{
  "id": "employee-cost",
  "version": "1b77372ecad2",
  "status": "published",
  "name": "Employee Cost Calculator",
  "question": "How much does an employee cost?",
  "summary": "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.",
  "category": "finance",
  "subcategory": "business",
  "url": "https://www.acalculator.org/finance/employee-cost-calculator",
  "markdown": "https://www.acalculator.org/finance/employee-cost-calculator.md",
  "kind": "function",
  "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 $7,000. State unemployment = state rate × the smaller of wages and the state wage base. Benefits = health insurance × 12 + retirement percent × wages + other costs. Total = wages + the four taxes + benefits.",
  "assumptions": [
    "Wages paid in 2026 (IRS Publication 15, 2026). All wages count for Social Security, Medicare and unemployment tax (no pre-tax cafeteria plan deductions).",
    "The employer is liable for FUTA, pays state unemployment tax on time and takes the full 5.4% credit; a credit reduction is added only when typed.",
    "The state rate and wage base are typed by you; the defaults are only examples.",
    "An estimate, not tax advice. Additional Medicare Tax is the employee’s alone and is not an employer cost."
  ],
  "inputs": {
    "$schema": "https://json-schema.org/draft/2020-12/schema",
    "type": "object",
    "properties": {
      "wages": {
        "title": "Yearly wages",
        "description": "Gross wages you pay the employee in 2026, before any deductions.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 10000000000
      },
      "hours": {
        "title": "Paid hours a year",
        "description": "Hours you pay for in a year, for the hourly cost: 2,080 is 40 hours × 52 weeks.",
        "type": "number",
        "minimum": 1,
        "maximum": 8784
      },
      "suta": {
        "title": "State unemployment tax rate",
        "description": "Your state unemployment (SUTA) rate from the state’s rate notice. The default is only an example.",
        "type": "number",
        "x-unit": "percent",
        "minimum": 0,
        "maximum": 100
      },
      "sutabase": {
        "title": "State unemployment wage base",
        "description": "Wages per employee your state taxes for unemployment each year. The default is only an example.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 10000000000
      },
      "health": {
        "title": "Health insurance a month (optional)",
        "description": "What you pay toward the employee’s health insurance each month.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 10000000000
      },
      "match": {
        "title": "Retirement contribution (optional)",
        "description": "What you put into the employee’s retirement plan, as a percent of wages.",
        "type": "number",
        "x-unit": "percent",
        "minimum": 0,
        "maximum": 100
      },
      "other": {
        "title": "Other yearly costs (optional)",
        "description": "Other yearly costs of the job: workers’ comp insurance, equipment, software, training.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 10000000000
      },
      "futacr": {
        "title": "FUTA credit reduction (optional)",
        "description": "Extra FUTA rate in a credit reduction state, as the Form 940 instructions list it; 0 elsewhere.",
        "type": "number",
        "x-unit": "percent",
        "minimum": 0,
        "maximum": 5.4
      }
    }
  },
  "outputs": {
    "total": {
      "label": "Total yearly cost",
      "description": "Wages + employer taxes + benefits and other costs.",
      "format": "money"
    },
    "taxes": {
      "label": "Employer payroll taxes",
      "description": "Social Security + Medicare + FUTA + state unemployment tax.",
      "format": "money"
    },
    "socialSecurity": {
      "label": "Social Security (employer share)",
      "description": "6.2% of wages up to the $184,500 wage base.",
      "format": "money"
    },
    "medicare": {
      "label": "Medicare (employer share)",
      "description": "1.45% of all wages.",
      "format": "money"
    },
    "futa": {
      "label": "Federal unemployment tax (FUTA)",
