1099 vs. W-2 Calculator
A bigger contract rate isn't always more money. See what you'd need to charge as a 1099 contractor to truly match a W-2 salary.
What the employer pays on your behalf — roughly $8k–$15k is typical.
Why a 1099 rate has to be higher than a salary
A W-2 employee pays half of FICA (7.65%) — the employer covers the other half. A 1099 contractor pays both halves as self-employment tax (15.3%). On top of that, contractors get no employer health insurance, no 401(k) match, no paid time off, and no unemployment coverage. A contract rate that looks bigger on paper can be worth less in the bank.
How this calculator works
It computes the real take-home of the W-2 job — pay after FICA, federal income tax, and state tax — then adds the dollar value of employer benefits to get the job's total worth. For the 1099 side it nets out business expenses, self-employment tax, the QBI deduction, income tax, and state tax. Finally it solves for the annual gross a contractor would need to match the salary's total value.
What it doesn't capture
Everyone's benefits package and deductions differ, and contractors have real upsides this tool doesn't price in — multiple clients, rate flexibility, retirement plans with far higher limits, and more write-offs. Treat the result as a negotiating floor, not a verdict.
Frequently asked
How much more should a contractor charge than an equivalent salary?+
A rough industry rule is 25–50% above the equivalent W-2 salary, but the honest answer is whatever covers the extra 7.65% of self-employment tax plus the benefits you now buy yourself. This calculator gives you the specific number instead of a rule of thumb.
Does the calculator include the QBI deduction?+
Yes — the 1099 side applies a simplified 20% qualified business income deduction, which is one tax advantage contractors have that W-2 employees do not.
Is a 1099 ever better than a W-2?+
Often, yes — especially with multiple clients, strong expense deductions, and a Solo 401(k). This tool only compares take-home pay; it can't price the flexibility and tax-planning room that come with self-employment.
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