What this measures
A salary is only part of what an employee costs a business. This calculator adds payroll taxes, benefits and overhead on top of the salary, so you can see the real annual cost of a hire before you make an offer, not after the first payroll run surprises you.
You might know this figure by a different name depending on your industry. Accountants and construction estimators often call it a labor cost or a burden rate, and the percentage added on top of salary is sometimes called a burdened labor rate. It's the same number either way, just different vocabulary for the same question: what does this person actually cost, beyond their paycheck.
The formula
The math behind the numbers above is simple once it's broken down. Start with the salary, then add the costs that come with employing someone.
If you're hiring someone new, add recruiting and onboarding costs on top for the first year only, since those don't repeat every year after that.
A quick example
Say you're offering a base salary of $65,000. Using the standard defaults, payroll taxes, benefits and overhead add up to about $19,500, which brings the annual cost to roughly $84,500. That works out to about $7,040 a month, before counting any one time hiring costs.
Frequently asked questions
What counts as the true cost of an employee?
It's the salary plus payroll taxes, benefits like health cover and retirement, and a share of overhead such as equipment, software and office space. If you're hiring right now, one time recruiting and training costs belong in the first year too.
Why is the total so much higher than the salary I'm offering?
Because taxes, benefits and overhead typically add 15% to 45% on top of a salary. A $60,000 offer can easily turn into $69,000 to $87,000 once everything is included, which is exactly why it's worth checking before you set a budget.
What percentages should I use?
The defaults are a reasonable starting point, but payroll tax rates and typical benefits vary a lot from one country to the next, and even between states or provinces. If you know your own numbers, switch to Advanced mode and swap them in for a more accurate result.
Should I include one time hiring costs every year?
No, recruiting and onboarding are usually a one off cost in an employee's first year. After that, the ongoing annual cost, without those one time costs, is the number worth using for future budgets.
Can I compare two roles or candidates at once?
Yes. Select "Compare a second role" above and you'll get two calculators side by side, along with a line summarising how much more or less one role costs than the other.
Is this the same as figuring out full time equivalent headcount?
Not quite. Full time equivalent (FTE) tells you how many people or hours you have, while this tool tells you what those people cost. The two are useful together but they answer different questions.
What's a burden rate, and is it different from this?
No, it's the same thing under a different name. A burden rate, a burdened labor rate, and a fully loaded labor cost all mean the same as the "true annual cost" this tool calculates, salary plus everything that comes with employing someone. Construction and manufacturing tend to say burden rate, HR and recruiting tend to say total cost of employment, and accounting sometimes says fully loaded cost. Pick whichever term your team already uses.
Does this work for restaurants, construction, or other specific industries?
Yes. The formula doesn't change by industry, salary plus taxes, benefits and overhead is the same math whether you're staffing a kitchen, a job site, or an office. What changes is which percentages are realistic for you, so use Advanced mode to swap in your own numbers if your industry runs higher on workers' comp, tools, or other overhead than the defaults assume.
Can I get this as an Excel spreadsheet instead?
You could build one, but a live calculator has a real advantage here: no formulas to accidentally break, no version to keep track of, and it works the same on your phone as it does on a laptop. Everything on this page recalculates instantly as you type, which is usually faster than opening a spreadsheet and finding the right cell.
What if my company uses a PEO?
A PEO (professional employer organization) typically charges its own fee on top of the employee's actual cost, so treat this calculator's result as the underlying cost of the employee, then add whatever your PEO bills separately. The two numbers answer different questions: this one is what the person costs, the PEO fee is what outsourcing that administration costs you.