Cost of hiring by state
Frequently asked questions
How much does it cost to hire your first employee?
Expect roughly 10–15% on top of wages for payroll taxes and workers' comp in most states, plus benefits. Our Florida example — $18/hour, 40 hours, 10 PTO days and $300/month health — costs about $44,500 a year, or $22.25 per hour actually worked.
What payroll taxes do employers pay in 2026?
Social Security 6.2% up to $184,500, Medicare 1.45%, federal unemployment (FUTA) 0.6% on the first $7,000, and state unemployment (SUTA) at a new-employer rate on a state wage base that ranges from $7,000 to over $70,000.
Is the FUTA rate higher in California for 2026?
Yes, almost certainly. California still owes a federal unemployment loan, so its FUTA credit is expected to be cut by 1.5%, making FUTA 2.1% on the first $7,000, an estimated $147 per employee instead of $42 (California EDD projection, not yet final). If the US Department of Labor refuses California's waiver of an extra 3.8% add-on, it would be 5.3%, about $413. The final figure comes after November 10, 2026.
Do I need workers' compensation insurance?
Most states require it once you have employees (thresholds vary; Texas lets most employers opt out). Cost depends heavily on job class: the 2024 Oregon study puts the all-industry median at $1.09 per $100 of payroll, with office work far lower.