Free tool · US and Canada · 2026
Employee cost calculator
Before you hire, see what the job really costs: pay plus the employer's payroll taxes, workers' compensation and benefits, per year, per month and per hour. Runs in your browser; nothing is saved.
The employee
Where do they work?
2,080 = 40 hours × 52 weeks. Used for the hourly figure only.
Your state sends your rate each year. 2.7% is a common new-employer rate; many states use something else.
At least $7,000 in every state, and much higher in many. Check your state's unemployment agency.
Set by your insurer or provincial board for your industry. Office work is far lower than construction.
Training, equipment, software seats, anything else that scales with pay.
What they really cost
Gross pay
$55,000.00
Social Security (6.2%)
On the first $184,500 of wages in 2026
$3,410.00
Medicare (1.45%)
On all wages; the 0.9% Additional Medicare Tax has no employer share
$797.50
FUTA (0.6%)
On the first $7,000, assuming the full 5.4% state credit
$42.00
State unemployment (2.7%)
On the first $7,000
$189.00
Workers' compensation (1%)
$550.00
Cost on top of pay
9.1% of gross pay
$4,988.50
Total cost per year
$59,988.50
Per month
$4,999.04
Per paid hour
Pay alone: $26.44 an hour
$28.84
2026 federal rates. Assumes a full year with one employer and on-time state unemployment payments (credit-reduction states pay more FUTA). State and local payroll taxes such as disability or paid leave programs are not included. An estimate, not tax advice.
What goes into the cost of an employee
The salary is only the start. On top of every dollar of pay, an employer pays its own share of payroll taxes, which never shows on the employee's pay stub, plus insurance and benefits. The calculator adds them up for one employee for a full year.
United States, 2026
| Cost | Employer rate | On |
|---|---|---|
| Social Security | 6.2% | The first $184,500 of wages |
| Medicare | 1.45% | All wages (no employer share of the 0.9% Additional Medicare Tax) |
| FUTA (federal unemployment) | 0.6% after the full state credit | The first $7,000 of wages |
| SUTA (state unemployment) | Set by your state | Your state's wage base (at least $7,000) |
| Workers' compensation | Set by your insurer or state fund | Usually per $100 of payroll, by job class |
Some states add more: disability insurance, paid family leave or local payroll taxes. Some of those are withheld from the employee, some are paid by the employer. Check your state's labour or revenue department.
Canada, 2026
| Cost | Employer rate | On | Maximum |
|---|---|---|---|
| CPP | 5.95% | Pay from $3,500 to $74,600 | $4,230.45 |
| CPP2 | 4% | Pay from $74,600 to $85,000 | $416.00 |
| EI | 2.282% (1.4 × 1.63%) | Up to $68,900 | $1,572.30 |
| Quebec: QPP | 6.3% | Pay from $3,500 to $74,600 | $4,479.30 |
| Quebec: QPP2 | 4% | Pay from $74,600 to $85,000 | $416.00 |
| Quebec: EI | 1.82% (1.4 × 1.30%) | Up to $68,900 | $1,253.98 |
| Quebec: QPIP | 0.602% | Up to $103,000 | $620.06 |
Provinces add their own: workers' compensation premiums (WSIB in Ontario, WorkSafeBC, CNESST in Quebec and so on) and, for larger payrolls, a payroll tax. Ontario's Employer Health Tax and British Columbia's Employer Health Tax both start above $1 million of annual payroll; Manitoba's health and post-secondary education levy starts above $2.5 million for 2026. Quebec employers also pay the health services fund. Vacation pay (at least 4% in most provinces) is part of wages; add it to the gross pay if you pay it on top.
How to use the result
- Pricing: the per-hour cost is what an hour of that person's time costs you before overhead. Bill above it. The markup and margin calculator helps set the rate.
- Budgeting: use the per-month figure in your cash-flow plan, and remember that Social Security, CPP and EI stop for the year once an employee reaches the maximum, so the cost is higher early in the year.
- Hire or contract: compare the total with what a contractor would charge. Classify workers by the actual relationship, not by what is cheaper; the IRS and CRA both have tests.
- Break-even: add the total to your fixed costs in the break-even calculator to see how many more sales the hire needs.
Sources
- SSA: Contribution and benefit base (2026: $184,500)
- IRS: Questions and answers for the Additional Medicare Tax
- IRS Publication 15 (2026), Employer's Tax Guide (FUTA, Social Security, Medicare)
- IRS: FUTA credit reduction
- CRA: CPP contribution rates, maximums and exemptions (2026)
- CRA: EI premium rates and maximums (2026)
- ESDC: Canada Employment Insurance Commission sets the 2026 EI premium rate
- Revenu Québec: Maximum pensionable earnings and QPP contribution rate
- Revenu Québec: Maximum insurable earnings and QPIP premium rate
- Ontario: Employer Health Tax
Rates as of October 25, 2026. Canadian figures from the CRA T4127 payroll formulas (July 2026 edition), the same tables our Canadian payroll calculator uses.
Questions
How much does an employee cost on top of their salary?
Employer payroll taxes alone usually add about 8% in the US (7.65% Social Security and Medicare, plus federal and state unemployment) and about 7% to 8% in Canada for a typical wage (CPP and EI). Workers' compensation, benefits, paid time off and equipment push the total well above that. Enter your own figures to see your number.
What is the employer's share of FICA in 2026?
6.2% Social Security on the first $184,500 of each employee's wages and 1.45% Medicare on all wages, for 7.65% on most pay. The extra 0.9% Additional Medicare Tax on wages over $200,000 is withheld from the employee only; the employer does not match it.
Why is FUTA only 0.6%?
The FUTA rate is 6.0% on the first $7,000 of each employee's wages, but employers get a credit of up to 5.4% for paying state unemployment tax on time, leaving 0.6% ($42 a year per employee). In a credit reduction state, the credit is smaller and FUTA costs more.
What is my SUTA rate?
Each state sets its own unemployment tax rate and taxable wage base. New employers get a standard new-employer rate for the first years, then a rate based on their history of layoffs and claims. Your state's unemployment agency sends your rate; enter it with your state's wage base.
How much CPP and EI does an employer pay in Canada?
For 2026 the employer matches the employee's CPP: 5.95% of pay between $3,500 and $74,600 (up to $4,230.45), plus 4% CPP2 on pay between $74,600 and $85,000 (up to $416). Employer EI is 1.4 times the employee premium: 2.282% on up to $68,900 of insurable earnings, a maximum of $1,572.30.
What is different in Quebec?
Quebec employers pay QPP instead of CPP (6.3% of pay between $3,500 and $74,600 in 2026, plus 4% QPP2), a lower EI rate (1.82% employer, because Quebec runs its own parental insurance), and QPIP at 0.602% on up to $103,000. Quebec employers also pay the health services fund and other provincial levies, which this calculator does not include.
Do I have to pay Ontario's Employer Health Tax?
Only if your Ontario payroll is over the $1 million exemption, which most small employers are not (the exemption is not available to private-sector employers with payroll over $5 million). British Columbia's EHT also starts above $1 million of payroll, and Manitoba's health and education levy above $2.5 million for 2026. Enter a rate in the provincial payroll tax field if one applies to you.
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- CRA payroll remittance schedules
General information, not tax or legal advice. Rates and thresholds change; confirm with the IRS, your state, the CRA or Revenu Québec before you rely on them.
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