Employers typically pay 25 to 40% more than a role's salary once payroll taxes, benefits, and overhead are added in. Use the live calculator on the right to see your exact number.
A $60,000 role costs about $85,990 a year once taxes, benefits, and overhead are added in.
$85,990Estimated true annual costCrunch the full numbersModel labor the way a CFO does, before someone asks why the budget is off.
Salary is the number on the offer letter. This is the number you actually spend.
Crunch it →A contractor looks cheap until you do the math. This does the math.
Crunch it →Work backward from what you need to earn to the rate you have to charge.
Crunch it →Spoiler: it is more than you budgeted for, and nobody on the team counted the manager hours.
Crunch it →Add payroll taxes, benefits, equipment, and the overhead that never shows up on a spreadsheet until someone asks where the money went, and an employee costs 25-40% more than their salary. These tools put the real number in front of you, whether you are budgeting a hire, weighing a contractor, or setting a freelance rate that does not leave you short at tax time.
U.S. government sources to verify the figures on this page:
Beyond salary, employers typically spend an additional 20 to 30 percent of a worker's wages on payroll taxes, health insurance, retirement contributions, workers compensation, and unemployment insurance. For a $50,000 salaried role, total employer cost often lands between $60,000 and $70,000 per year. That is before recruiting, onboarding, and training, which are one-time costs that tend to get estimated low. The Department of Labor and payroll providers like Paychex publish updated benchmarks.
The 70/30 rule is a budgeting guideline: roughly 70 percent of a new hire's total compensation goes to base salary, and the other 30 percent covers benefits and employer-paid taxes, including Social Security, Medicare, unemployment insurance, and health coverage. It is a planning estimate, not a legal requirement, and it assumes a fairly standard benefits package. Actual ratios vary by industry, company size, and what you actually offer.
A $20 per hour employee working full time earns about $41,600 per year in gross wages. Add employer payroll taxes (roughly 7.65 percent for FICA), workers compensation, unemployment insurance, and a basic benefits package, and the true cost typically lands between $50,000 and $55,000 annually. Add health insurance, a retirement match, or paid leave and the number climbs further. Use a payroll calculator to get a figure specific to your state.
If you bill clients for employee time, a common formula is to multiply the worker's fully loaded cost (wages plus all employer costs) by a markup of 1.5 to 2.5 times, depending on your industry and overhead. An employee who costs $40 per hour all-in might be billed at $60 to $100 per hour. An accountant can help confirm that your pricing actually covers taxes, benefits, overhead, and a margin worth having.