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Burdened labor rate calculator

What an hour of a tech really costs once payroll taxes, workers' comp, benefits, paid time off and tools are added, per paid hour and per billable hour. Federal tax rates come from the IRS; state rates are yours to enter.

Wage and hours

40 hr × 52 weeks = 2,080, including PTO.

Paid but not worked.

Drive, shop, training, callbacks.

Payroll taxes

Example rate (Tennessee new employer). Use the rate on your state notice.

Varies by state: $7,000 to over $50,000.

Federal rates applied automatically: Social Security 6.2% up to $184,500.00, Medicare 1.45% (IRS Publication 15), and FUTA 0.6% on the first $7,000.00 (IRS Topic 759).

Insurance, benefits and equipment

From your policy. Varies by state and class code.

Health, retirement match, other.

Burdened labor cost

$39.15 / hrper billable hour (1,640 billable hours a year)

Per paid hour
$30.87
Burden on wages
23.5%
Billable cost ÷ wage
1.57×
Wages
$52,000.00
Social Security and Medicare
$3,978.00
FUTA
$42.00
State unemployment
$189.00
Workers' comp
$0.00
Benefits
$6,000.00
Tools, phone and vehicle
$2,000.00
Total per year
$64,209.00

Add your workers' comp rate; it's often one of the biggest burden costs in the trades.

Straight-time hours only. Excludes overtime, bonuses and general liability insurance.

Burdened cost $39.15 per billable hour and $30.87 per paid hour on a $25.00 wage. Total annual cost $64,209.00, a 23.5% burden.

How it's calculated

  • Annual wages = hourly wage × paid hours
  • Social Security = 6.2% × wages up to $184,500; Medicare = 1.45% × wages
  • FUTA = 0.6% × first $7,000 of wages
  • State unemployment = your rate × wages up to your state's wage base
  • Workers' comp = rate per $100 ÷ 100 × wages
  • Total cost = wages + taxes + workers' comp + benefits + tools and vehicle
  • Billable hours = paid hours − PTO and holidays − non-billable work hours
  • Cost per paid hour = total ÷ paid hours; cost per billable hour = total ÷ billable hours
  • Burden % = (total cost − wages) ÷ wages

How to use it

  1. 1Enter the wage and hours. Enter the hourly wage and the hours you pay for in a year, including paid time off.
  2. 2Split out non-billable time. Enter paid time off and holidays, and worked hours you can't bill such as drive time, shop time and training.
  3. 3Enter your state rates. Enter your state unemployment rate and wage base from your state notice, and your workers' comp rate per $100 of payroll from your policy.
  4. 4Add benefits and tools. Add what you pay per year for health insurance, retirement match, tools, phone and vehicle for this employee.
  5. 5Price from the billable rate. Use the cost per billable hour, not the wage, when you set labor prices.

Worked example

A $25/hour tech paid for 2,080 hours, with 128 hours of PTO and holidays and 312 non-billable work hours; 2.7% state unemployment on the first $7,000; a workers' comp rate of $4.215 per $100 (Idaho's 2026 rate for landscaping, class 0042); $6,000 of benefits and $2,000 of tools and vehicle costs.

  1. Wages = $25 × 2,080 = $52,000
  2. FICA = $3,224 + $754 = $3,978; FUTA = $42; state unemployment = $189
  3. Workers' comp = 4.215 ÷ 100 × $52,000 = $2,191.80
  4. Total = $52,000 + $3,978 + $42 + $189 + $2,191.80 + $6,000 + $2,000 = $66,400.80
  5. Per paid hour = $66,400.80 ÷ 2,080 = $31.92
  6. Billable hours = 2,080 − 128 − 312 = 1,640; per billable hour = $66,400.80 ÷ 1,640 = $40.49

The $25 tech costs $31.92 per paid hour and $40.49 per billable hour, a 27.7% burden on wages and 1.62× the wage per billable hour.

Sources

  1. Internal Revenue Service, Publication 15 (2026), (Circular E), Employer's Tax Guide. Accessed 2026-11-03.

    Social Security tax is 6.2% each for employer and employee on wages up to the $184,500 wage base; Medicare tax is 1.45% each, with no wage base. The employer share used here is 7.65% (Additional Medicare Tax is withheld from the employee only).

  2. Internal Revenue Service, Topic no. 759, Form 940 – Employer's Annual Federal Unemployment (FUTA) Tax Return. Accessed 2026-11-03.

    FUTA is 6.0% of the first $7,000 paid to each employee. With the maximum 5.4% credit for state unemployment tax paid on time, the net rate is 0.6%. Employers in credit reduction states pay more.

  3. U.S. Department of Labor, Employment and Training Administration, Significant Provisions of State Unemployment Insurance Laws, July 2026. Accessed 2026-11-03.

    State unemployment rates, wage bases and new-employer rates vary by state. For example, Tennessee's taxable wage base is $7,000 with a 2.7% new-employer rate; Alabama's is $8,000, with experience rates from 0.20% to 5.40%. The calculator's 2.7% and $7,000 defaults are that example, not your rate: use the rate on your state notice.

  4. Idaho Industrial Commission, Idaho Workers Compensation Rates, effective January 1, 2026. Accessed 2026-11-03.

    Rates are applied per $100 of payroll by NCCI class code, for example 0042 landscaping $4.215, 5183 plumbing $2.387, 5474 painting $5.352, 5645 residential carpentry $8.152 and 5551 roofing $11.303. Rates differ by state, class and your experience mod, so the calculator leaves this blank for your policy's rate.

FAQ

Burdened labor rate calculator questions

Have a question we didn't cover? Book a demo and ask a product specialist.

What is a burdened labor rate?

It's the full cost of an hour of an employee's time: the wage plus employer payroll taxes, workers' comp, benefits, paid time off and the tools and vehicle they use. Price labor from this number, not the wage.

Why is the cost per billable hour so much higher?

You pay for holidays, vacation, drive time, shop time and training, but you can only bill the hours spent on customer work. Spreading the full annual cost over billable hours shows what each billed hour has to cover.

Where do I find my state unemployment rate?

Your state workforce agency mails a rate notice each year, and new employers get a standard new-employer rate. Rates and wage bases vary widely; the Department of Labor publishes a state-by-state summary (see sources).

How is workers' comp calculated?

Premiums are a rate per $100 of payroll for each job classification, adjusted by your experience mod. A roofing class costs far more than a plumbing or office class. Use the rate from your policy or quote.

Does this include overtime or owner pay?

No. Enter the hours you pay at straight time; overtime raises the cost per hour further. For your own time as an owner, use the hourly rate calculator instead.

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