What are the employer's costs at different levels of net salary?

What are the employer's costs at different levels of net salary?

The true cost of a salary

When the employee sees their salary in the bank account, they see net remuneration – the amount “in hand”.
But behind it stands a whole complex of costs that the employer incurs to provide this amount.

For each employee in Bulgaria, there are three main components:

• Net salary – what we actually receive;

• Gross salary – the amount before deductions for taxes and employee contributions;

• Total cost for the employer – gross salary + contributions that the employer owes on their account.

What do the costs include?

For the employee:

• 13.78% contributions (pension, health, unemployment, etc.)

• 10% income tax (on income after personal contributions are deducted)

For the employer:

• 18.92% contributions (pension, health, “Occupational Accident” fund, unemployment, etc.)

📌 The maximum insurable income from April 1, 2025, is 4,130 BGN.
That is, for salaries above this amount, contributions are calculated on 4,130 BGN, not on the actual gross amount.

Table: How much does different net salary cost the employer (2025)

What do these numbers mean?

• The difference between net and total cost is about 50% for incomes below 4,130 BGN.
  Example: for net 2,000 BGN, the employer pays about 3,040 BGN

• For higher incomes above the maximum insurable threshold, the state no longer takes more contributions,
  so the net-cost ratio becomes more favorable.

• Employers often underestimate the impact of bonuses, additional benefits, and contribution thresholds on total costs.

• For the employee, the real “cost of labor” is much higher than the amount they receive — and this is key to realizing the value of the workplace.

Psychological aspect: Why do we underestimate the value of salary?

Many people evaluate their remuneration only by the net amount, because:

• this is the “visible” result;

• contributions and taxes are “invisible money”;

• there is a lack of financial culture regarding labor costs.

From the employer's perspective, every salary is an investment – not just an expense.
It includes payment but also a commitment to security, health, and future pensions.

Therefore, understanding the full structure of costs is important for better negotiation as well as for building transparent relationships between employer and employee.

It's time for greater financial literacy

The salary is not just an amount we receive every month — it is the result of a comprehensive system of costs, regulations, and mutual expectations.

Understanding the real cost of labor:

• helps employees better assess the value they create;

• provides employers with a tool for planning costs and business sustainability;

• encourages a more transparent and mature labor market.