      "description": "(6.0% − 5.4% credit + any credit reduction) × wages up to $7,000.",
      "format": "money"
    },
    "suta": {
      "label": "State unemployment tax",
      "description": "State rate × wages up to the state wage base.",
      "format": "money"
    },
    "benefits": {
      "label": "Benefits and other costs",
      "description": "Health insurance × 12 + retirement percent × wages + other yearly costs.",
      "format": "money"
    },
    "monthly": {
      "label": "Cost a month",
      "description": "Total yearly cost ÷ 12.",
      "format": "money"
    },
    "hourly": {
      "label": "Cost an hour",
      "description": "Total yearly cost ÷ paid hours a year.",
      "format": "money"
    },
    "share": {
      "label": "Cost as a share of wages",
      "description": "Total yearly cost ÷ wages: 110% means the employee costs 10% more than the wages.",
      "format": "percent"
    }
  },
  "defaultAnswer": {
    "inputs": {
      "wages": 60000,
      "hours": 2080,
      "suta": 2.7,
      "sutabase": 7000,
      "health": 0,
      "match": 0,
      "other": 0
    },
    "outputs": {
      "total": 64821,
      "taxes": 4821,
      "socialSecurity": 3720,
      "medicare": 870,
      "futa": 42,
      "suta": 189,
      "benefits": 0,
      "monthly": 5401.75,
      "hourly": 31.16394230769231,
      "share": 108.035
    },
    "text": "An employee paid $60,000.00 a year costs about $64,821.00 in 2026, or $31.16 an hour."
  },
  "examples": [
    {
      "given": {
        "wages": 60000,
        "hours": 2080,
        "suta": 2.7,
        "sutabase": 7000
      },
      "expect": {
        "socialSecurity": 3720,
        "medicare": 870,
        "futa": 42,
        "suta": 189,
        "taxes": 4821,
        "total": 64821,
        "monthly": 5401.75,
        "hourly": 31.16394230769231,
        "share": 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; hand calculation in content.mdx; Python 3 check in docs/progress/WP-128/xcheck.py"
    },
    {
      "given": {
        "wages": 200000,
        "hours": 2080,
        "suta": 3.4,
        "sutabase": 10000,
        "health": 600,
        "match": 4,
        "other": 0
      },
      "expect": {
        "socialSecurity": 11439,
        "medicare": 2900,
        "futa": 42,
        "suta": 340,
        "taxes": 14721,
        "benefits": 15200,
        "total": 229921
      },
      "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); hand calculation in content.mdx; Python 3 check in docs/progress/WP-128/xcheck.py"
    },
    {
      "given": {
        "wages": 50000,
        "hours": 2080,
        "suta": 2.7,
        "sutabase": 7000,
        "futacr": 1.2
      },
      "expect": {
        "futa": 126,
        "taxes": 4140,
        "total": 54140
      },
      "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; Python 3 check in docs/progress/WP-128/xcheck.py"
    },
    {
      "given": {
        "wages": 5000,
        "hours": 520,
        "suta": 2.7,
        "sutabase": 7000
      },
      "expect": {
        "socialSecurity": 310,
        "medicare": 72.5,
        "futa": 30,
        "suta": 135,
        "total": 5547.5,
        "hourly": 10.66826923076923
      },
      "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; hand calculation in content.mdx; Python 3 check in docs/progress/WP-128/xcheck.py"
    }
  ],
  "sources": [
    "IRS, Publication 15 (2026), Employer’s Tax Guide: What’s New (Social Security 6.2% each for employer and employee, wage base $184,500; Medicare 1.45% each, no wage base); section 9 (no employer share of Additional Medicare Tax); section 14, Federal Unemployment (FUTA) Tax (6.0% on the first $7,000 of wages; credit of up to 5.4%; 0.6% after the full credit; credit reduction states). https://www.irs.gov/publications/p15 (retrieved 2026-10-18)",
    "IRS, Instructions for Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return (credit reduction states and Schedule A). https://www.irs.gov/instructions/i940 (retrieved 2026-10-18)"
  ],
  "related": [
    "payroll-tax",
    "workers-comp",
    "salary",
    "gross-pay",
    "self-employment-tax"
  ],
  "changelog": []
}