Why We Built This
It started with a common scenario: a small business owner posts a $55,000 job offer, thinks they are budgeting $55,000, and then gets hit with an unexpected tax bill at year end. The real cost was closer to $70,000. Nobody told them about FICA, FUTA, SUTA, workers compensation, or benefits overhead.
We kept seeing the same story repeated across Reddit threads, small business forums, and accounting communities. Employers were making six-figure hiring decisions based on a single number - the salary - while missing 25% to 40% of the true cost sitting right below the surface.
The mission is simple: Give every small business owner in America a free, accurate, no-jargon tool that shows exactly what a hire will really cost before they sign the offer letter.
What TrueCostHiring Does
TrueCostHiring is a free web-based calculator that computes the true annual cost of hiring a W2 employee versus engaging a 1099 independent contractor. It factors in every mandatory employer cost that does not appear on a job posting but absolutely appears on your tax bill:
- FICA payroll taxes (Social Security 6.2% + Medicare 1.45%) paid by the employer
- FUTA federal unemployment insurance (effective 0.6% on first $7,000 of wages)
- SUTA state unemployment insurance, with real rates for all 50 US states built in
- Workers compensation insurance, tiered by job risk category
- Benefits package costs from zero to full coverage
The result is a side-by-side comparison showing what a W2 employee truly costs versus the same person engaged as a 1099 contractor at the same rate - so you can make an informed financial decision, not a guess.
Who This Is For
Small Business Owners
Making their first hire or evaluating whether to bring on a contractor versus a full-time employee.
Startup Founders
Modeling headcount costs before a funding round or planning a team expansion on a budget.
HR Managers
Presenting accurate all-in compensation costs to finance teams and executive leadership.
Freelancers and Contractors
Understanding why their rates are higher than a salaried employee and communicating that value to clients.
Our Commitment to Accuracy
All tax rates in TrueCostHiring are updated for the 2025 tax year and sourced from IRS publications and state workforce agency rate tables. We use the effective FUTA rate of 0.6% (reflecting the standard SUTA credit), standard new-employer SUTA rates for each of the 50 US states, and NCCI workers compensation classification tiers.
Important disclaimer: TrueCostHiring is an educational tool, not professional tax or legal advice. Results are estimates based on standard new-employer rates. Your actual rates may vary based on your claims history, state, and industry. Always consult a licensed CPA or HR professional before making hiring decisions.
Always Free. No Ads from Advertisers. No Paywalls.
TrueCostHiring is and will always be free to use. There is no account required, no email signup, and no premium tier. The calculator runs entirely in your browser - no data you enter is ever sent to or stored on any server.
We believe that access to accurate financial information should not be gated behind a subscription. Small businesses are the backbone of the US economy, and they deserve the same quality of tools that enterprise HR departments have had for years.
Contact and Feedback
Have a suggestion, found a rate that needs updating, or want to report a bug? We read every message. Reach out at hello@truecosthiring.com and we will respond within 2 business days.
If you find TrueCostHiring useful, the best thing you can do is share it with another small business owner who is about to make a hiring decision.