1. Scope
Calculates the fully-loaded annual cost of a US employee: base salary + employer-side payroll taxes + benefits + overhead allocation. It uses US federal rates and does not model state unemployment insurance variations in detail.
2. Inputs and outputs
Inputs
- baseSalary number (currency/year)
- employerTaxRate percent default: 7.65
FICA employer portion.
- benefitsPercent percent default: 25
Health, retirement, leave — BLS ECEC average.
- overheadPerHead number (currency/year) default: 0
Software licences, equipment, workspace.
Outputs
- employerTaxes
baseSalary × employerTaxRate.
- benefits
baseSalary × benefitsPercent.
- totalCost
salary + taxes + benefits + overhead.
- multiplier
totalCost / salary.
Engine source: src/lib/employee-cost-calculator/engine.ts
3. Formula / scoring logic
employer_taxes = salary * employer_tax_rate
benefits = salary * benefits_pct
total_cost = salary + employer_taxes + benefits + overhead
multiplier = total_cost / salary4. Assumptions
- FICA employer portion is 7.65% up to the Social Security wage base (2024: $168,600 for OASDI) — the tool applies the flat rate and does not cap.
- Benefits default 25% is the BLS ECEC private-industry average; actual costs vary 15–40% depending on plan richness.
- State unemployment insurance (SUTA) and federal unemployment (FUTA) are folded into the single employer-tax rate by default.
5. Data sources
- US BLS Employer Costs for Employee Compensation (ECEC) as of 2024
- US SSA 2024 wage base and tax rates as of 2024
6. Known limitations
- US-only defaults. For European employers, substitute Eurostat labour-cost figures (see Eurostat LCI).
- Does not model equity compensation, bonuses, or severance accruals.
- Contractor (1099) comparisons belong in the Contractor vs Employee Calculator.
7. Reproducibility
Input
baseSalary = $120,000, employerTaxRate = 7.65%, benefitsPercent = 25%, overhead = $5,000.
Expected output
taxes = $9,180, benefits = $30,000, totalCost = $164,180, multiplier ≈ 1.37×.
8. Change log
- 2026-04-24 methodology page first published.
Worked example
Run live against the same engine this site ships
(/engines/employee-cost-calculator.js).
The inputs and outputs below are recomputed on every build and
independently re-verified in CI — they are never hand-authored.
Input
- tool
- employee_cost_calculator
- base_salary
- 65000
- payroll_tax_pct
- 7.65
- retirement_match_percent
- 3
- health_insurance_annual
- 7000
- pto_weeks
- 3
- equipment_annual
- 2000
- software_annual
- 1200
- office_space_annual
- 5000
- training_annual
- 1500
- unemployment_insurance_rate
- 2
- workers_comp_rate
- 1
- recruiting_cost
- 0
Output
- baseSalary
- 65000
- employerTaxes
- 6922.5
- benefitsCost
- 8950
- overheadCost
- 13450
- totalAnnualCost
- 94322.5
- costMultiplier
- 1.45
- effectiveHourlyRate
- 48.12
- monthlyBurn
- 7860.21
- breakdown[0].label
- Base Salary
- breakdown[0].amount
- 65000
- breakdown[0].category
- Salary
- breakdown[1].label
- Employer Taxes & Contributions
- breakdown[1].amount
- 6922.5
- breakdown[1].category
- Taxes
- breakdown[2].label
- Health Insurance
- breakdown[2].amount
- 7000
- breakdown[2].category
- Benefits
- breakdown[3].label
- Retirement Match
- breakdown[3].amount
- 1950
- breakdown[3].category
- Benefits
- breakdown[4].label
- Paid Time Off (PTO)
- breakdown[4].amount
- 3750
- breakdown[4].category
- Overhead
- breakdown[5].label
- Equipment
- breakdown[5].amount
- 2000
- breakdown[5].category
- Overhead
- breakdown[6].label
- Software
- breakdown[6].amount
- 1200
- breakdown[6].category
- Overhead
- breakdown[7].label
- Office Space
- breakdown[7].amount
- 5000
- breakdown[7].category
- Overhead
- breakdown[8].label
- Training & Development
- breakdown[8].amount
- 1500
- breakdown[8].category
- Overhead
Frequently asked questions
- What does the Employee Cost Calculator calculate?
- Calculates the fully-loaded annual cost of a US employee: base salary + employer-side payroll taxes + benefits + overhead allocation. It uses US federal rates and does not model state unemployment insurance variations in detail.
- What inputs does the Employee Cost Calculator need?
- It takes 4 inputs: baseSalary, employerTaxRate (default 7.65), benefitsPercent (default 25), overheadPerHead (default 0). Outputs returned: employerTaxes, benefits, totalCost, multiplier.
- What formula does the Employee Cost Calculator use?
- The exact computation is: employer_taxes = salary * employer_tax_rate; benefits = salary * benefits_pct; total_cost = salary + employer_taxes + benefits + overhead; multiplier = total_cost / salary
- Can I verify the Employee Cost Calculator with a worked example?
- Yes. With baseSalary = $120,000, employerTaxRate = 7.65%, benefitsPercent = 25%, overhead = $5,000. the tool returns taxes = $9,180, benefits = $30,000, totalCost = $164,180, multiplier ≈ 1.37×.
- Where does the Employee Cost Calculator get its benchmark data?
- Reference data is sourced from: US BLS Employer Costs for Employee Compensation (ECEC) (as of 2024); US SSA 2024 wage base and tax rates (as of 2024).
- What can the Employee Cost Calculator not tell me?
- Known limitations: US-only defaults. For European employers, substitute Eurostat labour-cost figures (see Eurostat LCI). Does not model equity compensation, bonuses, or severance accruals. Contractor (1099) comparisons belong in the Contractor vs Employee Calculator.