Online selling & marketing
Employee Cost Calculator
A salary is only part of what an employee costs. Add employer Social Security and Medicare, federal and state unemployment tax, workers' compensation, health insurance, retirement match and equipment to see the full yearly, monthly and hourly cost.
How to use the Employee Cost Calculator
- Enter the annual salary.
- Add health insurance and retirement match.
- Enter your state's unemployment rate and wage base.
- Add workers' comp and other costs.
Formula
Example
A $60,000 employee with $7,500 health insurance and a 4% match costs about $78,400 a year - roughly 1.3× salary.
Rule of thumb
Employees typically cost 1.25 to 1.4 times their salary once taxes and benefits are included.
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Frequently asked questions
What is FUTA?
Federal unemployment tax: 6% of the first $7,000 of wages, usually reduced to 0.6% ($42) with the state credit.
Are contractors cheaper?
There are no employer taxes, but they charge more per hour and must be classified correctly.
Does this include paid time off?
PTO is built into salary; the hourly cost uses 2,080 hours.
What about payroll software?
Add it to equipment and software costs.
Results are estimates for planning, not financial advice. Confirm important decisions with a qualified professional. Your inputs stay in your browser and are not sent to Soft2Cloud.
Last updated: November 2026