Curious about the employee side? See what this same $85K looks like after federal, state, and FICA taxes.
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For HR & Finance · IRS/SSA 2026 Rates

Employer Cost Estimator

What does an employee actually cost beyond their salary? See the full price tag of putting someone on payroll — including employer FICA, Medicare, FUTA, and benefits.

Example: $85,000 salary in Texas → $91,545 total employer cost · 1.077× salary

Most hiring managers think about salary. This estimator shows you what every offer letter actually costs — including FICA, FUTA, and benefits you may not have budgeted for.
Based on IRS Pub 15-T · SSA Contribution Base · DOL ETA FUTA · Methodology
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Your total employer cost
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per year
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Employer cost breakdown

Base salary
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Employer FICA (Social Security + Medicare)
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FUTA
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Health insurance
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401(k) employer match
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Total
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Add $0 in employer taxes · $0 in benefits

FICA + FUTA calculation details

Social Security is 6.2% of salary, capped at the 2026 SSA wage base of $184,500. Medicare is 1.45% of full salary (uncapped). FUTA is 0.6% on the first $7,000 of wages — the maximum is $42 per employee per year in non-credit-reduction states. Additional Medicare is $0 for employers — it's withheld from the employee's wages above $200,000 (per IRS Topic 560).

Benefits breakdown

This calculator treats your two benefits inputs as fully employer-paid: monthly health contribution × 12, and 401(k) match as a percentage of salary. Workers' compensation, state disability, and other payroll taxes are out of scope for v1.

Per-pay-period view

Salary per pay period: —

Employer taxes per pay period: —

Benefits per pay period: —

Total per pay period: —

Your $85,000 offer actually costs your organization$91,545 per year — $6,545 more than base salary. That's employer FICA and FUTA, taxes you pay on top of every dollar of wages. They don't show up on the offer letter. They show up in your budget.

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How this calculator works

This calculator uses IRS Publication 15-T for FICA rates, the SSA contribution base for the Social Security wage base, and DOL ETA guidance for FUTA. State unemployment insurance rates are not yet integrated (planned v1.1).

Includes

  • Social Security capped at the 2026 wage base of $184,500
  • Medicare at 1.45% on full salary (uncapped)
  • Additional Medicare: $0 employer cost — withheld from employee wages above $200,000 (no employer match)
  • FUTA at 0.6% on the first $7,000 of wages ($42 maximum per employee)
  • Health and 401(k) costs from the contribution amounts you enter

Does not include

  • Workers' compensation (planned Phase 2)
  • State disability insurance
  • Other payroll taxes (e.g., SUTA, local taxes)

This is an estimator, not a replacement for payroll tax advice. Consult a CPA or payroll professional for precise calculations.

Every offer letter has two numbers. The one on the page — and the one that hits your budget.

Most hiring managers and CFOs know there's a gap between salary and total employment cost. Fewer know exactly what fills it. Here's the math behind the gap.

FICA alone adds 7.65% on top of every dollar you pay in wages. FUTA adds up to $42 per employee per year after the standard 5.4% state UI credit. Health benefits and 401(k) matches — if you offer them — can push the true cost 15–25% above the salary figure.

This estimator uses IRS Publication 15-T rates and SSA wage base figures to calculate your actual cost of employment.

Questions answered

Questions answered

What taxes do employers pay besides salary?
When you extend an offer, you're signing up for more than the salary number on the letter. As an employer, you're also paying Social Security and Medicare taxes — 6.2% and 1.45% of each employee's wages, respectively. This is FICA, and the employer portion is a true additional cost, not a withholding. There's also a 0.9% Additional Medicare Tax on wages above $200,000 — but this is withheld from the employee's wages, not paid as an additional employer cost. On the federal level, FUTA adds 0.6% on the first $7,000 of wages per employee — capped at $42 per year. States layer their own unemployment insurance on top of this.
What is the employer FICA rate?
The combined employer FICA rate is 7.65% of wages. Social Security runs 6.2% and has a wage base cap — for 2026, that's $184,500. An employee earning $200,000 doesn't trigger Social Security tax on the dollars above $184,500. Medicare runs 1.45% with no cap. The 0.9% Additional Medicare Tax on wages above $200,000 is withheld from the employee's wages, not paid as an additional employer cost.
How is FUTA tax calculated?
FUTA is 0.6% of the first $7,000 of each employee's annual wages (the effective rate after 5.4% state UI credit). The maximum FUTA per employee is $7,000 × 0.006 = $42 per year. For employees earning less than $7,000, FUTA is proportional to actual wages. Most employers qualify for the 5.4% credit against their state UI contributions. Some states with outstanding UI loans lose their credit reduction, which means employers in those states pay the full 6.0% (max $420).
Is health insurance included in employer cost?
Health insurance isn't a tax, but it's often the largest voluntary employer expense. The average employer contribution for family coverage runs $18,000–$20,000 per year (Kaiser Family Foundation, 2025). For individual coverage, the average is roughly $7,500 per year. Enter your actual monthly contribution to see the full picture. Benefits are also one of the most effective retention tools available — employees who rate their benefits highly are significantly less likely to leave.
What is the 401(k) match cost?
The average employer 401(k) match is about 4.7% of salary (Plan Sponsor Council of America). For an $85,000 employee, that's $3,995 per year in employer contributions. Common structures: 50% match up to 6% of salary ($2,550/year for $85K), dollar-for-dollar up to 3% ($2,550/year), or 100% match up to 4% ($3,400/year). Different formulas produce different costs — enter your actual match formula to see what it adds to your employment cost.
How does overtime affect employer cost?
For non-exempt employees, overtime pay runs time-and-a-half. Every overtime hour costs 1.5× the regular rate in wages — plus employer FICA on top. An employee working 10 hours of overtime per week at $50/hour regular rate costs the employer $750/week in wages and roughly $57 in employer FICA on the overtime portion, compared to $500/week and $38.25 in FICA for regular hours.
What is the additional Medicare tax threshold?
The Additional Medicare Tax is 0.9% on wages above $200,000 for single filers ($250,000 for married filing jointly). For employers, this is a withholding obligation on the employee's wages — NOT an additional employer cost. The employer must withhold 0.9% from the employee's pay above the threshold, but does not pay an extra 0.9% on top of their 1.45% Medicare contribution.
Does this tool include workers' compensation?
Not yet. Workers' compensation rates vary by industry classification (NCCI class codes) and typically run 0.5–5.0% of payroll depending on the job type. Office workers usually fall under 0.5%, while construction or manufacturing roles can exceed 5%. Workers' comp is planned for a future version. For budgeting now, estimate your annual workers' comp premium as a percentage of payroll and add it to the estimate manually.

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Wahyu Agustiar — Independent Salary Data Researcher
Wahyu Agustiar
Independent Salary Data ResearcherPublished Jan 15, 2024Updated Oct 13, 2026

Maintained by the author using IRS Publication 15-T, SSA wage-base announcements, and BLS OEWS data. All calculator formulas are deterministic JavaScript — no AI inference in the numbers. Content is reviewed for accuracy when tax figures are updated annually. See Methodology · Author Profile