Freelancer vs W-2 Employee Comparison
Compare take-home pay and understand the true cost of self-employment
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Your Information
Freelancer Deductions & Expenses
These deductions reduce your taxable income as a freelancer
Equipment, software, office, etc.
Annual premium (self-employed deduction)
Up to 25% of net earnings
W-2 Employee
Traditional employment
Effective tax rate: 19.5%
Freelancer / 1099
Self-employed contractor
Effective tax rate: 18.0%
🎉 W-2 Employment Wins!
You'd keep $19,832 more per year as a W-2 employee
That's a 30.8% difference
Factor employer-paid payroll taxes, benefits, and simpler compliance into your negotiation for W-2 offers.
Break-even hourly rate
$52.47/hr
≈ $109,137 per year
You would need roughly $109,137 per year (52.47 $/hr) to tie the W-2 take-home.
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Printable summary
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Key Differences
W-2 Employee Advantages
- ✓ Employer pays half of FICA taxes (7.65%)
- ✓ Often includes benefits (health, 401k match)
- ✓ Simpler tax filing
- ✓ No quarterly estimated tax payments
- ✓ Unemployment insurance eligibility
Freelancer Advantages
- ✓ Deductible business expenses
- ✓ Higher retirement contribution limits (SEP-IRA)
- ✓ Health insurance premium deduction
- ✓ Home office deduction
- ✓ Flexibility in work arrangements
Disclaimer: This calculator provides simplified estimates for comparison purposes. Actual tax obligations vary based on many factors including state/local taxes, deductions, credits, and business structure. Consult a tax professional for personalized advice. W-2 calculation assumes no employer-provided benefits beyond standard FICA contribution.