Disclaimer Statutory rates use 2026 estimates and vary by province/state, industry, and payroll size. Verify current rates with the IRS, your state workforce agency, and your workers' comp carrier. Not payroll, tax, or legal advice.
Budgeting a hire at the advertised salary is the most common — and most expensive — payroll mistake small businesses make. The statutory contributions alone add a five-figure sum to most professional salaries, before benefits, equipment, or a desk. This calculator itemizes every layer so the number you budget is the number the hire actually costs.
The true cost of an employee is the gross salary plus every mandatory employer contribution, plus benefits, plus the overhead of giving that person a desk, tools, and administration. Across United States, a fully-burdened employee typically costs 1.2× to 1.4× base salary — and the rule of thumb rises toward 1.5× once rich benefits or high workers' compensation classes are involved. This calculator itemizes each component so you can quote projects, price services, and compare hiring against contractors or automation with real numbers.
For a US employer in 2026, the mandatory burden on top of salary includes: FICA — the employer matches 6.2% Social Security on wages up to the $176,100 wage base plus 1.45% Medicare on all wages (7.65% combined for most salaries); FUTA — 6.0% federal unemployment on the first $7,000 of wages, reduced to an effective 0.6% ($42/employee) with the full state credit; SUTA — state unemployment at new-employer rates commonly between 2% and 4%, applied to a state wage base that ranges from $7,000 (California) to over $50,000 (Washington); and workers' compensation — premiums from roughly 0.1–0.5% of payroll for clerical work to 5%+ for construction trades. Benefits are the biggest discretionary add: employer health coverage alone averages over $8,000/year for single coverage.
Take a $70,000 salary in Texas office work: Social Security $4,340, Medicare $1,015, FUTA $42, SUTA at 2.7% on a $9,000 base = $243, workers' comp at 1.5% = $1,050 — about $6,690 of statutory burden (9.6% of salary). Add $4,800 in benefits and $3,600 in overhead and the true annual cost is roughly $85,100, or about $45/hour over 1,880 productive hours — a 1.22× burden multiplier before health insurance is fully priced in.
Dividing by 2,080 nominal hours understates hourly cost. After 10 statutory holidays, 2–4 weeks of vacation, and average sick time, most full-time employees deliver 1,800–1,900 productive hours. Using productive hours is what makes the hourly figure safe to plug into pricing, break-even analysis, and staffing models.
The burdened hourly figure is the floor under every pricing decision. Professional service firms typically bill 2.5×–3× burdened hourly cost to cover non-billable time, management, and profit — an employee costing $47/hour needs to bill around $120–$140/hour before the firm earns a healthy margin. The same figure decides make-versus-buy questions: a task consuming 10 hours a week of a burdened $45/hour employee costs about $23,400 a year, which is the honest benchmark to compare against software, outsourcing, or AI automation quotes. Finally, remember the first-year additions this calculator holds constant: recruiting fees (often 15–25% of salary through an agency), onboarding drag of one to three months at reduced productivity, and equipment. Loading those in, a first-year hire commonly costs 1.4×–1.6× salary even when the steady-state multiplier is 1.25×–1.3×.
Rates in this tool are national estimates; your exact burden depends on province/state, industry classification, payroll size, and benefit design. Talk to a payroll provider or accountant before budgeting a hire above six figures, when operating in multiple jurisdictions, or when misclassification risk (employee vs. contractor) is in play — reclassification assessments routinely include back premiums and penalties. Comparing a hire against process automation instead? See our customer acquisition cost calculator, browse our legal and business wizards, or talk to LexScale.ai about AI intake that replaces repetitive staff work.
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