Payroll Employer Cost Calculator
Hiring an employee costs significantly more than the gross salary. Employers must pay their share of FICA taxes (7.65% of wages), federal unemployment tax (FUTA, effectively 0.6% on the first $7,000), and state unemployment tax (SUTA, which varies by state and experience rating). This calculator shows the total employer-side cost of a single employee, broken down by gross wages, employer FICA, FUTA, and SUTA, so you can understand your true labor costs for budgeting or pricing decisions.
Employer cost formula
Employer FICA = min(wages, $176,100)*0.062 + wages*0.0145
FUTA = min(wages, $7,000) * 0.006
SUTA = min(wages, SUTA wage base) * (SUTA rate / 100)
Total employer cost = gross wages + employer FICA + FUTA + SUTA
The effective FUTA rate is 0.6% after the standard 5.4% credit for states in good standing with the federal unemployment trust fund. SUTA wage bases and rates vary by state; the defaults here use a common new-employer example.
Understanding payroll tax costs
- Employer FICA adds approximately 7.65% to gross wages, making it the largest mandatory employer payroll tax.
- FUTA is capped at $42 per employee per year (0.6% times the $7,000 federal wage base) in most states.
- SUTA rates vary widely. New employers typically get an assigned rate; experienced employers' rates adjust based on unemployment claims history.
- Additional costs not included here include workers' compensation insurance, health insurance, 401(k) match, and paid leave.
- Self-employed individuals bear both the employee and employer share of FICA through the self-employment tax (15.3%).
Payroll employer cost: frequently asked questions
What is the employer FICA rate?
Employers pay 6.2% of wages for Social Security (up to the $176,100 wage base) and 1.45% for Medicare on all wages, totaling 7.65% in employer FICA. This exactly matches what the employee pays.
What is FUTA and how much does it cost?
FUTA is the Federal Unemployment Tax Act tax. Employers pay 6% on the first $7,000 of each employee's wages. However, employers in states with a federal-state unemployment insurance arrangement typically receive a 5.4% credit, reducing the effective FUTA rate to 0.6%, or a maximum of $42 per employee per year.
What is SUTA?
SUTA (State Unemployment Tax Act) is a state unemployment tax paid by employers. Rates vary by state and by the employer's experience rating (history of unemployment claims). New employer rates typically range from 1% to 4% on a state-determined wage base, which varies by state.
Are there other employer payroll costs beyond FICA and unemployment?
Yes. Employers may also pay for workers' compensation insurance, employer-funded health insurance contributions, 401(k) employer matches, paid leave costs, and payroll processing fees. This calculator covers FICA, FUTA, and SUTA.
Does total employer cost include the employee's salary?
Yes. Total employer cost is the gross salary plus all employer taxes and mandatory contributions. This is sometimes called the 'fully loaded' labor cost and represents what the employer actually pays per employee beyond just the salary.
Official sources
- IRS: Publication 15 (Employer's Tax Guide).
- IRS: About Form 940 (FUTA).
- DOL: State Unemployment Insurance Laws.
Reviewed by the CalculatorHub team, edited by James Graham, 15 June 2026. See our methodology.