A base salary is never the full cost of an employee — mandatory payroll taxes and insurance, plus whatever benefits an employer offers, sit on top of it.
How it works
Mandatory costs (payroll taxes, workers’ comp) plus benefits are totaled and divided by base salary to get a burden rate; adding that total back to the salary gives the true annual cost. The SBA’s own rule of thumb puts the multiplier typically between 1.25 and 1.4 times salary.
What this does not include
This totals the specific costs entered rather than assuming the SBA’s rule-of-thumb range applies automatically — actual burden varies a great deal by state, industry, and the specific benefits a business offers, which the source itself notes.
How to use this calculator
- Enter base salary.
- Enter mandatory payroll taxes and insurance, and any benefits costs.
Frequently asked questions
What counts as a mandatory cost?
Employer-side FICA, FUTA and state unemployment taxes, and workers’ compensation insurance — costs required regardless of what benefits a business chooses to offer.
Why does the SBA cite a 1.25 to 1.4 range?
As a rough planning rule of thumb — this calculator computes the actual figure from real numbers entered rather than assuming that range applies to every business.
Are payroll taxes tax-deductible to the employer?
Yes, per the SBA source — which can offset some of the burden cost, though this calculator shows the pre-deduction total cost, not an after-tax-benefit figure.
