Base compensation
Regular pay, overtime, and bonuses establish annual compensation.
regular wages + overtime wages + bonus pay$80,476Calculation methodology
How your true labor cost is calculated
The calculator starts with employee compensation, adds employer-paid taxes and expenses, removes paid hours that cannot be billed to jobs, and divides the total by productive working hours.
Methodology status
Planning model, editable assumptions
- Federal defaults
- 2026
- Federal source
- IRS Publication 15
- State rates
- Entered by the user
- Workers' compensation
- Entered by the user
- Last reviewed
- 2026-08-02
This is a planning calculator, not payroll, insurance, tax, or legal advice. Selecting a state does not apply state-specific calculation modules yet.
Seven-stage flow
From pay rate to billable-rate estimate
Employer payroll taxes
Each payroll tax uses its own entered rate and wage base.
rate x min(taxable wages, wage base)$6,198Insurance, benefits, and job costs
Workers' compensation, coverage, tools, vehicle, training, and custom costs are added separately.
insurance + benefits + job costs$20,792Annual employer cost
The calculator adds wages and all employer-paid burden costs.
annual wages + annual cash burden$107,466Productive hours
Paid holidays, leave, training, and admin time reduce hours available for job work.
paid hours - paid non-billable hours1,988True productive-hour cost
Annual employer cost is divided by productive hours.
annual employer cost / productive hours$54.06/hrSuggested billing rate
Optional markup is applied after cost. It is pricing, not labor burden.
productive cost x (1 + markup)$67.57/hrWorked example
Example: skilled carpenter
The numbers below are generated from the same preset data used by the calculator, so the explanation stays aligned with the tool.
| Base compensation | $80,476 |
|---|---|
| Employer payroll taxes | $6,198 |
| Insurance | $12,828 |
| Benefits and job costs | $7,964 |
| Total employer cost | $107,466 |
| Paid hours | 2,236 |
| Productive hours | 1,988 |
| Productive-hour cost | $54.06/hr |
The employee earns $34.00/hr as base pay, but costs approximately $54.06/hr for each productive hour.
Tax formula
Payroll-tax formula
Some taxes have wage limits; others do not. The calculator applies each entered wage base separately.
tax component = tax rate x min(taxable wages, applicable wage base)total employer payroll tax = Social Security + Medicare + FUTA + SUTA + other employer payroll taxesSimplification note
Bonus and overtime simplification
This calculator treats the entered bonus as annual compensation for planning purposes. Some nondiscretionary bonuses may also affect the employee's legally required overtime regular rate. Verify payroll treatment when applicable.
Result definitions
Understanding your results
Burden rate
The percentage by which productive-hour cost exceeds the worker's base hourly wage.
burden rate = (productive-hour cost - base hourly wage) / base hourly wageProductive utilization
The percentage of paid hours remaining after paid non-billable time is removed.
productive utilization = productive hours / paid hoursPaid-hour cost
Annual employer cost divided by all paid hours, before adjusting for non-billable paid time.
paid-hour cost = annual employer cost / paid hoursProductive-hour cost
Annual employer cost divided by productive hours. This is the core cost result.
productive-hour cost = annual employer cost / productive hoursAnnual employer cost
Annual wages plus payroll taxes, insurance, benefits, job costs, and custom costs.
annual employer cost = annual wages + annual cash burdenSuggested billing rate
Productive-hour cost plus the optional pricing markup. It is a pricing estimate, not labor burden.
suggested billing rate = productive-hour cost x (1 + markup)Input reference
Input definitions
Definitions are grouped by calculator section so users can expand only the area they need.
Worker compensation
Hourly Wage
Direct worker pay before taxes, insurance, benefits, tools, and non-productive paid time.
Annual Salary
Fixed yearly pay converted into an hourly equivalent using regular annual hours.
Regular Hours Per Week
The normal paid schedule before overtime.
Weeks Per Year
Weeks used to annualize the worker's paid schedule.
Overtime Hours Per Week
Average weekly overtime hours. Use a realistic normal workload.
Overtime Multiplier
The overtime pay multiplier. Time-and-a-half is 1.5x.
Bonuses
Annual incentive pay included in wage-linked percentage costs.
Federal and state payroll taxes
Social Security Rate
The Social Security portion of FICA. Verify current wage limits and rules.
Social Security Wage Base
Maximum annual wages subject to Social Security tax for the selected tax year.
Medicare Rate
The Medicare portion of FICA. Verify current rules with payroll support.
FUTA rate
Federal unemployment tax. The effective rate can depend on credits and wage bases.
FUTA wage base
Maximum annual wages subject to federal unemployment tax before credits and other rules.
SUTA rate
State unemployment tax. It varies by state and employer claim history.
SUTA wage base
Maximum annual wages per employee taxed for state unemployment. Every U.S. state caps this, so verify your state and tax-year value; SUTA is $0 in this estimate until you enter it.
Other Payroll Rate
Editable placeholder for local or state payroll costs not listed elsewhere.
Other Payroll Wage Base
Optional cap for another payroll tax. Zero leaves this custom payroll tax uncapped.
Insurance
Workers Comp Rate
Insurance tied to job injury risk. Rates vary by trade class, state, insurer, and claims.
Health Insurance Monthly
Employer-paid health coverage allocated to this worker.
Dental Vision Monthly
Employer-paid dental or vision coverage allocated to this worker.
General Liability Annual
A worker-level share of business liability insurance.
Other Insurance Annual
Other annual insurance cost assigned to this role.
Paid non-billable time
Paid Holidays
Paid holidays reduce productive hours while pay continues.
Vacation Days
Paid vacation reduces productive hours while pay continues.
Sick Days
Paid sick leave reduces productive hours while pay continues.
Training Days
Paid training days reduce productive field hours.
Admin Hours Annual
Paid time spent in meetings, paperwork, coordination, or other non-field work.
Benefits and job costs
Retirement Rate
Employer match or contribution as a percentage of wages.
Tools Annual
Annual worker-specific tool cost or replacement allowance.
Uniforms Annual
Annual cost for shirts, boots, branded gear, or laundry allowance.
Safety Equipment Annual
Annual PPE and safety supply cost.
Vehicle Allowance Annual
Annual truck, fuel, mileage, or vehicle allowance.
Training Annual
Direct course or training expense, separate from paid training time.
Certifications Annual
License, certification, testing, or renewal cost.
Other Annual
Known annual labor cost that does not fit another field.
Pricing
Markup Rate
Optional pricing markup applied after burdened cost. It is not labor burden.
Ready to calculate your real labor cost?
Start with a preset or enter your own payroll, insurance, benefits, and paid-time assumptions.