How it works
- Gross pay = hourly wage × paid hours. Time off is inside this number: you pay for those hours even though no work gets done.
- Payroll taxes = Social Security + Medicare + federal unemployment (FUTA) + state unemployment (SUTA).
- Labor burden = payroll taxes + workers' comp + benefits + training, uniforms, and tools. Burden % = burden ÷ gross pay. That's the number the break-even rate calculator asks for.
- Fully burdened cost = gross pay + burden.
- Cost per paid hour = burdened cost ÷ paid hours. Cost per hour worked = burdened cost ÷ (paid hours − time off). Cost per billable hour = burdened cost ÷ (paid hours × billable efficiency).
The cost per billable hour is the one that matters for pricing: customers only pay for billable hours, so those hours have to carry the cost of all the rest. It doesn't include overhead yet — trucks, office, rent, marketing. The break-even rate calculator adds that.
The federal tax rates used
- Social Security: 6.2% employer share, on pay up to the 2026 wage base of $184,500 per employee. Medicare: 1.45% employer share, on all pay (no wage base). Source: IRS Topic 751, Social Security and Medicare withholding rates
- FUTA: 0.6% on the first $7,000 paid to each employee per year. The FUTA rate is 6.0%, but employers who pay their state unemployment tax on time get a credit of up to 5.4%, leaving 0.6%. In a "credit reduction" state the credit is smaller and FUTA costs more. Source: IRS Topic 759, Form 940 – Employer's Annual Federal Unemployment (FUTA) Tax Return
State unemployment rates and wage bases, and workers' comp rates, depend on your state, your claims history, and your insurer, so we don't guess them. Check your state rate notice and your workers' comp policy.
Worked example
With the example numbers above: $30 × 2,080 paid hours = $62,400 gross pay, including $2,400 for 80 hours of time off. Social Security is $3,868.80, Medicare $904.80, FUTA $42, and state unemployment $270 (2.7% × $10,000), for $5,085.60 in payroll taxes. Workers' comp at 5% adds $3,120. Benefits add $6,000 and training, uniforms, and tools $1,500.
That's $15,705.60 of burden — 25.17% on top of gross pay — and a fully burdened cost of $78,105.60 a year. Per paid hour that's $37.55; per hour actually worked (2,000 hours) it's $39.05. At 60% billable efficiency the tech bills 1,248 hours, so each billable hour costs $62.58 in labor alone — more than double the $30 wage, before any overhead.
Things this leaves out
- Overtime premium. If you pay time and a half, add the extra half to the wage (or the hours) so gross pay matches your payroll report. The HVAC on-call and overtime pay guide covers when overtime is owed.
- Commission and spiffs. Add them to gross pay if your techs earn them; payroll taxes apply to them too.
- The truck. Vehicle, fuel, and insurance are overhead in the break-even rate calculator, not labor burden here. The HVAC service truck cost calculator works out what one truck costs per billable hour.
- Local taxes and other state charges. Some states and cities add their own payroll taxes or fees. Add them to the state unemployment rate if they apply to you.
We don't quote typical burden percentages, benefit costs, or efficiency here because we haven't found a solid public source for them. That's what the anonymous Owner Numbers survey collects, so owners can compare against real peers.
Where to get your numbers
- Wage, paid hours, and time off: last year's payroll reports for the tech.
- State unemployment rate and wage base: your state's yearly rate notice.
- Workers' comp: your policy or last audit — the rate per $100 of payroll for your HVAC class code.
- Billable efficiency: hours billed on invoices ÷ paid hours, from your field service software and payroll.
To check the wage itself against published pay data, see the guide HVAC Tech Pay & Hiring Benchmarks 2026.
Related tools
Ready to price? The HVAC break-even hourly rate calculator takes your burden % and efficiency, adds overhead, and gives you the rate to charge. Thinking about what it costs when a tech leaves? The HVAC technician turnover cost calculator adds up hiring, training, and the empty truck. Adding a tech? The should I hire another HVAC tech payback calculator shows how long a new hire takes to pay back. Weighing hourly against commission? The HVAC tech pay plan calculator compares a week of pay and shop cost under hourly, commission, and hybrid plans.