the role should generate (or free you up to generate) well more than its fully loaded cost. If a $80,000 hire really costs ~$102,000, the revenue or capacity they unlock needs to clear that bar with margin to spare. The loaded percentage also helps when comparing employees to contractors, who carry their own version of these costs.

Common mistakes

• ·Budgeting the salary, not the loaded cost. The 25–40% on top is real money and it's easy to forget until the bills arrive.
• ·Guessing at state rates. SUTA (state unemployment) and workers' comp vary by state and by your claims history — confirm your actual rates rather than using a placeholder.
• ·Omitting onboarding and ramp. A new hire isn't fully productive on day one; the first months carry cost without full output.

Frequently asked questions