2026 Fully Burdened Labor Cost Calculator
Fully burdened labor cost is the total annual expense of employing one person, including mandatory payroll taxes (FICA, FUTA, SUI), workers’ compensation, benefits, PTO, and overhead. In 2026, the average U.S. employee costs 1.25x–1.45x their base salary once all expenses are counted. This calculator shows your exact all-in cost and the minimum billable rate you need to be profitable.
How Fully Burdened Labor Cost Is Calculated
The burdened labor cost formula sums three layers of cost on top of base salary: mandatory taxes, benefit expenses, and overhead allocation. Each layer is expressed as a percentage of base salary for easy benchmarking.
| Cost Layer | 2026 Rate / Amount |
|---|---|
| FICA (SS + Medicare) | 7.65% of wages (no cap on Medicare) |
| FUTA | 0.6% on first $7,000 = $42/year max |
| SUI | 2–5% (state-dependent, history-based) |
| Health Insurance (employer portion) | $600–$800/month per employee |
| Workers’ Comp | 0.5% (office) to 10%+ (construction) |
The billable rate formula ensures your service pricing covers all costs: Billable Rate = Burdened Hourly Cost ÷ (1 − Target Margin). At a 30% target margin and $65/hr burdened cost, your minimum billable rate is $93/hr.
⚠️ Expert Pro-Tip
Workers’ comp is the most expensive hidden cost most employers don’t benchmark by role. A $50k office worker with a 0.5% WC rate costs $250/year in WC premiums. A $50k roofer at a 12% WC rate costs $6,000/year — 24x more. If your service business employs both types of workers on the same general liability policy, you may be cross-subsidizing risk without knowing it. Run this calculator separately for each labor category in your business.
2026 Fully Burdened Labor Cost Calculator
Find the true cost of an employee — and the billable rate you need to stay profitable.
Mandatory Payroll Taxes (2026)
FICA SS (6.2% / $184,500 cap) and Medicare (1.45%) are auto-calculated.
Benefits & Indirect Costs
Billable Rate Calculator
The Real Numbers
Base Hourly Rate
$36.06
what they see
True Hourly Cost
$52.52
what you actually pay
Annual Cost Breakdown
Payroll Tax Detail
Recommended Billable Rate
$75.02/hr
At 30% margin — covers $102,931/yr + $44,113 profit
2026 Industry Burden Rate Benchmarks
| Industry | Typical Burden Rate | Common Roles |
|---|---|---|
| Office / Administrative | 28–32% | Accountants, marketers, HR staff |
| Technology / Software | 30–35% | Developers, engineers, data analysts |
| Healthcare | 35–42% | Medical staff, therapists, lab techs |
| Manufacturing | 35–45% | Skilled trades, machine operators |
| Construction | 40–52% | Electricians, plumbers, laborers |
| Retail / Food Service | 25–32% | Cashiers, servers, stock associates |
Based on your results — what to do next:
Can your margins absorb this cost?
True employee cost is $102,931/yr. Run this against your revenue to see the margin impact.
Would AI automation beat ${fmt(results.totalCost)}/yr?
Compare the fully-burdened cost of this role against AI tooling. See at what cost the math flips.
Cut the employer FICA portion
An S-Corp election shifts some income away from self-employment tax — reducing the FICA burden in your cost structure.