You’ve decided to hire. You’ve agreed on a salary. But what does that employee actually cost your business? In Massachusetts, the answer is typically 20–35% more than the base salary once you add up all the mandatory employer obligations.
Here’s the full breakdown.
Mandatory Payroll Taxes
These are non-negotiable for every W-2 employee.
Social Security (FICA — Employer Share)
Rate: 6.2% on wages up to $176,100
Both you and the employee each pay 6.2%. The wage base resets every January 1.
Medicare (FICA — Employer Share)
Rate: 1.45% on all wages (no cap)
No ceiling on this one — it applies to every dollar of wages.
FUTA (Federal Unemployment Tax)
Rate: 0.6% on first $7,000 of wages per employee
Federal unemployment tax maxes out at $42/employee/year assuming you’re current on state unemployment payments. If you’re behind on SUTA, the FUTA credit is reduced and you pay up to 6.0%.
MA SUTA (State Unemployment Insurance)
Rate: 0.94%–7.37% on first $15,000 of wages (new employer rate: 2.42%)
New employers pay 2.42% for the first few years. Your rate adjusts annually based on your “experience rating” — how many former employees have collected unemployment benefits. If you’ve had layoffs, your rate goes up.
Max annual SUTA cost per employee (at new employer rate): $15,000 × 2.42% = $363
MA PFML (Paid Family Medical Leave — Employer Share)
Rate: 0.42% on wages up to $176,100 (only if 25+ employees)
If you have fewer than 25 Massachusetts employees, you owe no employer share of PFML. Employees still contribute, but that comes out of their check, not yours.
Putting It Together: $60,000 Salary Example
Employer with fewer than 25 employees:
| Item | Rate | Annual Cost |
|---|---|---|
| Social Security | 6.2% | $3,720 |
| Medicare | 1.45% | $870 |
| FUTA | 0.6% on $7K | $42 |
| MA SUTA (new employer) | 2.42% on $15K | $363 |
| PFML employer share | 0% (under 25 employees) | $0 |
| Mandatory tax total | $4,995 |
Employer with 25+ employees:
| Item | Rate | Annual Cost |
|---|---|---|
| Social Security | 6.2% | $3,720 |
| Medicare | 1.45% | $870 |
| FUTA | 0.6% on $7K | $42 |
| MA SUTA (new employer) | 2.42% on $15K | $363 |
| PFML employer share | 0.42% on $60K | $252 |
| Mandatory tax total | $5,247 |
Workers’ Compensation Insurance
Massachusetts requires all employers to carry workers’ comp. The cost varies dramatically by industry:
| Industry | Typical Rate per $100 of Payroll |
|---|---|
| Office / clerical | $0.25–$0.50 |
| Retail | $1.00–$2.50 |
| Restaurant | $2.00–$4.00 |
| Construction | $5.00–$20.00+ |
| Healthcare (direct care) | $3.00–$8.00 |
For a $60,000 office employee: roughly $150–$300/year. For a $60,000 construction worker: $3,000–$12,000/year.
Benefits (If You Offer Them)
These aren’t legally required (except for some cases), but they affect your ability to hire:
| Benefit | Typical Employer Cost |
|---|---|
| Health insurance (single) | $6,000–$9,000/year |
| Health insurance (family) | $14,000–$20,000/year |
| Dental/vision | $500–$1,200/year |
| 401(k) match (3%) | $1,800/year on $60K salary |
| Paid time off (15 days) | ~5.8% of salary |
The Full Picture
For a $60,000/year employee at a small MA business (under 25 employees) offering health insurance and basic benefits:
| Category | Cost |
|---|---|
| Gross salary | $60,000 |
| Mandatory payroll taxes | $4,995 |
| Workers’ comp (office) | $225 |
| Health insurance (single) | $7,500 |
| 401(k) match 3% | $1,800 |
| Paid time off (15 days) | ~$3,462 |
| Total employer cost | ~$77,982 |
That $60,000 salary is actually $78,000 in real cost — about 30% more.
What This Means for Hiring Decisions
Before making an offer, know your fully-loaded cost. If a $60,000 salary would stretch your budget, a $50,000 salary with strong benefits may still cost you $65,000 all-in.
The OtterDesk payroll calculator shows you the full employer cost breakdown — mandatory taxes, PFML, and estimated FUTA/SUTA — for any salary in any New England state.