1099 vs W-2 Income Calculator
Compare being a 1099 contractor against a W-2 employee on the same gross pay. See the self-employment tax gap, the employer-paid costs you have to cover yourself, and the break-even rate a contractor must charge to match a salary's total compensation.
The salary you're comparing against
Used only for the optional income-tax estimate
W-2 Employer Benefits
Employer-paid value you lose as a contractor (added to W-2 total comp)
e.g. 15 paid days ≈ $4,615
1099 Contractor Options
Reduces taxable profit on the 1099 side
Break-even 1099 Rate
1.25×
of the W-2 salary
Gross You'd Need to Charge
$100,135
≈ $48/hr (vs $38/hr W-2)
W-2 Employee
1099 Contractor
What a contractor must self-fund
Versus a W-2 employee, a contractor covers the employer-paid 7.65% payroll tax ($6,120) plus $14,015 of lost benefits — about $20,135 a year out of their own billing.
Employee FICA
$6,120
1099 SE Tax
$11,304
Extra Payroll Tax
$5,184
Assumes 2026 rates: Social Security wage base $184,500, SE tax 15.3% (12.4% Social Security + 2.9% Medicare), W-2 FICA 7.65% each side. Hourly figures assume a 2,080-hour full-time year. State tax not included.
How This Comparison Works
Enter a salary to compare
Put in the W-2 salary you're weighing against a contract. The same gross becomes the 1099 side's billing baseline.
Add benefits and expenses
Include the employer health share, 401(k) match, and PTO you'd give up — plus any business expenses or QBI on the 1099 side.
Read the break-even rate
See the self-employment tax gap, the employer-paid costs you must self-fund, and the multiplier a contractor needs to break even.
Why 1099 and W-2 Take-Home Differ
Same gross pay, very different economics. Here is what actually changes when you move between a paycheck and an invoice.
SE tax = both halves of FICA
A W-2 employee and their employer each pay 7.65% of wages into Social Security and Medicare. A 1099 contractor is both sides, so they owe the full 15.3% as self-employment tax — computed on 92.35% of net profit. That alone makes a contractor's payroll tax roughly double an employee's.
Benefits and PTO have real value
Employer-paid health premiums, a 401(k) match, and paid time off can add 20–30% on top of salary. A contractor self-funds all of it from their billing rate, which is why break-even usually lands around 1.25×–1.5× the equivalent salary.
Quarterly estimated taxes
No one withholds tax from a 1099 invoice. If you expect to owe $1,000+, the IRS wants quarterly payments via Form 1040-ES (April 15, June 15, Sept 15, Jan 15). Budget a slice of every payment so the bill doesn't surprise you.
When each setup wins
W-2 wins on stability, benefits, and simplicity. 1099 wins when your rate clears break-even with margin and you value deductions (home office, equipment, mileage) and the 20% QBI deduction that employees can't claim.
What This Calculator Includes
Self-employment tax
Full 15.3% on net SE earnings, with the 2026 Social Security wage base cap applied.
Employer-paid equivalent
The hidden 7.65% employer FICA, shown for an apples-to-apples comparison.
Benefit valuation
Add health premium share, 401(k) match, and PTO to the W-2 total comp.
Break-even rate
The multiplier and annual gross a contractor must charge to match the salary.
Why Use This Calculator?
Negotiate from real numbers
Know the exact rate you need before accepting a contract, so you don't quietly take a pay cut by going 1099.
Apples-to-apples
Surfaces the employer-paid payroll tax and benefits that a raw salary-vs-rate comparison hides.
2026-accurate math
Uses the 2026 Social Security wage base and statutory FICA/SE rates, with the half-SE-tax deduction and optional 20% QBI.
Frequently Asked Questions
Related Tools & Reading
Official References
This calculator uses 2026 federal payroll and self-employment tax rules:
- IRS: Self-Employment Tax (Social Security and Medicare)
The 15.3% SE tax, the 92.35% factor, and Schedule SE.
- IRS Publication 15 (Circular E), Employer's Tax Guide
Employer and employee FICA shares (6.2% + 1.45% each).
- IRS: Independent Contractor (Self-Employed) or Employee?
Worker classification rules behind 1099 vs W-2 status.
- SSA: Contribution and Benefit Base
2026 Social Security wage base of $184,500.
This calculator provides estimates based on 2026 federal rates and your inputs. It excludes state and local tax, additional Medicare tax for very high earners, and individual credits. Consult a qualified tax professional for advice on your specific situation.