Most owners decide on a hire by looking at one number. Can the business carry a $60,000 salary. Then the first payroll runs, and the amount leaving the bank account is bigger than $60,000 divided by 26.
The gap is not a mistake. Employing someone carries costs that never appear in the offer letter, and they are all knowable in advance. Here is what they are, using the published rates for 2026.
Start with the federal piece. You match your employee's Social Security and Medicare. The IRS sets the employer share at 6.2% for Social Security and 1.45% for Medicare, so 7.65% combined. Social Security stops at the first $184,500 of wages in 2026, and Medicare has no ceiling. There is also a 0.9% Additional Medicare Tax on wages over $200,000, withheld from the employee with no employer match.
Then federal unemployment tax. FUTA is 6.0% on the first $7,000 of each employee's wages. Pay your state unemployment tax in full and on time and you get a credit of up to 5.4%, which brings the rate down to 0.6%. That is a maximum of $42 per employee per year.
State unemployment insurance is where Virginia, Maryland, and DC stop looking alike. The Virginia Employment Commission taxes the first $8,000 of annual wages, with base rates from 0.1% to 6.2% plus add-ons, and new employers start at 2.5%. The Maryland Department of Labor taxes the first $8,500, is using Table A for 2026 (the lowest rates in the schedule) with contributory rates from 0.30% to 7.50%, and puts new employers between 1.0% and 2.6%. DC DOES taxes the first $9,000, and a newly liable employer pays the prior year average rate or 2.7%, whichever is higher, until it has four to five years of experience.
Run it on a $60,000 hire for a new employer. Social Security is 6.2% of $60,000, or $3,720. Medicare is 1.45%, or $870. FUTA is 0.6% of the first $7,000, or $42. State unemployment is $200 in Virginia (2.5% of $8,000), $221 in Maryland at the top of the new employer range (2.6% of $8,500), and $243 in DC (2.7% of $9,000).
Total employer payroll tax: roughly $4,832 in Virginia, $4,853 in Maryland, and $4,875 in DC. Call it eight percent on top of the salary in all three. Notice how small the state difference is. Owners often assume unemployment tax is where crossing a state line hurts, and on these numbers it is worth about forty dollars a year. Income tax, sales tax on services, and where your entity is registered move far more money than this line does.
Payroll tax is the part with published rates. The rest depends on your business and is usually larger. Workers compensation insurance is required for most employers and priced off your payroll and job classification, so an office role and a clinical role are not priced the same. Benefits include health insurance, a retirement match, and paid time off, and paid time off is easy to forget because it never arrives as a bill. Payroll processing carries a per employee monthly fee. Equipment, software seats, and space follow the person. So does your own time on hiring, onboarding, and supervision, which in a small business is the most expensive hour in the building.
Add it up and the loaded cost of a $60,000 hire commonly runs meaningfully above $70,000. The exact figure depends on your benefits and your insurance, so build it from your own quotes rather than from a rule of thumb.
The better question is not whether the business can afford the salary. It is when the hire turns cash positive. A new person costs money from day one and produces slowly for the first stretch, which makes this a cash timing question as much as a profit question. Look at your cash on hand, your collections pattern, and how many months you can carry a fully loaded salary before that role pays for itself. If you cannot carry it through the ramp, the hire is a risk regardless of how good the candidate looks. That is a forecast, and it is a different exercise from reading last month's profit and loss statement.
We work with owners across Virginia, Maryland, and DC, which frequently means one payroll spanning more than one jurisdiction. An employee in Arlington, one in Bethesda, and one downtown put you in three unemployment systems and three withholding regimes on a single payroll, each with its own registration, filing calendar, and penalties for missing one. If you are about to make a first hire, or a hire across a state line, build the fully loaded number before the offer goes out.
Sources: IRS Topic 751, Social Security and Medicare withholding rates (irs.gov/taxtopics/tc751). IRS Topic 759, Form 940 and FUTA (irs.gov/taxtopics/tc759). Virginia Employment Commission, Employer UI Tax Questions (vec.virginia.gov). Maryland Department of Labor, Tax Rates and Quarterly Reporting (labor.maryland.gov). DC Department of Employment Services, Employer Tax Information (does.dc.gov).