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Employee Cost Calculator

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Find the true total cost of an employee - base salary is just the starting point. Benefits, payroll taxes, and overhead typically add 25-50% or more on top.

Employee Cost Calculator

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True total annual cost
$85,590.00
Cost multiplier
1.43x salary
Effective hourly cost
$41.15/hr (2,080 hrs/yr)
US employer payroll tax defaults to 7.65% (Social Security + Medicare); adjust for your specific situation and location.

The formula

True total cost = Base salary x (1 + Benefits % + Payroll tax % + Overhead %)
Example

A $60,000 salary with 25% benefits load, 7.65% payroll tax, and 10% overhead: total = 60,000 x 1.4265 = $85,590 - a 1.43x multiplier on the base salary alone.

Step-by-step guide

  1. Enter the base salary being offered or paid.
  2. Enter your benefits load - health insurance, retirement matching, paid time off, and similar costs, as a percentage of salary.
  3. Enter employer payroll tax - in the US, this typically includes the employer's share of Social Security and Medicare, plus unemployment insurance.
  4. Enter overhead - equipment, office space, software licenses, management time, and other indirect costs of supporting an employee.

Why "fully loaded" cost matters for hiring decisions

A $60,000 salary offer often actually costs a business closer to $80,000-90,000 once every real cost is included - a gap that surprises many first-time hiring managers and small business owners. Using base salary alone to decide whether a hire is affordable, or to compare the cost of an employee against a contractor or freelancer, systematically understates the true cost and can lead to budgeting shortfalls or an apples-to-oranges comparison.

Common mistakes

Budgeting hiring decisions on base salary alone - the real cost is routinely 25-50% higher once benefits, taxes, and overhead are included.
Comparing an employee's base salary directly against a freelancer or contractor's rate without loading either figure - a fair comparison needs both sides on the same fully-loaded basis.

Frequently asked questions

What's a typical benefits load percentage?

It varies significantly by company size, industry, and benefits generosity, but 20-40% of base salary is a commonly cited range for health insurance, retirement contributions, and paid time off combined.

Why 2,080 hours for the hourly figure?

2,080 hours represents a standard full-time schedule: 40 hours a week x 52 weeks, before accounting for holidays or time off, giving a simple, widely used reference point for converting salary to an hourly figure.

Should this include recruiting and onboarding costs?

Those are typically one-time costs rather than ongoing annual costs, so they're not included in this recurring cost figure - you can factor them in separately when evaluating the total cost of a new hire in year one specifically.

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