Employer Payroll Cost Calculator 2026
The true cost of an employee in 2026: employer Social Security (to $184,500) and Medicare, FUTA, state unemployment, health insurance, 401(k) match and other benefits — total cost, burden rate, hourly cost and the equivalent contractor rate.
| Social Security (employer 6.2%) | — |
|---|---|
| Medicare (employer 1.45%) | — |
| FUTA (0.6% of first $7,000) | — |
| State unemployment | — |
| Mandatory payroll taxes | — |
| Benefits | — |
| Total cost of employment | — |
| Burden rate | — |
| True hourly cost | — |
| Equivalent contractor rate | — |
In short
An employee costs more than salary: employers pay 6.2% Social Security on wages up to $184,500 in 2026, 1.45% Medicare on all wages, 0.6% FUTA on the first $7,000 ($42) and state unemployment on each state's wage base, plus health insurance, retirement match, workers' compensation and paid leave. Payroll taxes alone add about 8–10%; the all-in burden is typically 1.25–1.4 times salary.
Who this is for: US small-business owners and hiring managers budgeting a new hire or comparing an employee with a contractor.
What an employee really costs in 2026
- Mandatory employer taxes: Social Security 6.2% (up to $184,500 of wages), Medicare 1.45% (no cap), FUTA 0.6% of the first $7,000 ($42), and state unemployment on each state's wage base at your experience rate.
- Benefits: employer health premiums average roughly $7,000–8,000 a year for single coverage and over $20,000 for family plans; a 3–4% 401(k) match, workers' compensation (0.5–5% depending on the job) and paid leave add more.
- Burden rate: taxes alone add about 8–10%; with benefits most employers land at 1.25–1.4× salary.
- Employee vs contractor: a contractor's higher hourly rate covers the 7.65% employer FICA you are not paying plus their own benefits — compare the true hourly cost, not the base rate.
- Deductible: wages, payroll taxes and benefits are all deductible business expenses; the health premiums are also tax-free to the employee.
See also: 1099 vs W-2 Calculator, US Paycheck Calculator — Take-Home Pay 2026.
Assumptions
- Employer FICA 6.2% to $184,500 + 1.45%; FUTA 0.6% of the first $7,000; SUTA at the rate and wage base entered.
- Benefits = health × 12 + match % × salary + other.
- Hourly cost = total ÷ hours entered; contractor-equivalent assumes identical total cost.
Worked example
Social Security $4,650 + Medicare $1,088 + FUTA $42 + SUTA $270 = $6,050 of payroll taxes (8.07%). Benefits: $7,200 health + $2,250 match + $2,500 = $11,950. Total cost $93,000 — a 24.0% burden — or $44.71 an hour against a $36.06 base rate.
Frequently asked questions
What percentage does an employer pay in payroll taxes?
7.65% FICA (6.2% + 1.45%) plus 0.6% FUTA on the first $7,000 and state unemployment — typically 8–10% of salary in total for mid-level pay.
Is the Social Security wage base $184,500 in 2026?
Yes — the employer 6.2% stops at $184,500 of wages per employee; Medicare 1.45% continues on all wages.
What is a typical burden rate?
1.25 to 1.4 times salary once health insurance, retirement match, workers' comp and paid leave are included.
Do I pay FUTA on every employee?
Yes, on the first $7,000 of each employee's wages — $42 each at the net 0.6% rate, more if your state has a credit reduction.
What is a FUTA credit reduction state?
A state that has not repaid federal unemployment loans; employers there pay a higher net FUTA rate (0.9% or more instead of 0.6%).
Are bonuses subject to employer payroll tax?
Yes — bonuses are wages for FICA and unemployment tax purposes.
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