The taxes are the smallest surprise
Roughly 8–10% on top of wages is predictable. Workers compensation, benefits, a retirement match, an extra EHR seat and the supervision time you can no longer bill are the costs that actually change your model.
2026 tax year · Free tool
Employer payroll tax, what a hire really costs
The salary you quote is not the number that leaves your account. Employer Social Security, Medicare, federal unemployment and your state's unemployment insurance all sit on top of it. Here is the real figure for your first associate clinician, your admin, or your own S-corp salary.
True annual cost of this hire
$0
Enter an annual wage to see the employer taxes on top.
Employer taxes$0
Load on wages0%
Monthly cost$0
Employer-side taxes, line by line
These are on top of the wage, the employee's own share is withheld from their pay.
Gross wages$0
Employer Social Security6.2% up to the wage base$0
Employer Medicare1.45% with no ceiling$0
FUTAFederal unemployment$0
State unemployment (SUI)Varies by state$0
Total employer payroll tax$0
True cost of hire$0
Wage plus employer taxes
The wage dominates the bar, but the sliver on the right is real money leaving your account every payroll run.
For context: the employee side
Withheld from their gross pay, so it is not an added cost to you, but it is why their take-home looks smaller than the offer letter.
Employee FICA withheld6.2% Social Security + 1.45% Medicare$0
Combined FICA into the systemBoth halves together$0
Educational estimate only, not tax, legal, or accounting advice. Every situation is different; book a consultation for guidance specific to you.
Assumptions used in this calculator
These are the exact 2026 figures this calculator applies.
- Tax year 2026
- Employer Social Security 6.2%
- Social Security wage base $184,500
- Employer Medicare 1.45%
- Medicare wage ceiling None
- FUTA effective rate 0.6%
- FUTA wage base $7,000
- Maximum FUTA per employee $42
- Default SUI rate 2.7% (editable)
- Default SUI wage base $12,000 (editable)
State unemployment varies by state. Both the rate and the wage base are set by your state and your specific rate depends on your experience rating, the defaults here are illustrative placeholders, not a quoted rate. The FUTA figure assumes the full 5.4% state credit, which applies when state unemployment tax is paid on time and your state is not a credit-reduction state that year. Not modeled: workers compensation insurance, health and dental benefits, retirement plan matching, state disability and paid-family-leave contributions, local payroll or commuter taxes, payroll processing fees, the 0.9% Additional Medicare Tax withheld from high earners (an employee cost, never matched by the employer), equipment, software licenses and recruiting costs.
Before you make the offer
Three things practice owners underestimate about a first hire
Payroll tax is the visible part. These are the parts that catch group-practice owners in year one.
Classification is not a preference
Whether someone is a contractor or an employee turns on how the work is controlled, not on what the agreement says or what everyone else in your field does. Getting it wrong means back taxes, penalties and interest, and it is one of the most common findings in a practice audit.
Payroll registration is state by state
Hiring in a new state generally means registering for withholding and unemployment there, even if your practice is entirely virtual. Each registration has its own timeline, and the penalties for filing late are per return, not per year.
Related service
Set payroll up once, properly, and stop thinking about it
We handle employee onboarding and payroll system setup, integrate it with your accounting so the books stay clean, and keep 1099 and contractor compliance in order. We work in Gusto, ADP, Paychex, QuickBooks Payroll and Workday, and we are Gusto People Advisor certified.
Questions, answered
About employer payroll taxes
What payroll taxes does an employer actually pay?
Four. Employer Social Security at 6.2% up to the $184,500 wage base, employer Medicare at 1.45% with no ceiling, federal unemployment at an effective 0.6% on the first $7,000 of wages, and state unemployment insurance at a rate and wage base your state sets. The employee pays their own matching 6.2% and 1.45% out of gross pay, that is withheld from them, not an extra cost to you.
Why is FUTA 0.6% and not 6%?
The gross federal rate is 6% on the first $7,000 of wages, but employers who pay state unemployment tax on time earn a 5.4% credit, bringing the effective rate to 0.6%, a maximum of $42 per employee per year. Some states are designated credit-reduction states in some years, which raises the effective rate for employers there.
Why do I have to enter my own state unemployment rate?
Because it varies enormously. Both the rate and the wage base are set state by state, and your specific rate depends on your experience rating, new employers get a standard starting rate that moves over time based on claims history. The defaults here are illustrative placeholders, not your rate. Find yours on the annual rate notice from your state unemployment agency.
Does this include workers compensation or benefits?
No. This models statutory payroll taxes only. Workers compensation, health benefits, retirement matching, state disability and paid-family-leave contributions, payroll processing fees, equipment and software are all real costs of a hire and none of them appear here. Budget another meaningful layer on top.
Do these taxes apply to contractors?
No, and that gap is exactly why worker classification gets scrutinised. You do not pay employer payroll taxes on a genuine 1099 contractor. But misclassifying an employee as a contractor to avoid them exposes you to back taxes, penalties and interest, and the tests are behavioral rather than a matter of what the agreement says.
How does this change if I am an S corporation paying myself?
It applies to you too. Your own reasonable salary carries employer Social Security, Medicare, FUTA and state unemployment exactly as any other employee's would. That employer-side cost is part of why an S corporation election has to clear a genuine hurdle before it saves anything, see the S Corp Strategy Report.
My employee earns more than the Social Security wage base. What happens?
Employer Social Security stops at $184,500 of wages for 2026, the maximum employer share is $11,439.00. Medicare keeps going at 1.45% on every dollar. The 0.9% Additional Medicare Tax that kicks in above $200,000 is withheld from the employee only; you never match it.