Topic guide · updated 2026-08-05
What Hiring Actually Costs
What an employee costs a US employer beyond the wage: Social Security to the annual ceiling, Medicare with no ceiling, federal unemployment tax after the state credit, state unemployment at each state's own wage base, benefits benchmarked to federal survey data, and the hours you should divide by.
An offer letter names one number and the business pays a different one. The gap is employer payroll taxes, benefits and overhead, and it is large enough that a $70,000 hire commonly costs closer to $87,000.
None of it is hidden. Every rate is published by an agency and the arithmetic is simple. What makes it hard to assemble is that the figures live in four separate places, one of which is fifty-one different state agencies — and most calculators fill the gaps with assumptions rather than sources.
This is the map: what each component is, where its number comes from, and which parts no honest tool should print at all.
The four employer taxes
Social Security at a fixed rate on wages up to an annual ceiling. Medicare at a fixed rate on every dollar, with no ceiling. Federal unemployment tax at a headline rate less a large credit for paying your state on time. State unemployment tax at your state's rate on your state's own taxable wage base. Only Medicare applies to a whole salary. The other three stop at ceilings, and the unemployment ceilings are low enough that those taxes are usually fully paid within the first months of the year — which makes early-year cash flow worse than an annual average suggests.
Why the state wage base matters more than the state rate
States differ in their unemployment tax rates, but they differ far more in what those rates apply to. A low rate on a high wage base can cost more than a high rate on a low one, so comparing rates alone tells you very little. It is also where calculators go wrong most often, because assuming a single national wage base is easy and wrong for most states. Every state figure here is transcribed from that state's workforce agency, with the page and the date recorded beneath it.
The benefits number, and where it comes from
The rule of thumb in wide circulation — multiply salary by somewhere between 1.25 and 1.4 — traces to a lecture note from about twenty years ago, and survives because it is memorable rather than because it is current. Federal survey data publishes the real distribution quarterly, by industry and wage band. This site prefills from that instead, with one conversion the published figure requires: benefits are reported as a share of total compensation, so applying that percentage directly to a wage understates the load by about a third.
What no calculator should print
Workers' compensation. It is priced by class code, payroll and insurer, and the same salary costs very different amounts for a roofer and a bookkeeper. A tool that prefills one national rate is guessing on your behalf, and the guess is wrong for nearly everyone. Also the Additional Medicare surtax. An employer must withhold it above a threshold but does not match it, so it is not an employer cost — and several competing calculators add it to the total anyway.
Tools in this topic
Every calculator and explainer in this cluster, each built on verified figures with its official source linked.
Employee cost
What a hire actually costs once employer taxes, benefits and overhead are counted. Social Security to this year’s wage base, Medicare, federal unemployment after the state credit, and your state’s own unemployment tax at its own wage base — every rate cited to the agency that published it, with the math shown.
Labor burden
Your burden rate as a percentage of the wage, the burdened cost of an hour actually worked once paid time off is taken out, and the rate you must bill to hold your target gross margin. Employer taxes come from verified federal and state rates, with the math shown line by line.
Key terms
Frequently asked questions
Most employers land between about 1.15× and 1.35× salary once employer taxes, benefits and overhead are counted, though the spread is wide and driven mostly by benefits rather than tax. The calculator shows your own multiplier from your own figures rather than an average that fits nobody.
Official sources for this topic
Every figure and rule referenced above is published by one of these agencies, and each of them — not this site — determines what is actually paid.
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