🧮 Payroll Tax Calculator for Small Business Owners
When you hire, you pay the salary AND the employer's share of taxes on it: the FICA match, federal and state unemployment, plus whatever benefits you offer. The rule of thumb says 1.25 to 1.4 times salary, but a rule of thumb cannot sign your payroll. Here is your specific number.
Your state assigns this to your business. New employers commonly start between 2 and 4 percent; the notice from your state has the exact figure.
SUTA only applies to the first slice of each salary. Many states use $7,000 to $15,000; check your state's rate notice.
True annual cost of this employee
$54,741
Employer payroll taxes per year
$3,741
Times the salary
1.22x
True cost per month
$4,562
A $45,000 salary really costs you $54,741 a year (1.22 times the salary): $3,741 of employer taxes plus $6,000 of benefits on top of the wage. Budget $4,562 a month for this hire, and remember the hire only makes sense if they help generate meaningfully more than that.
Estimates for planning, not financial advice. Your real numbers will vary; that is exactly why you track them.
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The full picture of a hire includes tools, space, and ramp-up time. Run the complete version and see whether the hire pays for itself.
See the full true-cost picture →Good questions about this math
What taxes does an employer pay on top of salary?
Three main ones. The FICA match: 7.65 percent of wages (6.2 percent Social Security plus 1.45 percent Medicare), matching what the employee pays. FUTA: federal unemployment, effectively 0.6 percent of the first $7,000 after the standard credit. SUTA: state unemployment, at a rate your state assigns to your business, applied to your state's wage base.
Where does the 1.25 to 1.4 times salary rule come from?
Payroll taxes add roughly 8 to 10 percent, benefits commonly add 10 to 25 percent, and equipment, software, and space add the rest. Your multiplier above is built from your actual numbers; add a line for tools and workspace mentally if you want the fully loaded figure.
Does the Social Security match ever stop?
Yes. The 6.2 percent Social Security portion only applies up to the annual wage cap (set each year by the government, in the high $100,000s). The 1.45 percent Medicare portion has no cap. For most small business salaries the full 7.65 percent applies to every dollar.