What a US executive really costs
A $180,000 executive costs an American employer about $210,512 a year once employer FICA, unemployment tax, a 401(k) match and health insurance are counted, and about $246,512 in the first year with a search fee. That is roughly 17 per cent on top of the salary, and almost nobody budgets for it.
| Salary | Employer FICA | Unemployment | 401(k) match | Health | Ongoing |
|---|---|---|---|---|---|
| $150,000 | $11,475 | $542 | $6,000 | $9,000 | $177,017 |
| $180,000 | $13,770 | $542 | $7,200 | $9,000 | $210,512 |
| $250,000 | $15,064 | $542 | $10,000 | $9,000 | $284,606 |
Where each number comes from
Employer FICA, 7.65 per cent. Social Security at 6.2 per cent, which stops at the $184,500 wage base for 2026 earnings, and Medicare at 1.45 per cent with no cap. IRS Topic 751.
Federal unemployment. The headline rate is 6 per cent on the first $7,000 of wages, but an employer paying state unemployment on time gets a credit that brings the effective rate to 0.6 per cent, which is what almost everyone pays.
State unemployment, health insurance, the 401(k) match and the search fee are assumptions. State unemployment is set per state and per employer’s claims history. Health insurance is the largest and most variable line of all and depends entirely on the plan and whether coverage is single or family. The match here is 4 per cent, a common one rather than a required one, and the search fee is 20 per cent of first-year salary, which is the low end. Substitute your own numbers wherever you have them.
Why the percentage falls as the salary rises
Because the biggest lines do not scale with pay. Health insurance costs roughly the same for a $150,000 hire as for a $250,000 one, unemployment tax is capped at a few thousand dollars of wages, and Social Security stops entirely at the wage base. The dollar figure keeps climbing; the percentage does not.
Against a fractional arrangement
A fractional executive is engaged as a business rather than employed, usually on a monthly retainer. None of the lines above apply: no FICA, no unemployment tax, no health contribution, no match, and no search fee. US fractional retainers commonly run $5,000 to $15,000 a month for a chief financial officer, depending on days and scope.
Which is cheaper depends entirely on how much of the seat you need. Below roughly half a full-time commitment the fractional arrangement wins comfortably; above it the employed hire wins and also gives you five days. The cost calculator works the same comparison in sterling, and the principle is identical.
General information, not tax or legal advice. Rates change and several figures here are stated assumptions. Check with your own accountant before budgeting on them.
Common questions
What does a US executive actually cost beyond salary?
On a $180,000 salary, roughly $30,512 a year on top before any search fee, which is about 17 per cent. Employer FICA is 7.65 per cent, Social Security capped at the annual wage base and Medicare uncapped. Federal unemployment is small. The large and variable line is health insurance.
Why is the loaded percentage lower on a higher salary?
Because the biggest fixed lines do not scale. Health insurance, federal unemployment and state unemployment cost roughly the same whether somebody earns $150,000 or $250,000, and Social Security stops at the wage base entirely. So the percentage falls as salary rises even though the dollar amount goes up.
How does a fractional arrangement compare?
A fractional executive is engaged as a business, usually on a monthly retainer, so none of these lines apply: no FICA, no unemployment tax, no health contribution, no match, and no search fee. You are buying days rather than a person, which is cheaper below a certain commitment and more expensive above it.
Are these numbers exact?
The statutory rates are, and they are cited to the IRS. Health insurance, state unemployment, the 401(k) match and the recruitment fee are assumptions, marked as such on this page, because each varies by state, by employer and by plan. Use your own figures where you have them.
Fractional executives, verified by hand
Operators in the United States and the United Kingdom, booked direct, with no commission taken from either side. Start from the seat you need, or read how a fractional engagement is classified.