Employer-side payroll taxes — FICA, FUTA, and total payroll cost — broken down per employee per pay period. 2026 wage bases and rates.
As an employer, you pay a matching 7.65% FICA on every dollar of wages (up to the Social Security wage base of $176,100 for 2026 for the SS portion). FUTA is 6% on the first $7,000 of wages per employee, reduced by up to 5.4% for states that pay their own SUI — most employers pay just 0.6% net.
Note: most states also charge SUTA (state unemployment tax) on a state-specific wage base. This calculator shows federal taxes only. Add your state SUTA rate (typically 1–5% on $10,000–$45,000 of wages) for a complete picture.
When you hire someone at $60,000 per year, your actual cost is typically $75,000 to $85,000 or more. The gap between salary and total employment cost surprises many business owners and can significantly impact profitability projections. Understanding all the components is essential before making a hiring decision — especially for a small business where one hire represents a meaningful percentage of total operating expense.
As an employer, you pay the employer's share of FICA taxes on top of the employee's salary. That's 6.2% for Social Security on wages up to $176,100 and 1.45% for Medicare with no cap — a combined 7.65%. You also pay Federal Unemployment Tax (FUTA) of 6% on the first $7,000 of each employee's wages, though the effective rate is usually 0.6% after the state tax credit. State unemployment insurance (SUI) rates vary by state and your claims history.
Health insurance is typically the largest benefit cost — employer contributions often run $5,000 to $15,000 per employee per year depending on the plan and coverage level. Paid time off has a real dollar value: two weeks of PTO on a $60,000 salary is worth $2,308. Retirement contributions, dental, vision, life insurance, and disability add further. A comprehensive benefits package commonly adds 20% to 30% on top of salary.
Contractors appear cheaper on paper because you skip payroll taxes and benefits. But contractors typically charge 30% to 50% more per hour than the equivalent employee rate because they're covering those costs themselves. For project-based or seasonal work, contractors are often the right choice. For ongoing, core-function roles, the all-in cost comparison often favors a salaried employee once you account for the contractor premium.
Workers' compensation insurance is required in most states and the cost varies widely by industry risk classification. A clerical worker might cost $0.30 per $100 of payroll. A construction worker could cost $15 or more per $100. For businesses with field workers, drivers, or anyone in a physically demanding role, workers' comp is a significant line item in total employment cost.
The right hiring question is not "can we afford this salary?" but "does this role generate or enable enough revenue or cost savings to justify the full employment cost?" A sales hire at $80,000 all-in needs to drive enough incremental revenue to cover their cost plus your target return. An operations hire at $65,000 all-in needs to save time or money worth more than that. Building a simple payroll cost model before every hire keeps hiring decisions grounded in economics rather than intuition.