W-2 vs 1099 calculator
A salary offer on one side, a contract rate on the other. See which leaves you with more after self-employment tax and the benefits you'd be buying yourself.
W-2 salary comes out ahead by
$5,855 a year
Break-even contract rate: $59.68/hour at 1,800 billable hours.
Where the contractor premium goes
On a W-2 your employer pays half of Social Security and Medicare, a share of your health premium, and often a 401(k) match, and none of it shows in the salary. As a contractor you pay the full 15.3% FICA as self-employment tax, buy your own insurance, and only earn on hours a client pays for. The self-employment tax calculator breaks down the 1099 side and the quarterly payments; the job offer comparison lines up several W-2 offers.
Questions people ask
How much more should a 1099 contractor charge than a W-2 salary?
A common rule of thumb is 25–40% more per hour, but the right number depends on how many hours you can actually bill, your health insurance cost and the employee benefits you give up. The break-even rate above is calculated from your own numbers rather than a rule of thumb.
Why do 1099 workers pay more tax?
Employees pay 7.65% Social Security and Medicare and the employer pays another 7.65%. Contractors pay both halves as 15.3% self-employment tax, on 92.35% of profit. Half of it is deductible, and many contractors also get the 20% qualified business income deduction, which softens the gap.
Is $50 an hour on a 1099 the same as $100,000 a year?
Not usually. $50 × 2,080 hours is $104,000 of revenue, but contractors rarely bill every working hour, pay the employer half of FICA and buy their own health insurance and retirement savings. Put $50 and your realistic billable hours into the calculator to see the salary it matches.
What counts toward the W-2 side?
Take-home pay after federal, state and FICA tax, plus the employer 401(k) match and the yearly value of other benefits you enter (the employer share of health premiums is typically the largest). Paid time off is already inside the salary.
2026 federal brackets and standard deduction, SE tax on 92.35% of profit with half deducted, 20% QBI deduction assumed; state tax uses the same simplified state model as the paycheck calculator. Self-employed health premiums are often deductible, which this simplified view leaves out. Estimate only.