Cost of an employee calculator (2026 employer payroll taxes)

Employer payroll tax calculator

Pick the state where the employee works and enter annual gross pay. The calculator applies that state's 2026 SUTA wage base and prefills the new employer rate when the state has one simple rate; otherwise the rate field stays blank and the state's rule shows under the result, so type the rate in (see the table below). Replace the rate with the one on your state rate notice if you have one. Add monthly benefits, your workers comp rate and your payroll software fee to see the full yearly cost.

Federal rates: Social Security 6.2% to $184,500, Medicare 1.45%, FUTA 0.6% on $7,000 (IRS, checked October 16, 2026). State rates from each unemployment agency. This is an estimate for budgeting, not a payroll run.

How each line is calculated

Social Security stops when pay reaches $184,500, so the employer share falls for high earners. In 2027 the cap rises to $192,300 (SSA, Oct 14, 2026). The full federal table, with deposit rules and W-2 dates, is on 2026 payroll tax rates.

States where you enter or change the SUTA rate

The calculator prefills the SUTA rate only when a state has one simple new employer rate, for example Texas 2.70% or Florida 2.7%. Where the rate has parts, depends on your industry or changes by quarter, the field stays blank and the state's rule appears under the result. Until you type a rate, the calculator counts state unemployment as $0, so the total is too low. Use these figures:

The full state list is on the SUTA rates by state page.

Worked example: a $60,000 employee in four states

One full-time employee paid $60,000 a year, new employer, 2026 rates. Taxes only, before benefits, workers comp and software.

Adding benefits and software

Say the Texas employer above also offers a $500 a month QSEHRA allowance (under the 2026 cap of $6,450 for self-only coverage) and runs payroll on Gusto Plus for a 10-person team ($80 + 10 x $12 = $200 a month, or $20 per employee). The year looks like this:

• Gross pay: $60,000
• Employer taxes: $4,875
• QSEHRA: $500 x 12 = $6,000
• Payroll software: $20 x 12 = $240
• Workers comp: your carrier's rate x $600 (pay / 100)

Total before workers comp: $71,115, or 18.5% on top of salary. Change the inputs to see how much the benefit choice moves the number compared with taxes.

Payroll software cost per employee

Payroll providers charge a monthly base fee plus a per-person fee, so the cost per employee falls as you grow. Enter the per-employee figure for your team size in the calculator.

Add-ons change this. Patriot charges $12 a month for each additional state, and Gusto Simple covers a single state. See what payroll services cost for add-ons and the best payroll software ranking for how these providers score.

What the calculator leaves out

• FUTA credit reduction. California is on the 2026 potential list at 1.5%. Add it to the SUTA rate as shown in the table.
• State paid leave and disability premiums paid by the employer. Washington PFML (employer pays 28.57% of 1.13% at 50 or more employees, on up to $184,500), New Jersey TDI 0.5% for new employers, Colorado FAMLI 0.88% (split up to 50/50; employers with 9 or fewer employees owe only the 0.44% employee half), Minnesota Paid Leave 0.88% (split up to 50/50) and Delaware Paid Leave 0.80% (employer may pass up to 50% to employees). Enter your share in the benefits field.
• Local payroll taxes. Some cities charge the employer directly, for example Denver's Occupational Privilege Tax of $4.00 per employee per month and San Francisco's business taxes. See Denver payroll taxes and Philadelphia wage tax.
• Retirement match. If you match 401(k) deferrals, add the match to benefits. The 2026 employee deferral limit is $24,500.
• Paid time off, bonuses and overtime. These are pay, not on-costs, but they raise gross pay and every tax line.
• PEO fees. A PEO bills taxes, workers comp and benefits together with an admin fee. Compare on what a PEO costs per employee.

We do not publish a typical benefits or workers comp cost, because we have not found an official source that fits a small employer. Use a broker, carrier or state fund quote. Our workers comp cost guide and small business health insurance guide explain what drives those quotes.

Hiring outside the US?

Use the international employee cost calculator for mandatory employer contributions in 50+ countries plus an EOR fee, and the employer cost by country index to compare them side by side.

Common mistakes when estimating employee cost

1. Adding the employee's 7.65% FICA to your cost. You withhold it from pay; your cost is your own 7.65%.
2. Applying SUTA to all pay. SUTA stops at the state wage base: $7,000 in California, $9,000 in Texas, $78,200 in Washington.
3. Using 0.6% FUTA in California. The potential 2026 credit reduction makes it 2.1%, or $147 per employee.
4. Keeping the new employer rate forever. After 2 to 3 years most states assign an experience rate, which can be far lower or far higher. Check every rate notice.
5. Forgetting the second state. A remote employee in another state usually means a second SUTA account and different rates.