How much does a new hire or pay raise really cost an employer?
Calculating the cost of a new hire or a pay raise as an employer goes beyond just salary. There are several components you’ll want to factor in to get a full picture of the financial impact.
Find your Employer Taxes breakdown.
You can find your specific EMPLOYER TAXES breakdown on PAGE 3 of the PAYROLL SUMMARY under REPORTING > REPORT ARCHIVE with each payroll. It will also show you the unemployment rates and IDs assigned to your company.
Payroll Cost Calculator
Use our simple spreadsheet to get a rough estimate of what an employer is responsible for and what an employee's net pay might look like. This is NOT all inclusive and individual scenarios may differ based on benefits being offered, etc.
Consider other costs
For new hires, there are other costs associated with bringing someone new on - such as training, benefit costs, equipment costs, etc.
Payroll Tax Breakdown
| Employer Responsibility | Employee Responsibility | |
|---|---|---|
|
Social Security |
Content |
6.2% up to SS Wage limit – 2025 is $176,100 |
|
Medicare |
1.45% |
1.45% |
|
Federal Income Tax |
|
Based off W-4 – flows to personal tax return |
|
Federal Unemployment Tax (FUTA) |
FUTA .6% on first $7k in wages per employee |
|
|
State Income Tax |
|
3.07% (for PA) – flows to personal tax return |
|
State Unemployment Tax |
3.822% on first $10K per employee (start up rate for PA UC) |
0.07% (for PA) |
|
Local Earned Income Tax
|
|
~1% (can vary depending on local residency) – flows to personal tax return |
A note on unemployment taxes
An employer is NOT paying 100% of the unemployment payments a former employee is receiving. Each year, employers receive a tax rate from their state. An increase or decrease in the tax rate is related to how many claims the employer may or may not have. An employer is paying an unemployment tax with each payroll related to their active employees. These taxes have wage limits so that once an employer has paid an employee the wage limit, the tax stops for the year and will restart with the first pay of the following year (i.e. in PA, the wage base is $10,000 so once an employee has been paid $10,000 for the year, the tax will stop).