Methodology: Employee Cost Calculator

1. Scope

Calculates the fully-loaded annual cost of a US employee: base salary + employer-side payroll taxes + benefits + overhead allocation. It uses US federal rates and does not model state unemployment insurance variations in detail.

2. Inputs and outputs

Inputs

baseSalary number (currency/year)
employerTaxRate percent default: 7.65

FICA employer portion.
benefitsPercent percent default: 25

Health, retirement, leave — BLS ECEC average.
overheadPerHead number (currency/year) default: 0

Software licences, equipment, workspace.

Outputs

employerTaxes

baseSalary × employerTaxRate.
benefits

baseSalary × benefitsPercent.
totalCost

salary + taxes + benefits + overhead.
multiplier

totalCost / salary.

Engine source: src/lib/employee-cost-calculator/engine.ts

3. Formula / scoring logic

employer_taxes = salary * employer_tax_rate
benefits       = salary * benefits_pct
total_cost     = salary + employer_taxes + benefits + overhead
multiplier     = total_cost / salary

4. Assumptions

FICA employer portion is 7.65% up to the Social Security wage base (2024: $168,600 for OASDI) — the tool applies the flat rate and does not cap.
Benefits default 25% is the BLS ECEC private-industry average; actual costs vary 15–40% depending on plan richness.
State unemployment insurance (SUTA) and federal unemployment (FUTA) are folded into the single employer-tax rate by default.

5. Data sources

US BLS Employer Costs for Employee Compensation (ECEC) as of 2024
US SSA 2024 wage base and tax rates as of 2024

6. Known limitations

US-only defaults. For European employers, substitute Eurostat labour-cost figures (see Eurostat LCI).
Does not model equity compensation, bonuses, or severance accruals.
Contractor (1099) comparisons belong in the Contractor vs Employee Calculator.

7. Reproducibility

Input
baseSalary = $120,000, employerTaxRate = 7.65%, benefitsPercent = 25%, overhead = $5,000.

Expected output
taxes = $9,180, benefits = $30,000, totalCost = $164,180, multiplier ≈ 1.37×.

8. Change log

2026-04-24 methodology page first published.