A common rule of thumb says an employee costs 1.25 to 1.4 times their salary. The exact multiple depends on the state, the job and, above all, the benefits you offer.
Mandatory employer taxes
- Social Security: 6.2% of wages up to $184,500 (2026).
- Medicare: 1.45% of all wages, with no cap.
- Federal unemployment (FUTA): 6.0% of the first $7,000, reduced to 0.6% when you pay state unemployment on time. That is at most $42 per employee per year, more in credit-reduction states.
- State unemployment (SUTA): a rate assigned by your state on a wage base that ranges from $7,000 to over $70,000. See payroll taxes by state.
- State programs: employer shares of paid family and medical leave or disability insurance in states such as New Jersey, Washington, Oregon, Massachusetts, Colorado, Connecticut and DC.
Insurance
Workers' compensation is required in almost every state (Texas lets most private employers opt out). Premiums are priced per $100 of payroll by job class: clerical work may cost under $0.20 per $100, while roofing can cost over $20. General liability and employment practices liability insurance are common extras.
Benefits
Benefits are usually the biggest cost after wages. In the BLS Employer Costs for Employee Compensation survey, benefits make up roughly 30% of total compensation in private industry, led by health insurance, paid time off, retirement contributions and legally required benefits.
Hidden costs
- Recruiting, background checks and onboarding.
- Equipment, software licenses and workspace.
- Payroll and HR software or a PEO.
- Training time before a new hire is fully productive.
Estimate it for your state
The cost-to-hire calculator adds federal and state payroll taxes, a workers' comp benchmark and any benefits you enter. Use your own SUTA rate from your state's annual notice for the most accurate result.