Payroll Cost Calculator

Find out what an employee really costs beyond their salary — employer payroll tax, benefits and overhead all add up.

What this calculator does

Adds employer payroll tax, benefits and overhead on top of gross salary to show the real cost of hiring someone.
Uses your own payroll tax rate rather than a hardcoded default — employer costs vary enormously by country, so a single built-in number would be wrong for most readers.
Shows the result as both a total figure and a percentage above the advertised salary.

Salary is the starting point, not the whole cost

The U.S. Small Business Administration's rule of thumb is that the true cost of an employee runs 1.25 to 1.4 times their base salary once employer taxes, benefits and overhead are counted — a €40,000 hire can genuinely cost €50,000–€56,000 once everything is added up. Budgeting off salary alone is one of the most common hiring-cost mistakes, and it's exactly what leads businesses to advertise a role at a rate they can't actually sustain once the real cost lands.

Employer payroll tax varies enormously by country

This is why the rate field is left for you to fill in rather than baked into the calculator. In the UK, employer National Insurance is 15% on salary above the £5,000 secondary threshold. In the US, employer FICA is a combined 7.65% (6.2% Social Security + 1.45% Medicare), plus state unemployment insurance on top, which varies by state. Some countries' employer contributions run far higher still. Use your own country's actual published rate, not a number you've seen quoted for somewhere else.

One simplification worth knowing: this calculator applies your rate to the full salary, not just the portion above a threshold like the UK's £5,000. That slightly overstates the tax — for a more precise figure, divide your actual annual employer tax bill by the full salary and enter that effective rate instead.

Benefits are often mandatory, not optional

In the UK, for example, employers must contribute a minimum of 3% to an auto-enrolled employee's pension by law — that's not a perk you can skip to save money, it's a legal floor. Health insurance, dental, and similar benefits sit on top of that, and even generous policies like unlimited holiday have a real cost: someone not working is still someone you're paying.

Overhead is easy to forget until it adds up

A laptop, monitor, software licenses, a share of office or desk space, recruitment costs, and onboarding time are all real costs of having someone on staff, even though none of them appear on a payslip. None of these are large individually, but skipping them consistently understates what a hire actually costs a business.

Use the percentage, not just the total

The "more than salary alone" figure is often more useful than the raw total — it's a portable number you can apply to any future salary figure without recalculating everything from scratch, whether you're comparing a raise, planning how many people a budget can actually support, or pricing services against what staff genuinely cost to employ.

A few places this number actually gets used

Before posting a job at a given salary, running it through this calculator first shows whether the business can really afford the true cost, not just the advertised figure. The same logic applies to a raise request — a €3,000 increase rarely costs exactly €3,000 once payroll tax and any percentage-based benefits scale with it. And if a business bills clients for staff time, the true hourly cost of an employee (true annual cost divided by billable hours) is the real number to price services against, not the salary alone.

FAQ

Why isn't salary the real cost of hiring someone?

Because employer payroll taxes, benefits and overhead all sit on top of it. The U.S. Small Business Administration puts the typical true cost at 1.25 to 1.4 times the base salary once everything is counted.

What employer payroll tax rate should I use?

It depends entirely on your country. In the UK, employer National Insurance is 15% on salary above the £5,000 secondary threshold (GOV.UK, 2025/26 and 2026/27). In the US, employer FICA is 7.65% (6.2% Social Security + 1.45% Medicare), plus state unemployment insurance which varies by state. Use your own country's actual rate, not a number copied from elsewhere.

What counts as "benefits" in this calculator?

Anything beyond base salary and mandatory payroll tax: pension or retirement contributions, health insurance, dental, life insurance, and similar. In the UK, minimum 3% employer pension contribution is mandatory by law once an employee is auto-enrolled, not optional.

What "other overhead" should I include?

Equipment (laptop, monitor), software licenses, desk or office space, recruitment costs, and onboarding or training time. These are real costs of having the person on staff, even though they don't show up on a payslip.

How much more does an employee typically cost than their salary?

The U.S. Small Business Administration's rule of thumb is 1.25 to 1.4 times base salary, i.e. 25-40% more. The real number varies a lot by country — employer costs on top of salary can run from roughly 7% in some places to well over double the salary in others.