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60,000 of pay and a 7.65 percent burden
Annual pay is 60,000. The burden box is 7.65 percent, the 2026 employer share of Social Security and Medicare on wages under 184,500. Overhead allocated to this person is 12,000, which is an example amount. Productive hours are 2,080, from 40 hours times 52 weeks.
Annual pay: 25% lower
Change annual pay to 45,000 / year while keeping the other example values the same.
Annual pay: 25% higher
Change annual pay to 75,000 / year while keeping the other example values the same.
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Quick answer
What does the Fully burdened labor rate calculate?
What does one productive hour cost after burden? This calculator uses annual pay, payroll burden, overhead for this person, and productive hours to estimate pay, burden, and overhead per productive hour immediately in your browser.
With the values currently entered, the result is $36.82 — per productive hour. It also shows annual cost, payroll burden, and pay before burden and overhead.
How to use the Fully burdened labor rate
- Replace the example values with your own numbers.
- Review the result and supporting figures as they update automatically.
- Check the formula and assumptions before using the estimate for a decision.
Inputs used
- Annual pay — entered in / year
- Payroll burden — entered in %
- Overhead for this person — entered in / year
- Productive hours — entered in hrs
Fully burdened labor rate formula
Annual cost = pay + pay × burden percent + overhead. Hourly rate = annual cost ÷ productive hours.
Assumptions
- IRS Publication 15 for 2026 sets the employer share at 6.2% for Social Security and 1.45% for Medicare, which is 7.65%. Social Security applies up to the $184,500 wage base. The 7.65 in the box is that employer share. Health insurance, retirement, and state payroll taxes are extra, so raise the percent when you include them.
- FAR 31.203 allocates indirect costs over a base the cost objectives share. The overhead box is the share you assign to this person for the year. The 12,000 is an example amount. The 2,080 hour default is 40 hours times 52 weeks. Lower it when some of those hours are paid leave.
Verify the inputs
Authoritative sources
These sources explain the definitions, factors, or rules behind this tool. Their geographic scope is shown because an official source for one country is not automatically valid somewhere else.
Splits Social Security (6.2%) and Medicare (1.45%) on wages. Employee and employer each pay 7.65% on wages below the Social Security wage base.
FAR 31.203, Indirect costsAcquisition.gov — Federal Acquisition RegulationScope: US federal contracting cost principles; the allocation idea is generalAfter direct costs are charged, indirect costs are grouped and allocated with a base common to the cost objectives. Items in that base bear a pro rata share of the grouping. The base period is normally the fiscal year.
Sources do not endorse Calculum. Check the source date, scope, and your own documents before making a financial, tax, insurance, or reporting decision.
Practical guide
Fully burdened labor rate example and edge cases
A fully burdened labor rate spreads pay, payroll burden, and overhead across productive hours. IRS Publication 15 for 2026 sets the employer share of Social Security and Medicare at 7.65 percent of wages under the wage base. You type the overhead share.
Example: 60,000 of pay and a 7.65 percent burden
Annual pay is 60,000. The burden box is 7.65 percent, the 2026 employer share of Social Security and Medicare on wages under 184,500. Overhead allocated to this person is 12,000, which is an example amount. Productive hours are 2,080, from 40 hours times 52 weeks.
- Annual pay
- 60,000 / year
- Payroll burden
- 7.65 %
- Overhead for this person
- 12,000 / year
- Productive hours
- 2,080 hrs
Calculated result$36.82per productive hour
The employer share is 4,590. Pay, that share, and the 12,000 of overhead add to 76,590. Divided by 2,080 hours, the rate is 36.82. Pay alone is 28.85 an hour before burden and overhead.
Example results use the default display profile. The calculator above follows your selected country and units.
How to read the result
- Read the 36.82 first. Pay of 60,000, employer taxes of 4,590, and overhead of 12,000 add to 76,590. Divide by 2,080 productive hours. Pay alone, before burden and overhead, is 28.85 an hour.
- The 7.65 percent is the 2026 employer share on wages at or under the 184,500 Social Security wage base. Health insurance, retirement, and state payroll taxes are extra. Raise the percent when you want them in the rate. The 12,000 overhead is an example amount you replace.
Edge cases worth checking
Wages pass the Social Security wage base
For 2026, Pub. 15 applies the 6.2 percent employer Social Security tax only up to 184,500 of wages. Medicare at 1.45 percent has no wage cap. On pay above 184,500, a flat 7.65 percent overstates the employer share. Lower the percent, or apply 6.2 percent only up to the wage base.
Vacation hours are still inside 2,080
The 2,080 default is 40 hours times 52 weeks. Those hours include vacation, holidays, and sick time when the person is paid for them. Lower the box to the hours you can assign to work, and the same annual cost spreads over fewer hours.
What changes the result most
Annual pay
Use a current amount for annual pay. Include fees or recurring costs that belong in the same figure.
Payroll burden
Test a lower and higher payroll burden. A small percentage change can move the final result more than expected.
Overhead for this person
Use a current amount for overhead for this person. Include fees or recurring costs that belong in the same figure.
Try a different scenario
Small changes show whether the answer is stable or sensitive.
Annual pay: 25% lower
45,000 / year$29.06per productive hour
Annual pay: 25% higher
75,000 / year$44.59per productive hour
Payroll burden: 25% higher
9.563 %$37.37per productive hour
Common mistakes
Check annual pay
IRS Publication 15 for 2026 sets the employer share at 6.2% for Social Security and 1.45% for Medicare, which is 7.65%. Social Security applies up to the $184,500 wage base. The 7.65 in the box is that employer share. Health insurance, retirement, and state payroll taxes are extra, so raise the percent when you include them. Make sure this matches the number you enter.
Keep productive hours consistent
FAR 31.203 allocates indirect costs over a base the cost objectives share. The overhead box is the share you assign to this person for the year. The 12,000 is an example amount. The 2,080 hour default is 40 hours times 52 weeks. Lower it when some of those hours are paid leave. Use the same units and time period throughout the calculation.
Do not rely on one fully burdened labor rate scenario
Run a cautious case and an optimistic case. The range is often more useful than one exact-looking number.
Use this result well
What does one productive hour cost after burden?
It does not replace a quote, contract, accountant, or local employment guidance.