# Employee Cost Calculator

> Calculate the true fully-burdened cost of an employee including taxes, benefits, and overhead

**Category:** Finance
**Keywords:** employee cost, burden rate, fully burdened cost, payroll tax, benefits cost, employer cost, total compensation, overhead, HR, salary calculator
**URL:** https://complete.tools/employee-cost-calculator

## What makes up the burden rate?

The **burden rate** measures how much an employee costs above and beyond their base salary, expressed as a percentage. A burden rate of 35% on a $75,000 salary means the employee actually costs $101,250 per year.

The burden rate includes several categories:

- **Employer payroll taxes**: FICA (Social Security and Medicare at 7.65%), FUTA (Federal Unemployment at ~0.6%), and SUTA (State Unemployment, which varies by state from 0.5% to 5%+). Combined, these typically total 8% to 12% of salary.
- **Health insurance**: The average employer contribution for a single employee plan is roughly $7,000 to $8,000 per year, while family coverage can exceed $16,000.
- **Retirement contributions**: Employer 401(k) matches commonly range from 3% to 6% of salary.
- **Paid time off**: Vacation days, sick leave, and holidays represent salary paid for non-productive time. At 25 PTO days, this adds roughly 10% to the cost.
- **Other benefits**: Life insurance, short- and long-term disability, professional development, and equipment allowances.
- **Overhead**: Office space, utilities, IT infrastructure, HR administration, and management time.

## How the calculations work

**Formulas:**

```
Payroll Tax Cost = Base Salary x Tax Rate
Retirement Cost = Base Salary x Match Rate
PTO Cost = (Base Salary / 260 work days) x PTO Days
Total Benefits = Health Insurance + Retirement + PTO Cost + Other Benefits
Overhead Cost = Base Salary x Overhead Rate
Total Cost = Base Salary + Payroll Taxes + Total Benefits + Overhead
```

The **effective hourly rate** divides the total annual cost by actual working hours (2,080 standard hours minus PTO hours). This gives a more realistic picture of what each productive hour costs the employer.

The **burden rate percentage** is calculated as: ((Total Cost - Salary) / Salary) x 100. Most employers see burden rates between 25% and 40%, meaning the total cost is 1.25x to 1.4x the base salary.

## Who should use this calculator

- **Business owners and CFOs** planning annual budgets and forecasting labor costs for the coming year
- **Hiring managers** building a business case for a new position and needing to show the full cost
- **Freelancers and consultants** setting hourly rates that match or exceed what an equivalent employee would cost
- **HR professionals** benchmarking total compensation packages against industry standards
- **Project managers** estimating labor costs for bids, proposals, and project budgets
- **Startup founders** determining runway and burn rate with accurate headcount costs

## How to use

1. Enter the employee's base annual salary
2. Adjust the employer payroll tax rate if it differs from the 10% default (varies by state)
3. Enter the annual health insurance contribution for the coverage level (single or family)
4. Set the retirement match percentage your company offers
5. Enter total paid time off days including vacation, sick leave, and company holidays
6. Add any other annual benefit costs such as life insurance, training budgets, or equipment
7. Set the overhead rate to reflect your facility and administrative costs
8. Click Calculate Total Cost to see the complete breakdown

## FAQs

**Q:** What is a typical burden rate for an employee?


**A:** Most employers see a burden rate between 25% and 40% above the base salary. This means an employee with a $70,000 salary typically costs $87,500 to $98,000 per year in total. Companies with generous benefits packages or expensive office locations may see rates closer to 50% or higher.


**Q:** Why does PTO count as a cost?


**A:** When an employee takes paid time off, the company pays their full salary but receives no productive work in return. The PTO cost represents the salary paid during non-working days. For an employee earning $75,000 with 25 PTO days, that equals roughly $7,212 in paid non-productive time.


**Q:** How do I estimate overhead costs?


**A:** Overhead includes office rent allocated per employee, utilities, IT equipment and support, furniture, office supplies, and administrative staff costs. A common rule of thumb is 10% to 20% of salary, though this varies significantly. Remote employees typically have lower overhead (5% to 10%) while employees in premium office space may be 25% or more.


**Q:** Should I include training costs?


**A:** Yes. Onboarding, ongoing professional development, conference attendance, and certification costs are real expenses that should be factored in. These typically fall in the Other Benefits category and can range from $1,000 to $5,000+ per employee annually.


**Q:** How does this differ from total compensation?


**A:** Total compensation is what the employee receives (salary + benefits they use). The fully-burdened cost is what the employer pays, which includes items the employee never sees, like the employer's share of payroll taxes, overhead, and administrative costs.


**Q:** What is the effective hourly rate?


**A:** The effective hourly rate divides the total annual cost by the number of actual productive working hours (2,080 standard hours minus PTO hours). This tells you what each hour of actual work costs the company, which is useful for project billing and contractor comparisons.

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*Generated from [complete.tools/employee-cost-calculator](https://complete.tools/employee-cost-calculator)*