How Small Business Payroll Tax Calculator Works
Our free small business payroll tax calculator reveals the true cost of each employee beyond their salary. Most new employers are shocked to discover that a $60,000 salary actually costs $66,000-75,000+ once employer payroll taxes are added — and that is before benefits.
The calculator breaks down every employer-side tax: FICA match (6.2% Social Security up to the $168,600 wage base plus 1.45% Medicare — totaling 7.65% on most salaries), FUTA (Federal Unemployment Tax at 0.6% on the first $7,000 per employee after the state credit), and SUTA (State Unemployment Tax, which varies dramatically by state and your claims history).
You add employees individually with their salaries and the tool calculates per-employee and total employer tax obligations. The stacked bar chart shows exactly how much each tax component adds to each employee's cost, making it easy to see that your highest-paid employees have a lower burden percentage (because SS caps out) while lower-paid workers have a proportionally higher burden.
The industry selector adds an approximate workers' compensation estimate on top of payroll taxes, giving you the complete picture of employer costs. A restaurant with $500,000 in total payroll might spend $55,000-65,000 on employer taxes and insurance alone.
Use this alongside the Contractor vs Employee Cost Calculator calculator to compare the cost of hiring an employee versus an independent contractor, or the Workers' Comp Cost Estimator for a more detailed workers' comp breakdown by classification code.
Key Terms Explained
- Employer FICA Match
- The employer's matching contribution to Social Security (6.2%) and Medicare (1.45%), equal to the amount withheld from the employee's paycheck — totaling 7.65% of wages.
- FUTA (Federal Unemployment Tax)
- A federal tax of 6.0% on the first $7,000 of each employee's wages, reduced to 0.6% in most states that maintain compliant state unemployment programs.
- SUTA (State Unemployment Tax)
- State-level unemployment tax with rates and wage bases that vary widely — from 0.5% to 12%+ depending on state, industry, and your claims history.
- Employer Burden Rate
- The percentage added on top of salary for employer taxes and mandatory insurance. Typically 10-15% for taxes alone, 30-50%+ including benefits.
- Social Security Wage Base
- The maximum amount of earnings subject to Social Security tax — $168,600 in 2026. Earnings above this cap are not subject to the 6.2% SS tax.
- New Employer SUTA Rate
- The default unemployment tax rate assigned to businesses without claims history, typically around 2.7% but varying by state from 1.0% to 5.4%.
Who Needs This Tool
Needs to know the true cost of offering a $70,000 salary to budget accurately and set the right payroll amount in their cash flow projections.
Currently has 3 employees and is planning to hire 5 more — wants to model the total payroll tax impact on cash flow before committing.
Self-employed contractor evaluating whether to hire employees, comparing the cost of a $50,000 employee versus paying a $50,000 contractor.
Needs quick payroll tax estimates for multiple clients across different states without running full payroll calculations.
Methodology & Formulas
Employer FICA = 6.2% × min(salary, $168,600) + 1.45% × salary. FUTA = 0.6% × min(salary, $7,000). SUTA = state new employer rate × min(salary, state wage base). Workers' comp estimate = (salary / 100) × industry rate factor. Total Employer Cost = Salary + FICA + FUTA + SUTA + Workers' Comp. Burden Percentage = (Total Employer Taxes / Salary) × 100. All rates use 2026 federal and state schedules.
Pro Tips
- The employer burden drops for high earners — once salary exceeds $168,600, the 6.2% SS tax stops, reducing the marginal cost of raises above that threshold.
- SUTA rates reward low turnover — every unemployment claim against your account increases your rate for years, so investing in retention saves on taxes.
- Consider hiring in states with lower SUTA rates and wage bases if your employees can work remotely — the savings can be significant for larger teams.
- FUTA is tiny ($42 per employee per year in most states) but forgetting it in budgets is a common small business accounting mistake.
- Offer benefits strategically — many benefits (health insurance, 401k match) are tax-deductible for the employer and not subject to FICA, making them more efficient than equivalent salary.