What an employee costs on top of the wage (US, 2026)
- Social Security: the employer pays 6.2% of wages, matching the employee's 6.2%, up to the 2026 wage base of $184,500[1].
- Medicare: the employer pays 1.45% of all wages, with no cap. The 0.9% Additional Medicare Tax on wages over $200,000 is withheld from the employee only; there's no employer match[1].
- FUTA (federal unemployment): 6.0% on the first $7,000 of each employee's wages. If you pay your state unemployment tax in full and on time, you get a credit of up to 5.4%, so the usual net rate is 0.6%, or $42 per employee per year[2]. In "credit reduction" states, which haven't repaid federal unemployment loans, the credit is smaller and FUTA costs more[2]. DOL's potential 2026 list names California (an estimated 5.3% total reduction) and the U.S. Virgin Islands (4.8%), with final figures set after November 10, 2026[3].
- SUTA (state unemployment): each state sets its own rates and taxable wage base, and assigns your rate based on your industry and layoff history[4]. That's why the calculator takes a low-to-high range. Use the rate on your state's notice, or the new-employer rate from your state workforce agency.
- Workers' compensation: usually priced per $100 of payroll by class of work, and set by your state's rules and your insurer. Enter your quoted rate.
- Benefits: health insurance, retirement contributions and other benefits are a policy choice. Paid time off is already in the salary, but it reduces the hours actually worked, so the calculator shows the cost per worked hour too.
Is your total in the right ballpark? For context, the Bureau of Labor Statistics found that in June 2026 private-industry employers paid an average of $46.89 per hour worked in total compensation: $32.82 in wages and salaries (70.0%) and $14.07 in benefits (30.0%)[5]. BLS's benefits figure includes paid leave, insurance, retirement and legally required benefits such as payroll taxes.
Worked examples
| Salary | Employer FICA | FUTA | SUTA | Workers' comp | Benefits | Total cost | Multiplier |
|---|---|---|---|---|---|---|---|
| $35,000 | $2,678 | $42 | $189 | $350 | $7,050 | $45,308 | 1.29× |
| $50,000 | $3,825 | $42 | $189 | $500 | $7,500 | $62,056 | 1.24× |
| $75,000 | $5,738 | $42 | $189 | $750 | $8,250 | $89,968 | 1.20× |
| $120,000 | $9,180 | $42 | $189 | $1,200 | $9,600 | $140,211 | 1.17× |
| $200,000 | $14,339 | $42 | $189 | $2,000 | $12,000 | $228,570 | 1.14× |
Notice the multiplier falling as pay rises? That's not a typo. Social Security stops at $184,500, FUTA and most SUTA bases cap early, and flat-cost benefits such as health insurance matter less on a bigger salary. Thinking of freelancing instead of hiring? Our self-employment tax guide explains the 15.3% a sole proprietor pays, and the Freelance Hourly Rate Calculator works out a rate. Funding the hire with debt? Try the Business Loan Calculator. Hiring your first employee means you'll need an EIN: here's how to get one free.
Frequently asked questions
How much does an employee cost on top of salary?
In the US, employer payroll taxes alone are about 7.65% (Social Security plus Medicare) plus federal and state unemployment tax. Add workers' comp and benefits and our examples come to about 1.14 to 1.29 times the wage, before paid leave is counted. BLS data for June 2026 put benefits at 30.0% of private-industry compensation costs.
What is the employer share of FICA in 2026?
7.65%: 6.2% for Social Security on wages up to $184,500 and 1.45% for Medicare on all wages. The employee pays the same amounts through withholding.
How much is FUTA per employee?
FUTA is 6.0% of the first $7,000 of wages. With the full 5.4% state credit, the net rate is 0.6%, or $42 per employee per year. It's higher in credit reduction states.
What is SUTA and what rate will I pay?
SUTA is state unemployment tax. Each state sets its own rate range and taxable wage base, and new employers usually get a set new-employer rate. Your state workforce agency sends your assigned rate.
Is workers' comp required?
Workers' compensation rules are set by each state, and most states require employers to carry it. Your rate depends on the type of work and your claims history; insurers usually quote it per $100 of payroll.
Does the employee's 7.65% cost the employer anything?
No. The employee's Social Security and Medicare taxes, and their income tax withholding, are taken out of their pay. They're part of the wage you already counted, not an extra cost.
Sources
Federal tax figures from the IRS, unemployment rules from the U.S. Department of Labor, compensation benchmarks from BLS. We haven't tested these figures with a lender, insurer or payroll provider; rules and rates change, so confirm with the official source. See our methodology and editorial policy. General information only, not financial, tax or legal advice.
- [1] IRS Topic 751: Social Security and Medicare withholding rates (2026 wage base): https://www.irs.gov/taxtopics/tc751 (checked 17 Oct 2026)
- [2] IRS Topic 759: Form 940, FUTA tax rate, wage base and credit: https://www.irs.gov/taxtopics/tc759 (checked 17 Oct 2026)
- [3] U.S. Department of Labor: FUTA credit reductions (potential 2026 list): https://oui.doleta.gov/unemploy/futa_credit.asp (checked 17 Oct 2026)
- [4] U.S. Department of Labor: Comparison of State Unemployment Insurance Laws: https://oui.doleta.gov/unemploy/statelaws.asp (checked 17 Oct 2026)
- [5] BLS: Employer Costs for Employee Compensation, June 2026 (released Sep 9, 2026): https://www.bls.gov/news.release/ecec.nr0.htm (checked 17 Oct 2026)