What Does Each Employee Really Cost?
Enter your headcount, average salary, employer tax rate, and benefits package to see your true total payroll cost and cost per employee.
A $60,000 salary typically costs the employer $75,000–$84,000 all-in once taxes, insurance, and benefits are added.
25–40%
on top of salary is the typical true employer cost per employee
7.65%
FICA employer share (Social Security + Medicare) on every US payroll
$15k+
average annual employer health insurance contribution per US employee
Understanding the true cost of hiring
Salary is only the starting point
When you hire someone at $60,000, the actual cost is closer to $75,000–$84,000 once you add payroll taxes, health insurance, 401k matching, paid time off, and workers' compensation. Budget for the burden, not just the offer letter number.
Use cost-per-head for pricing and planning
Agencies, consultancies, and service businesses should divide total workforce cost by billable hours to get a true cost per hour. If your all-in cost is $80,000/year and an employee works 1,800 billable hours, your cost is $44/hr before overhead — meaning your billing rate must be significantly higher to be profitable.
SUTA rates spike with layoffs
State unemployment tax (SUTA) rates are experience-rated — meaning if your company has a history of layoffs, your SUTA rate increases. New employers typically start at a default rate (often 2–3%), but it can climb above 10% for businesses with frequent terminations. Budget conservatively if your workforce is seasonal or project-based.
How the Payroll Calculator Works
Formula
Gross Payroll = Employees × Average Salary
Employer Taxes = Gross Payroll × Employer Tax %
Benefits = Employees × Benefits per Employee
Total Cost = Gross Payroll + Employer Taxes + Benefits
Cost / Employee = Total Cost ÷ Employees
Burden Rate = (Cost per Employee − Salary) ÷ SalaryThis calculator computes total gross payroll, adds employer payroll taxes (a percentage of the salary pool) and annual benefits, and divides by headcount for the true cost per employee — the number to use for pricing, budgeting, and profitability.
The burden rate is how much each hire costs above base salary; 25–40% is typical. Add billable hours to see an all-in cost per hour — the floor your billing rate must clear before overhead and profit.
Frequently Asked Questions
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