How much does an employee cost?
Type the wages, your state unemployment rate and any benefits. The employee cost calculator adds the 2026 employer payroll taxes and shows what the employee really costs.
- Total yearly cost
- $64,821.00
An employee paid $60,000.00 a year costs about $64,821.00 in 2026, or $31.16 an hour.
- Employer payroll taxes
- $4,821.00
- Social Security (employer share)
- $3,720.00
- Medicare (employer share)
- $870.00
- Federal unemployment tax (FUTA)
- $42.00
- State unemployment tax
- $189.00
- Benefits and other costs
- $0.00
- Cost a month
- $5,401.75
- Cost an hour
- $31.16
- Cost as a share of wages
- 108.04%
Total yearly cost: $64,821.00. An employee paid $60,000.00 a year costs about $64,821.00 in 2026, or $31.16 an hour.
Total yearly cost by yearly wages
The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use
How to calculate
Works out the yearly cost of an employee in 2026: wages plus the employer’s Social Security, Medicare, federal and state unemployment taxes and benefits, as a total, a monthly and an hourly cost.
Example with the default inputs (Yearly wages $60,000.00, Paid hours a year 2,080, State unemployment tax rate 2.7%, State unemployment wage base $7,000.00, Health insurance a month (optional) $0.00, Retirement contribution (optional) 0%, Other yearly costs (optional) $0.00): An employee paid $60,000.00 a year costs about $64,821.00 in 2026, or $31.16 an hour.
Method: Social Security = 6.2% × the smaller of wages and $184,500. Medicare = 1.45% × wages. FUTA = (6.0% − 5.4% + credit reduction) × the smaller of wages and $7,000. State unemployment = state rate × the smaller of wages and the state wage base. Benefits = health insurance × 12 + retirement percent × wages + other costs. Total = wages + the four taxes + benefits.
- Wages paid in 2026 (IRS Publication 15, 2026). All wages count for Social Security, Medicare and unemployment tax (no pre-tax cafeteria plan deductions).
- The employer is liable for FUTA, pays state unemployment tax on time and takes the full 5.4% credit; a credit reduction is added only when typed.
- The state rate and wage base are typed by you; the defaults are only examples.
- An estimate, not tax advice. Additional Medicare Tax is the employee’s alone and is not an employer cost.
Worked examples
Each example is checked against the calculator on every build.
- Yearly wages $60,000.00, Paid hours a year 2,080, State unemployment tax rate 2.7%, State unemployment wage base $7,000.00 gives Social Security (employer share) $3,720.00, Medicare (employer share) $870.00, Federal unemployment tax (FUTA) $42.00, State unemployment tax $189.00, Employer payroll taxes $4,821.00, Total yearly cost $64,821.00, Cost a month $5,401.75, Cost an hour $31.16, Cost as a share of wages 108.035%.Source: IRS Publication 15 (2026): Social Security 6.2% each for employer and employee on wages up to $184,500, Medicare 1.45% each, no employer share of Additional Medicare Tax; section 14, FUTA 6.0% of the first $7,000 with a credit of up to 5.4% (0.6%), https://www.irs.gov/publications/p15
- Yearly wages $200,000.00, Paid hours a year 2,080, State unemployment tax rate 3.4%, State unemployment wage base $10,000.00, Health insurance a month (optional) $600.00, Retirement contribution (optional) 4%, Other yearly costs (optional) $0.00 gives Social Security (employer share) $11,439.00, Medicare (employer share) $2,900.00, Federal unemployment tax (FUTA) $42.00, State unemployment tax $340.00, Employer payroll taxes $14,721.00, Benefits and other costs $15,200.00, Total yearly cost $229,921.00.Source: IRS Publication 15 (2026): Social Security 6.2% each for employer and employee on wages up to $184,500, Medicare 1.45% each, no employer share of Additional Medicare Tax; section 14, FUTA 6.0% of the first $7,000 with a credit of up to 5.4% (0.6%), https://www.irs.gov/publications/p15 (Social Security stops at $184,500)
- Yearly wages $50,000.00, Paid hours a year 2,080, State unemployment tax rate 2.7%, State unemployment wage base $7,000.00, FUTA credit reduction (optional) 1.2% gives Federal unemployment tax (FUTA) $126.00, Employer payroll taxes $4,140.00, Total yearly cost $54,140.00.Source: IRS Publication 15 (2026): Social Security 6.2% each for employer and employee on wages up to $184,500, Medicare 1.45% each, no employer share of Additional Medicare Tax; section 14, FUTA 6.0% of the first $7,000 with a credit of up to 5.4% (0.6%), https://www.irs.gov/publications/p15; IRS Instructions for Form 940 (credit reduction adds to the 0.6% rate), https://www.irs.gov/instructions/i940
- Yearly wages $5,000.00, Paid hours a year 520, State unemployment tax rate 2.7%, State unemployment wage base $7,000.00 gives Social Security (employer share) $310.00, Medicare (employer share) $72.50, Federal unemployment tax (FUTA) $30.00, State unemployment tax $135.00, Total yearly cost $5,547.50, Cost an hour $10.67.Source: IRS Publication 15 (2026): Social Security 6.2% each for employer and employee on wages up to $184,500, Medicare 1.45% each, no employer share of Additional Medicare Tax; section 14, FUTA 6.0% of the first $7,000 with a credit of up to 5.4% (0.6%), https://www.irs.gov/publications/p15
How it works
- Social Security (employer) = 6.2% × the smaller of wages and $184,500
- Medicare (employer) = 1.45% × wages
- FUTA = (6.0% − 5.4% credit + credit reduction) × the smaller of wages and $7,000
- State unemployment = state rate × the smaller of wages and the state wage base
- Employer payroll taxes = Social Security + Medicare + FUTA + state unemployment
- Benefits and other costs = health insurance a month × 12 + retirement percent × wages + other yearly costs
- Total yearly cost = wages + employer payroll taxes + benefits and other costs
- Cost a month = total ÷ 12; cost an hour = total ÷ paid hours a year; share = total ÷ wages × 100
Exact arithmetic. Every amount is read as the exact decimal you typed, each result is an exact fraction, and it is rounded once to cents, half up.
