Employee Cost Calculator (2026): True Cost of an Employee

Your hire (US)

Pay type SalaryHourly

Annual salary

$

Gross pay before tax.

Hours per year

hours

40 hours × 52 weeks is 2,080. Used for the hourly cost.

State AlabamaAlaskaArizonaArkansasCaliforniaColoradoConnecticutDelawareDistrict of ColumbiaFloridaGeorgiaHawaiiIdahoIllinoisIndianaIowaKansasKentuckyLouisianaMaineMarylandMassachusettsMichiganMinnesotaMississippiMissouriMontanaNebraskaNevadaNew HampshireNew JerseyNew MexicoNew YorkNorth CarolinaNorth DakotaOhioOklahomaOregonPennsylvaniaRhode IslandSouth CarolinaSouth DakotaTennesseeTexasUtahVermontVirginiaWashingtonWest VirginiaWisconsinWyoming

Where the employee works. Sets the state unemployment tax.

Benefits, share of salary

%

Default: the BLS private-industry average for insurance and retirement. Use 0 if you offer none.

Workers’ comp, state rate and employer of record fee

Workers’ comp rate per $100 of payroll

From your insurer. It depends on the job class, so there is no default.

State unemployment (SUTA) rate

%

Prefilled with the state’s 2026 new-employer rate. Use the rate on your state notice if you have one.

Employer of record fee, per month

$

Only if an employer of record employs this person for you.

US employees only for now. Country costs are not in this calculator yet.

Update result

Total cost per year

$73,554.91

1.23 times salary, $35.36 an hour

Salary

$60,000.00

Employer payroll taxes

$4,875.04

Benefits

$8,679.87

• Workers' comp is not included: rates depend on the job class and state. Enter yours to add it.

Employee cost calculator breakdown

A $60,000 Texas employee costs salary plus $4,875.04 of employer payroll taxes and $8,679.87 of benefits, $73,554.91 a year. Every line links its source. For the employee’s side of the same paycheck, see take-home pay in Texas; if this is your first hire, compare payroll for 1 employee.

Cost of an employee by salary

In Texas, an employee with average benefits costs about 1.23 times salary at $60,000, before workers’ comp. The table covers common salaries and hourly rates at 2,080 hours a year.

How much does a $20-an-hour employee cost an employer?

A $20-an-hour employee costs $51,085.44 a year in Texas, or $24.56 an hour, once $3,467.40 of payroll taxes and $6,018.04 of average benefits are added (2026 rates, 2,080 hours, before workers’ comp).

How do you calculate the cost of an employee?

Add employer payroll taxes, benefits and workers’ comp to salary, then divide the total by salary for the multiplier.

1. Payroll taxes: the employer’s Social Security and Medicare match, FUTA and state unemployment tax. The employer payroll tax calculator shows them per payroll.
2. Benefits: health and other insurance plus retirement. The default is the BLS private-industry average; enter your own share if you know it.
3. Workers’ comp: your insurer’s rate per hundred dollars of payroll, which depends on the job.
4. Multiplier: total cost divided by salary.

Is the 1.25 to 1.4 times rule right?

Close, but slightly high for an average hire: a $60,000 Texas employee with average benefits costs 1.23 times salary. It rises with richer benefits and in states that tax more of each salary: New Jersey’s unemployment wage base is $44,800 against $9,000 in Texas.

Hiring outside the US or on a 1099?

This calculator covers US employees only; country costs are not in it yet. For a US contractor, compare W-2 vs contractor cost, or price the cost of a contractor instead. If benefits are your biggest line, see what a PEO costs per employee.

Method and sources

Payroll taxes come from IRS Publication 15 (2026) and each state’s unemployment agency, at the state’s 2026 new-employer rate. Benefits default to our arithmetic on the BLS Employer Costs for Employee Compensation release (June 2026, private industry): insurance plus retirement, divided by wages plus paid leave, which gives 14.47% of salary. Paid leave is divided in rather than added, because a salary already pays for days off. Small employers often spend less on benefits than this average, so the share is editable.

• IRS Pub. 15 (2026) (opens in a new tab), checked October 23, 2026
• IRS Pub. 15 (2026) (opens in a new tab), checked October 23, 2026
• twc.texas.gov (opens in a new tab), checked October 23, 2026
• BLS ECEC, June 2026 (opens in a new tab), checked October 23, 2026