I intend to ask for a fairly substantial raise near the end of the year, but before I do so, I want to ensure that I've considered all the legally required costs to my employer before making my request.

From my research, the legally required costs beyond the salary on the employer end are as follows:

  • Social Security Tax: 6.2% of income up to an annual salary of $113,700; my current and requested salary are less than this, so the full amount is applicable;
  • Medicare Tax: 1.45% without a salary limit;
  • State Unemployment Insurance: The highest rate I found for this was 15%, but the highest threshold for pay was $39,800 and my current and proposed pay are greater than this amount, so I don't think this is applicable for this situation;
  • Health Care Insurance: There would not be a change in my insurance costs. I would cost the same before the raise as I did after;

In total, I think only the Social Security and Medicare taxes are applicable totaling 7.65%.

Is this correct or am I missing other legally required cost elements that go into a raise?

  • 3
    Just curious - how do you plan on using this information on costs in the discussion? Jul 18, 2019 at 11:52
  • 2
    @mu無 I don't specifically intend to bring it up. My goal is to try and fully understand the ramifications of my request. Jul 18, 2019 at 11:55
  • Alright. Hope you've considered that different positions have set range of compensation, and management/HR usually allows exceeding that range only when employee moves on to the next level, which can in itself could introduce additional costs for the company. Jul 18, 2019 at 12:01
  • 1
    this will get really complicated fast. In theory they also have to pay for all benefits that track according to salary. But some benefits may lead to tax-cuts or an insurance might give them better conditions compared to a comparable single contract, etc..). Jul 18, 2019 at 12:03
  • Check out the BLS's Employer Costs for Employee Compensation publication for a general discussion of the same question.
    – Jay
    Jul 18, 2019 at 12:11

2 Answers 2


Is this correct or am I missing other cost elements that go into a raise?

Any and all benefits that track according to salary would change.

Many companies have a free life insurance benefit that equals 1 year salary, for example.

But I'm guessing you are over-thinking this. Just focus on the salary part. The rest isn't something the company will fret over.


You are over-focusing on the fine details of the “direct to you” money costs, which isn’t usually the costs that make or break a raise. As a manager, the real costs of giving a raise are not the additional couple percent going into the benefits, they are:

  1. The political capital expended to go get the raise from my boss/the powers that be, especially if it’s not part of a normal solicited annual raise cycle. And the time required for rounds and rounds of justification and negotiation with 3 levels of management plus HR. Besides the hit to my budget, that’s the biggest direct cost to me as a manager.

  2. The possible team impacts of “now everyone wants more money” or “now these two people are disgruntled because you got a raise and they think they’re as good/better than you.” That’s the biggest long term cost of your raise to me as a manager.

This information gives you a chance to be smart and reduce the “cost” to your manager by effectively supporting them in the justification cycle and not spreading it around in the team. That'll be more effective than enumerating every percent of additional load on your salary.

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