Work out employer payroll taxes, an employee’s net pay and the total cost to the employer for each pay period, using the rates you enter.
Estimate only. You enter the tax rates, since payroll taxes vary by country, state and filing status.
How to Calculate Employer Payroll Taxes
Multiply gross pay by the employer tax rate and add the result to gross pay. For $2,000 bi-weekly at 7.65%, the employer owes $153, so the period costs $2,153. With 22% employee withholding, the worker takes home $1,560 after $440 in tax. Rules vary by year and location, so treat results as estimates.
| Gross pay per period | Employer tax at 7.65% | Total cost to employer |
|---|---|---|
| $1,000 | $76.50 | $1,076.50 |
| $2,000 | $153.00 | $2,153.00 |
| $2,500 | $191.25 | $2,691.25 |
| $4,000 | $306.00 | $4,306.00 |
| $6,000 | $459.00 | $6,459.00 |
How Payroll Is Worked Out
Every pay period has two numbers: what the employee takes home, and what the employer pays once payroll taxes are added. Both come from a gross pay figure and your own rates, so first combine expected federal, state and local withholding into one percentage.
Formula: Net Pay = Gross Pay − Pre-Tax Deductions − (Employee Tax Rate × (Gross Pay − Pre-Tax Deductions)). Total Cost to Employer = Gross Pay + (Employer Payroll Tax Rate × Gross Pay). Annual Gross = Gross Pay × Pay Periods per Year, based on the pay frequency selected.
- Employee tax: $2,000 × 22% = $440.
- Net pay: $2,000 − $440 = $1,560.
- Employer tax: $2,000 × 7.65% = $153.
- Total cost: $2,000 + $153 = $2,153.
- Gross pay (per period): the employee's pay before any taxes or deductions for one pay period
- Pay frequency: weekly (52/yr), bi-weekly (26/yr), semi-monthly (24/yr) or monthly (12/yr)
- Employee tax and withholding: the combined rate withheld from the employee's taxable pay
- Employer payroll tax: the rate the employer pays on top of gross pay
- Pre-tax deductions (optional): amounts like retirement contributions subtracted before employee tax is calculated
How to Calculate Payroll Taxes for an Employee
Subtract pre-tax deductions, then apply the employee rate to what's left. The rows below show net pay for a few setups.
| Gross Pay | Pre-Tax Deductions | Employee Tax Rate | Pay Frequency | Net Pay |
|---|---|---|---|---|
| $2,500 | $0 | 22% | Bi-weekly | $1,950 |
| $1,000 | $100 | 15% | Weekly | $765 |
| $4,000 | $200 | 24% | Semi-monthly | $2,888 |
| $6,000 | $0 | 20% | Monthly | $4,800 |
| $1,500 | $50 | 18% | Bi-weekly | $1,189 |
How Much Does an Employee Cost Above Salary?
At least the employer payroll tax: a $2,000 bi-weekly employee at 7.65% adds $3,978 a year on top of $52,000 in gross pay. As an employer cost of employee calculator this covers payroll tax only, so benefits push the real figure higher.
- Match the pay period. Weekly, fortnightly and monthly runs divide annual allowances differently, so pick the period the payslip uses.
- Separate employee and employer taxes. Many countries split social contributions between the two, and only the employee share reduces take-home pay.
- Take pre-tax deductions first. To calculate payroll deductions correctly, enter pension contributions made before tax in the pre-tax field so they lower the taxable amount.
Progressive tax bands are the main reason one blended rate differs from a real payslip; the average effective rate from a recent payslip gives a closer match. Treat this payroll calculator as a planning tool for budgets and hiring, not a filing system, and confirm details with your tax authority or accountant. The payroll article on Wikipedia outlines typical deductions.
Common questions about payroll costs
How do you calculate employer payroll taxes?
Multiply the employee's gross pay by the employer tax rate you pay. On $2,000 of gross pay at 7.65%, that is $153, so the pay period costs $2,153.How much does an employee cost above salary?
At minimum, the employer payroll tax on top of gross pay. A $2,000 bi-weekly employee at 7.65% costs $3,978 a year in employer tax, about $55,978 in total. Benefits and other costs aren't included here, so the real figure is higher.How do you calculate payroll taxes for an employee?
Take pre-tax deductions off gross pay, then multiply the rest by the combined employee withholding rate. $1,000 weekly with $100 pre-tax at 15% gives $135 in tax and $765 net.What's the difference between employee tax rate and employer payroll tax rate?
Employee tax is withheld from the employee's pay and lowers their net pay. Employer payroll tax is an extra cost paid on top of gross pay and never comes out of the paycheck.Can I use this for contractors as well as employees?
It is built around employer-employee payroll with separate employee and employer rates. Contractors usually handle their own taxes, so the freelance tax calculator is a better fit.Does this calculator withhold federal, state, and local taxes separately?
No. It uses one combined employee rate that you enter, since real withholding varies by jurisdiction and filing status. Add your expected federal, state and local rates into one figure first.Related Calculators
To check an individual employee's own paycheck outside of a payroll run, try the paycheck calculator or the take-home pay calculator. If you need to compare an annual salary against these per-period figures, the salary calculator can help translate between the two.