Article
4 min read
Employer Costs for an Employee in the United States (2026 Guide)
Employer of record
Global hiring
Author
Jemima Owen-Jones
Last Update
February 05, 2026
Quick answer: What is the total employer cost for a $100,000 salary in the United States?
For an employee earning $100,000 USD annually in the United States, employers can expect mandatory employer costs of approximately $8,798 USD per year, bringing total compensation costs to $108,798 USD.
Estimated total employer cost (United States): ~8.8% on top of gross salary (example estimate).
Hiring in the United States can help you access world-class talent—whether you’re expanding into the market, building a remote team, or hiring your ideal candidate locally.
But even when two employees earn the same salary, the total employer cost varies by country due to statutory payroll taxes, healthcare-related contributions, and mandatory insurance requirements.
This guide provides a ballpark estimate of the mandatory employer cost of hiring an employee in the United States, using an example salary of $100,000 USD per year.
What’s included in this estimate?
This estimate includes mandatory employer-side statutory costs that may apply when hiring an employee in the United States, such as:
- Medicare employer contribution
- Social Security employer contribution (up to the annual wage base limit)
- Federal unemployment tax (FUTA)
- State unemployment tax (SUTA) (varies by state)
- Workers’ compensation insurance (varies by state and industry)
- Payroll-related state/local taxes (where applicable)
What’s not included in this estimate?
This estimate generally does not include additional costs such as:
- Paid time off (vacation leave)
- Sick leave pay (state or employer policy dependent)
- Private health insurance premiums
- Employer-provided benefits (401(k), dental, vision, etc.)
- Bonuses, equity, or commissions
- Equipment and onboarding expenses
- Costs that vary significantly by state, city, or industry
Why employer costs vary in the United States (and globally)
Employer costs can differ depending on:
- State unemployment tax rates and wage bases
- Workers’ compensation premium rates (industry + state dependent)
- Whether state and local payroll taxes apply
- Whether Social Security wage base limits apply to the employee’s earnings
- Healthcare benefit offerings (outside statutory requirements)
- Currency exchange rate fluctuations (if you pay in a different base currency)
Estimated employer cost breakdown for the United States
Below is an estimated breakdown of mandatory employer costs for hiring an employee in the United States earning $100,000 USD/year.
Example salary used in this estimate
- Annual gross salary: $100,000 USD
Employer mandatory costs (estimated)
| Employer Cost Category | Estimated Annual Cost (USD) | Notes |
|---|---|---|
| Medicare | $1,450 | Federal healthcare payroll contribution (no cap on taxable amount) |
| Social Security | $6,200 | Employer match up to the annual wage base limit |
| Federal Unemployment (FUTA) | $42 | Federal unemployment program contribution |
| Workers’ Compensation | $600 | Varies widely by state and industry |
| Tax Payroll | $380 | Aggregate estimate for state/local payroll-related taxes |
| State Unemployment (SUTA) | $126 | Varies significantly by state |
| Total Estimated Employer Costs | $8,798 | Total mandatory employer cost estimate |
Total compensation cost (salary + mandatory employer costs)
| Total | USD |
|---|---|
| Gross Salary | $100,000 |
| Mandatory Employer Costs | $8,798 |
| Total Compensation Cost | $108,798 |
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FAQs
What costs include employer payroll taxes in the United States?
In the US, employer payroll taxes typically include mandatory contributions such as Social Security, Medicare, and unemployment insurance (federal and state). These employer payroll taxes are paid on top of an employee’s base salary and are a key part of total employment cost.
How much does an employee cost beyond base salary in the US (cost calculation)?
A US employer’s cost calculation usually starts with base salary and adds employer payroll taxes, plus any required insurance costs and optional benefits. In this 2026 cost example, mandatory employer costs add thousands of dollars on top of salary—but the total can be higher depending on benefits packages and insurance rates.
What is unemployment insurance and how does it affect employer costs?
Unemployment insurance is funded through employer payroll taxes at both the federal level (FUTA) and state level (SUTA). Rates vary by state and employer history, so unemployment insurance can meaningfully affect the total cost of employment.
Why do insurance rates vary for US employers?
An employer’s insurance rate can vary based on the employee’s state, job risk level, and industry. For example, workers’ compensation costs are typically higher for physically demanding roles than for office-based roles.
Do minimum wage laws affect employer cost in the US?
Yes. Minimum wage laws directly affect employer costs in the United States. As of 2025, the federal minimum wage is $7.25 per hour, but many states and cities require significantly higher minimum wages—for example, $16+ per hour in parts of California and New York.
Minimum wage rules determine the base salary employers must pay and also influence total payroll costs, since employer payroll taxes (such as Social Security and Medicare) are calculated based on wages.
What employee benefits should employers budget for in the US?
Beyond payroll taxes, employee benefits can be one of the largest additional costs of hiring in the US. Common benefits include health insurance, paid time off, and other benefits packages that vary by company size and industry.
What are common retirement plans offered by US employers?
Many employers offer retirement plans such as a 401(k). While retirement plans are usually optional (not a statutory employer cost), employer matching contributions can significantly increase total compensation costs.
What is a benefit plan and how does it affect total employer cost?
A benefit plan refers to the structured set of benefits an employer provides—such as health insurance, retirement plans, dental/vision coverage, and other perks. A competitive benefit plan often increases total employment costs beyond payroll taxes.
Do larger companies pay more in benefits packages?
Often, yes. Larger companies may offer more comprehensive benefits packages to stay competitive in hiring, including richer health insurance coverage and stronger retirement plan contributions. This can increase total employer costs well beyond mandatory payroll taxes.
What costs include optional benefits vs mandatory costs in the US?
In the US, mandatory costs typically include employer payroll taxes and required insurance contributions. Optional costs often include employee benefits like health insurance, retirement plans, bonuses, and additional perks—these are not always required, but they can strongly influence total compensation costs.
Jemima is a nomadic writer, journalist, and digital marketer with a decade of experience crafting compelling B2B content for a global audience. She is a strong advocate for equal opportunities and is dedicated to shaping the future of work. At Deel, she specializes in thought-leadership content covering global mobility, cross-border compliance, and workplace culture topics.