Figures that change each year
The data check should compare these with the next year's Publication 15.
| Figure | 2026 value | Source | Next update |
|---|---|---|---|
| Social Security wage base | $184,500 | Publication 15 (2026); SSA | SSA announces it in October; Publication 15 for 2027 in December |
| Social Security rate (employer) | 6.2% | Publication 15 (2026) | Set by law; check each Publication 15 |
| Medicare rate (employer) | 1.45% | Publication 15 (2026) | Set by law; check each Publication 15 |
| FUTA rate, credit and wage base | 6.0%, 5.4%, $7,000 | Publication 15 (2026) section 14 | Set by law; check each Publication 15 |
| FUTA credit reduction states | typed by you | Department of Labor; Form 940 instructions | Named each November for that year's wages |
When the data is out of date
After December 31, 2026 the page keeps using the 2026 rates and says so above the result.
Assumptions
- Wages are paid in 2026, and all of them count for Social Security, Medicare and unemployment tax (no pre-tax cafeteria plan deductions).
- The employer is liable for FUTA, pays state unemployment tax on time, and takes the full 5.4% credit; a credit reduction is added only when typed.
- The state rate and wage base are typed; the defaults are only examples. Paid hours are 1 to 8,784 a year.
- An estimate, not tax advice.
Worked examples by hand
$60,000 of wages, 2.7% on the first $7,000. Social Security = 6.2% × 60,000 = $3,720; Medicare = 1.45% × 60,000 = $870; FUTA = 0.6% × 7,000 = $42; state = 2.7% × 7,000 = $189. Taxes = $4,821; total = $64,821; a month $5,401.75; an hour 64,821 ÷ 2,080 = $31.16; share 108.04%.
$200,000 of wages with benefits. Social Security = 6.2% × 184,500 = $11,439; Medicare = 1.45% × 200,000 = $2,900; FUTA = $42; state = 3.4% × 10,000 = $340; taxes = $14,721. Benefits = 600 × 12 + 4% × 200,000 = $15,200. Total = 200,000 + 14,721 + 15,200 = $229,921.
A credit reduction state. $50,000 of wages with a 1.2% credit reduction: FUTA = (0.6% + 1.2%) × 7,000 = $126; taxes = 3,100 + 725 + 126 + 189 = $4,140.
Part-time wages. $5,000 for 520 hours: Social Security $310, Medicare $72.50, FUTA 0.6% × 5,000 = $30, state 2.7% × 5,000 = $135; total $5,547.50, or $10.67 an hour.
Other questions people ask
How much does an employee cost on top of wages?
In 2026 the employer pays 6.2% Social Security on wages up to $184,500, 1.45% Medicare on all wages, federal unemployment tax (usually $42 a year), state unemployment tax, and any benefits. A $60,000 employee with a 2.7% state rate on the first $7,000 and no benefits costs $64,821, about 8% over the wages.
What payroll taxes does an employer pay in 2026?
Social Security: 6.2% of each employee’s wages up to $184,500. Medicare: 1.45% of all wages. FUTA: 6.0% of the first $7,000 of wages, less a credit of up to 5.4% for state unemployment tax, so 0.6% or $42 per employee. State unemployment tax at your state’s rate on its wage base.
Does the employer pay the 0.9% Additional Medicare Tax?
No. The employer withholds 0.9% Additional Medicare Tax from wages over $200,000, but it is the employee’s tax: there is no employer share.
How do I find my state unemployment tax rate?
Your state workforce or unemployment agency sends a rate notice each year; new employers get the state’s new-employer rate. Each state also sets its own wage base, which can be more than the $7,000 federal one. Type both into the calculator; the 2.7% on $7,000 default is only an example.
What is a FUTA credit reduction?
When a state has borrowed from the federal unemployment fund and not repaid it, employers there get a smaller credit, so they pay more FUTA. The Department of Labor names the states each November and the IRS lists them in the Form 940 instructions. Type the reduction (for example 1.2%) if your state is one.
What other costs should I include?
Health insurance, retirement contributions, workers’ compensation insurance, equipment, software, training and payroll services. Put health insurance in its own box and the rest in other yearly costs. The workers comp premium calculator can estimate the insurance.