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An employee costs more than their paycheck. On top of wages, employers pay their share of Social Security and Medicare, federal and state unemployment taxes, workers’ compensation insurance and any benefits, plus equipment and training. This calculator adds it all up, so you can budget for your first hire and price your work to cover it.
General estimate, not tax advice. Your state and insurer set some of these rates. Numbers stay on this device.
What’s included
- Employer Social Security and Medicare: 6.2% of pay up to $184,500 in 2026, and 1.45% of all pay. You also withhold the same amounts from the employee’s pay, but that’s their cost, not yours.
- Federal unemployment tax (FUTA): 6.0% of the first $7,000 of each employee’s pay, usually reduced to 0.6% ($42) by the credit for paying state unemployment tax on time.
- State unemployment tax: your state sets the rate and the wage base it applies to. Use the rate on your state’s notice.
- Workers’ compensation: required for employees in most states; the rate depends on the job’s risk.
- Benefits and extras: health insurance, retirement contributions, equipment, software and training.
Frequently asked questions
Why does the cost per hour matter?
Paid vacation, sick days and holidays mean you pay for hours not worked. If you bill customers for your employees’ time, your rates must cover the cost per hour actually worked.
Is this exact?
It’s an estimate. Your state’s rates, your insurer’s quote and your benefits decide the real figure. A payroll provider or accountant can confirm it.
Last reviewed October 27, 2026.
