Employee Cost Calculator
W-2 vs. 1099 comparison guide with cost examples and legal considerations. Understand the financial and compliance differences.
Open the CalculatorPre-configured with your state tax rates. Adjust salary, benefits, and overhead to model your specific hire.
Total Annual Cost
$101,207
Loaded multiplier: 1.27× base salary
Open the interactive calculator to adjust every input and export a PDF report.
The two worker classifications carry fundamentally different cost structures and compliance obligations.
A W-2 employee costs salary plus employer payroll taxes, workers’ comp, benefits, a retirement match, and overhead. A 1099 independent contractor is paid a flat rate with no employer taxes, benefits, or overhead — but typically charges a higher hourly rate and pays their own self-employment tax.
Hold the role constant and compare the annual employer cost of each classification.
| Cost component | W-2 employee | 1099 contractor |
|---|---|---|
| Base pay | $80,000 | $135,200 |
| Employer FICA / FUTA / SUTA | $6,567 | $0 |
| Workers’ comp + benefits + overhead | $14,640 | $0 |
| Total annual employer cost | $101,207 | $135,200 |
Misclassifying an employee as a contractor can trigger back taxes, penalties, and legal liability.
The IRS and state agencies apply behavioral, financial, and relationship tests to determine worker status. Control over how, when, and where work is done points toward employee status. When in doubt, consult an employment attorney — the cost of reclassification can exceed a year of the savings.
Every rate and formula is checked against the issuing agency before publication. Last updated 2026-08-24.
IRS
FICA, FUTA tax rate & wage base
U.S. DOL
FUTA credit, federal wage & hour
State Workforce Agencies
SUTA rates, wage bases, new-employer rates
BLS
Industry salary benchmarks & turnover
The fully loaded cost of an employee is the total annual cost to employ them: base salary plus employer payroll taxes (FICA, FUTA, SUTA), workers’ compensation, benefits, and overhead. Using TrueHireCost’s current default assumptions, an $80,000 employee has an estimated annual employer cost of approximately $101,207. Actual costs vary by state, benefits, workers’ compensation, retirement contributions, and overhead. Under those defaults the loaded multiplier is about 1.27× base salary ($101,207).
TrueHireCost adds employer FICA (7.65%), federal and state unemployment tax, workers’ comp (varies by state and industry), benefits, and overhead to the base salary. You can adjust each input for any U.S. state and industry.
Employers pay 7.65% FICA (6.2% Social Security + 1.45% Medicare), FUTA (up to 0.6% on the first $7,000), state unemployment (SUTA), and state disability insurance where applicable.
Yes. The TrueHireCost employee cost calculator is free to use, requires no sign-up, and works for all 50 U.S. states and 20 major industries.
For Estimation Purposes Only
TrueHireCost provides cost estimates for informational purposes only and is not professional tax, legal, or HR advice. Actual employer costs vary by experience rating, industry classification, carrier, and jurisdiction. Consult a qualified CPA, tax advisor, or HR professional before making hiring or payroll decisions.