The burdened rate is what an hour of an employee's work actually costs you. It's the number to use when you quote for a project, set billing rates or compare hiring with contracting.
The formula
Burdened rate = (salary + payroll taxes + benefits + overhead) ÷ hours actually workedHours actually worked = paid hours − paid leave and holidaysBill rate = burdened rate ÷ billable share ÷ (1 − margin)Worked example
Example: US employee on $90,000
Yearly cost with payroll taxes, benefits and equipment: $113,166. Overhead at 15% of salary: $13,500. Total: $126,666.
Paid hours: 2,080. Less 26 days of leave and holidays: 1,872 hours worked.
Burdened rate: $67.66 an hour, 56% above the $43.27 base rate.
At 75% billable, each billable hour costs $90.22; for a 20% margin, bill about $112.77.
For the full cost breakdown in India or Australia, use the employee cost calculator.
How to use this calculator
- Pick a country and enter the salary and benefits.
- Add overhead as a share of salary: rent, admin, management and tools.
- Set paid hours, leave and holidays, the billable share and your target margin.
FAQs
What is a burden rate?
The extra cost on top of pay, as a percentage of the base hourly rate. A 50% burden means each $1 of wages really costs $1.50.
What overhead percentage should I use?
10–25% of salary is common for small firms; it covers rent, admin staff, software and management time.
Why divide by hours worked, not hours paid?
Because you pay for holidays and leave but get no work in those hours. Spreading the cost over actual working hours gives the true hourly cost.
Sources
- IRS: Topic 759, Form 940 (FUTA)
- SSA: 2026 Social Security changes (wage base $184,500)
- ATO: Key superannuation rates and thresholds
- PIB: Code on Social Security, 2020 (in force 21 Nov 2025)
Results are estimates and aren't financial advice. For decisions about your own money, check with a qualified adviser. Spotted a mistake? Tell us.