How this number is calculated

HireCost adds three layers on top of the salary you enter: mandatory federal payroll taxes, mandatory state unemployment insurance, and any optional benefits you turn on. The result is the fully-loaded annual cost of one new hire — not a team total, and not a paycheck/take-home estimate for the employee.

Federal payroll taxes

Every employer pays these on top of wages, regardless of state or industry.

• Employer Social Security — 6.2% of wages, up to the annual wage base ($184,500 for 2026, per the SSA’s 2026 COLA release).
• Employer Medicare — 1.45% of all wages, no cap.
• FUTA (Federal Unemployment) — 6.0% on the first $7,000 of wages, minus a standard 5.4% credit for employers who pay state unemployment on time, netting 0.6% in most states. States with an unpaid federal unemployment-trust-fund loan balance lose part of that credit, which raises the effective FUTA rate for every employer in that state. The U.S. Department of Labor doesn’t finalize each year’s credit-reduction states until after November 10, so where we apply a projected add-on (e.g. California for 2026), it’s flagged as an estimate in the calculator.

Source: Social Security Administration (SSA) 2026 COLA release; IRS Form 940 instructions; U.S. Department of Labor.

State unemployment insurance (SUI)

This is the one line that genuinely varies by state: each state labor/workforce agency sets its own new-employer rate and taxable wage base. The calculator assumes your business is a new employer (not yet experience-rated) — an established business’s real rate depends on its own claims history, which this tool can’t know.

California, Texas, Florida, and New York are individually verified against their own agencies (EDD, TWC, DOR, and NY DOL), along with 15 more of the largest states, each carrying its own source citation on its state page and in the calculator’s assumptions panel. The remaining states are compiled from multi-state payroll compliance sources; confirm those against your own state’s labor department before relying on them for an actual hire.

Paid sick & paid leave laws

Modeled today for California (a flat 40 hours/year) and New York (40 or 56 hours/year, tiered by headcount). It’s shown as a separate info line, not added to the total — for a salaried employee it’s already covered by their fixed salary, so summing it in would double-count it. Roughly 15 other states have their own paid sick/paid leave laws not modeled yet, and no city-level ordinance (NYC, SF, Seattle, etc.) is modeled.

Optional benefits

Off by default, and fully editable: health insurance, 401(k) match, bonus, meals, and other perks. Health insurance defaults to the most recent KFF (Kaiser Family Foundation) Employer Health Benefits Survey national-average employer contribution — replace it with your own quote for an exact number. Workers’ compensation defaults to a rough national average by industry, since real per-class-code premium data is commercially licensed, not public; enter your own annual premium if you have one.

What isn’t included

• PTO / paid holidays — discretionary in most states and mostly an opportunity cost rather than an added cash cost for a salaried employee, which makes it a fundamentally different kind of number than the mandatory tax/benefit lines above.
• A precise per-class-code workers’ comp premium (real NCCI class-code rate data is commercially licensed).
• City- or county-level payroll tax and paid-leave ordinances.
• Employee-vs-contractor cost comparisons.

Data year & update schedule

All figures are for the 2026 tax year. We check the Social Security wage base each October, when the SSA announces the following year’s number; FUTA credit-reduction states each November, when the Department of Labor publishes its determination; and state SUI new-employer rates and wage bases as each state’s labor department updates them, typically effective January 1. Every line in the calculator’s assumptions panel and every state page shows the specific source behind that number.

Sources

• Social Security Administration (SSA)
• Internal Revenue Service (IRS) — Form 940 instructions
• U.S. Department of Labor — FUTA credit reduction determinations
• Each state’s unemployment insurance / labor agency — see the relevant state page for the exact citation
• KFF (Kaiser Family Foundation) Employer Health Benefits Survey — health insurance default

None of this is tax, payroll, legal, or accounting advice — see Terms for the full disclaimer. Found a rate that looks wrong? Email contact@hirecostcalc.com.