Employee Cost Calculator
Know the True Cost of Hiring
Use this free Employee Cost Calculator to find the real cost of hiring and retaining an employee. Enter salary, benefits, and taxes to understand your total expense per employee annually or monthly.
Salary & Compensation
Benefits & Insurance
Taxes & Payroll Costs
Overhead & Miscellaneous
The true cost of an employee includes not just salary but also taxes, insurance, benefits, and other overhead expenses. Employers often spend 20–40% more than base salary when all costs are included.
Key Cost Components:
- • Base salary and bonuses
- • Payroll taxes (Social Security, Medicare)
- • Health insurance and benefits
- • Retirement contributions
- • Equipment and training costs
- • Office space and utilities
- • Offer remote work to reduce office overhead
- • Optimize benefits packages for cost-efficiency
- • Use automated payroll software to reduce admin costs
- • Hire contractors for flexible roles
- • Implement employee wellness programs to reduce healthcare costs
- • Provide tax-advantaged benefits like HSAs and 401(k)s
Input Parameters:
- Base Salary: $60,000
- Health Insurance: $6,000
- Retirement: 3% of salary
- Payroll Taxes: 7.65%
- Equipment/Training: $3,000
Results:
- Total Annual Cost: $78,000
- Monthly Cost: $6,500
- Additional Costs: $18,000 (30%)
- True Hourly Cost: $37.50
How do you calculate the total cost of an employee?
Total employee cost = Base Salary + Benefits + Payroll Taxes + Overhead Costs. This typically adds 20-40% to the base salary depending on your location and benefits package.
What percentage do benefits add to an employee's salary?
Benefits typically add 20-30% to base salary in the US. This includes health insurance, retirement contributions, paid time off, and other perks.
How much does an employee really cost per year?
An employee typically costs 1.2 to 1.4 times their base salary annually. For a $60,000 salary, expect total costs of $72,000 to $84,000.
What is included in employer payroll taxes?
Employer payroll taxes include Social Security (6.2%), Medicare (1.45%), federal unemployment (FUTA), and state unemployment taxes (SUTA).
How can small businesses estimate hiring costs easily?
Use our employee cost calculator for instant estimates. Consider industry benchmarks, location-specific tax rates, and required benefits for accurate budgeting.