W-2 vs 1099 Calculator
Compare a salaried W-2 job with 1099 contract work. A contractor pays both halves of Social Security and Medicare, so a higher gross rate is needed just to match a salary's take-home.
Your details
- W-2 take-home (after FICA)
- $92,350.00
- 1099 advantage / (shortfall)
- $10,694.54
- Self-employment tax
- $16,955.46
W-2 vs 1099 take-home
- Contractor take-home
- $103,044.5453%
- W-2 take-home
- $92,350.0047%
Formula
W-2 take-home subtracts the 7.65% employee FICA share. 1099 take-home subtracts self-employment tax — 15.3% on 92.35% of income. The difference shows which nets more after payroll taxes.
How it works
As a contractor you cover the employer's half of payroll taxes and usually lose benefits (health insurance, 401(k) match, PTO). A common rule of thumb is that a 1099 rate should be roughly 25–30% above a W-2 salary to truly break even.
Frequently asked questions
Why does a 1099 contractor pay more tax?⌄
Employees split the 15.3% Social Security and Medicare tax with their employer. Contractors pay the whole thing themselves as self-employment tax, though half is deductible.
How much more should a contract rate be?⌄
To offset extra taxes and lost benefits, contractors often target 25–30% more than an equivalent salary. This tool compares payroll taxes; add a benefits estimate on top.
Does this include income tax?⌄
No — it isolates payroll/self-employment tax, which is the main structural difference. Income tax is broadly similar for the same total income.
Sources & methodology
Compares take-home after payroll/SE tax only (W-2 7.65%; 1099 15.3% of 92.35%). Excludes income tax, deductions, and benefits. Not tax advice.
- •IRS — self-employment tax — IRS
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