--- title: "Employee Cost Calculator: True Cost of an Employee | MCC" description: "Add employer payroll tax, unemployment tax, workers' comp and benefits to a wage to see what an employee really costs. Free and private, runs in your browser." url: "https://mcc-solutionsnj.com/bookkeeping/employee-cost-calculator" --- Free tool # What does an employee really cost? Enter a wage and your payroll costs. See the true yearly cost and the cost per hour worked, including employer taxes, insurance and benefits. [![Intuit ProAdvisor Gold tier badge](/img/credentials/intuit-proadvisor-gold.png)](https://proadvisor.intuit.com/app/accountant/search?searchId=matthew-coleman77)Gold tier in Intuit's ProAdvisor program. [See my Intuit listing](https://proadvisor.intuit.com/app/accountant/search?searchId=matthew-coleman77) Hourly wage ($) Hours per week Paid weeks per year Employer Social Security and Medicare (%) Federal unemployment tax rate (%) Federal unemployment wage base ($) State unemployment tax rate (%) (example, use yours) State unemployment wage base ($) (use yours) Workers' compensation (% of wages) (example, use your quote) Benefits per year ($) (optional) Other yearly costs ($) (equipment, software, training) Prefer to talk it through? [Take the free books check](/bookkeeping/health-check) or [contact us](/contact). Share ## Put this tool on your own site Free to use. Paste this where you want it to appear. It runs in the visitor's browser, so nothing they enter is sent to us. [See every calculator you can embed](/embed) How it works ## How it works The total is **wages + employer Social Security and Medicare + federal unemployment tax + state unemployment tax + workers' compensation + benefits**. Employers pay 7.65% of wages toward Social Security and Medicare. Federal unemployment tax is 6.0% on the first $7,000, less a credit that generally brings the usual net rate to 0.6%. State unemployment and workers' compensation rates vary, so the defaults here are examples. Replace them with your own. FAQ ## About this calculator **What does an employee really cost?** More than the wage. Employers also pay their share of Social Security and Medicare, federal and state unemployment tax, workers' compensation insurance and any benefits. The calculator adds them up. **What is the employer share of payroll tax?** Employers pay 7.65% of wages toward Social Security (6.2%, up to an annual wage limit) and Medicare (1.45%). Higher wages above the Social Security limit are not taxed for that portion, so check the current limit if wages are high. **What is the federal unemployment tax?** The federal rate is 6.0% on the first $7,000 of each employee's wages, but employers who pay state unemployment tax on time generally receive a credit that brings the usual net rate to 0.6%. The calculator defaults to that. **What are the state unemployment and workers' comp rates?** They vary by state, industry and your claims history. The defaults are examples. Use the rates on your state notice and your insurance quote. **Does this include overtime or paid time off?** No. Enter the hours you actually pay for. Add paid time off or training as an extra cost if you pay for hours that are not productive. **Is anything saved?** No. The math runs in your browser and nothing you enter is sent to us. Compare with a contractor in the [contractor vs employee cost calculator](/bookkeeping/contractor-vs-employee-cost-calculator), work out overtime with the [overtime pay calculator](/bookkeeping/overtime-pay-calculator), or plan the cash with the [cash flow calculator](/bookkeeping/cash-flow-and-burn-rate-calculator). More free tools: [Real estate commission split calculator](/bookkeeping/real-estate-commission-split-calculator), [HOA dues per unit calculator](/bookkeeping/hoa-dues-per-unit-calculator), [Deadhead percentage and revenue per mile calculator](/bookkeeping/deadhead-percentage-and-revenue-per-mile-calculator), or [see all free tools](/free-tools). Free ### Month-End Close Checklist (PDF) The five-day close, one page to print. Enter your email and we send a link to confirm it is yours, then the download. We may email you about new toolkits, and every email has an unsubscribe link. General information, not tax or legal advice. [How we write and check our tools](/editorial-standards). ## Worked example: a $20 an hour employee These rates are invented to show the steps. Use your own state and insurance rates. | Item | How | Amount | | --- | --- | --- | | Wages | $20 x 40 hours x 52 weeks | $41,600.00 | | Social Security and Medicare | 7.65% of wages | $3,182.40 | | Federal unemployment | 0.6% of the first $7,000 | $42.00 | | State unemployment (example) | 3% of the first $35,000 | $1,050.00 | | Workers' compensation (example) | 1.5% of wages | $624.00 | | Benefits (example) | Per year | $3,000.00 | | **Total yearly cost** | | **$49,498.40** | Spread over 2,080 paid hours that is $23.80 an hour, about 19% above the wage. If the person is productive for 1,920 hours after vacation and holidays, the cost per productive hour is $25.78. ### Costs this leaves out Recruiting, training time, equipment, software and overtime are not in the total unless you enter them under other yearly costs. Do it yourself ### Hiring Your First Employee in New Jersey Kit Go from no employees to a correct first paycheck without missing a registration or a deadline. [See what's inside ($25)](/toolkits/hiring-your-first-employee-kit) [Free sample](/toolkits/hiring-your-first-employee-kit#free-starter)14-day full refund Keep this calculator on your phone: [Add MCC Money to your phone](/tools/mcc-money-app). It's free, works offline and holds 62 calculators. ## Want payroll and books handled right? [See bookkeeping](/bookkeeping/)[Call (908) 444-6373](tel:+19084446373)