Menu
For kidsColoring pages with your business name
Self-employed & tax / W-2 vs 1099 Calculator

W-2 vs 1099 Calculator

US rates · checked 20 Oct 2026
$

Enter a number from 0 to 10000000

$

Enter a number of at least 0

Employer health premiums, 401(k) match and paid time off you'd otherwise pay for yourself.

$

Enter a number from 0 to 10000000

$

Enter a number of at least 0

Equipment, software, insurance and other costs the client won't cover.

%

Enter a number from 0 to 60%

Total income tax ÷ income, not your top bracket. Used for both options; we don't compute brackets.

$

Enter a number of at least 0

$184,500 is the 2026 figure (IRS Pub. 15, 2026). Check the figure for the year you are filing.

W-2 pays more by
$3,704.25 a year
$100,1501099 pay to match W-2
$48.15per hour (2,080 h)
W-2 salary$80,000.00
Employee FICA · 6.2% SS (capped) + 1.45% Medicare−$6,120.00
Income tax · at your effective rate−$12,000.00
Benefits+$8,000.00
W-2 value after tax$69,880.00
1099 pay minus expenses$92,000.00
Self-employment tax · 15.3% of 92.35% of profit−$12,999.19
Income tax · on profit minus half SE tax−$12,825.06
1099 take-home$66,175.75

A 1099 contract needs about $100,150 a year to match this W-2 job after tax and benefits.

See breakdown

How the w-2 vs 1099 calculation works

Compare a W-2 salary with benefits against a 1099 contract after FICA, self-employment tax and income tax, and find the contract pay that breaks even.

  1. Employees pay 7.65% FICA

    6.2% Social Security up to the wage base ($184,500 in 2026) plus 1.45% Medicare. The employer pays the other 7.65%.

  2. Contractors pay both halves

    Self-employment tax is 15.3% of 92.35% of profit, about 14.1%. Business expenses come off first.

  3. Income tax uses one rate you enter

    We apply your expected effective rate to the salary and to contract profit minus half the SE tax. No brackets are computed.

  4. Add the value of benefits to the W-2 side

    Health cover, a 401(k) match and paid leave are real pay. $8,000 of benefits has to be earned back on a 1099.

Worked example. An $80,000 salary loses $6,120 to FICA and $12,000 to income tax at 15%, then gains $8,000 in benefits: $69,880. A $95,000 contract with $3,000 of expenses pays $12,999.19 SE tax and $12,825.06 income tax, leaving $66,175.75. The W-2 job is worth $3,704.25 more; the contract would need about $100,150 to match.

W-2 vs 1099 FAQ

How much more should a 1099 contractor charge than a W-2 employee?

It depends on the benefits you give up, your expenses and your tax rate, so run your own numbers. With an $80,000 salary, $8,000 of benefits and $3,000 of expenses at 15%, the break-even is about $100,150, 25% more. With no benefits and no expenses it is about $86,028, 7.5% more, mostly the employer's 7.65% FICA share you now pay yourself.

Is 1099 or W-2 better for taxes?

A W-2 employee pays half the FICA and the employer pays the rest. A contractor pays the full 15.3% but can deduct business expenses and half the SE tax. An employer withholds tax from your pay; a client generally does not withhold from a contractor's pay, so you pay it yourself.

How does the IRS decide if I am a W-2 employee or a 1099 contractor?

Not by the form you are given. Under the IRS common-law rules, what matters is whether the business has the right to direct and control what you do and how you do it. The IRS looks at behavioral control, financial control and the type of relationship. If it is unclear, the business or the worker can file Form SS-8 and the IRS will decide, which can take at least six months.

Does this include the QBI deduction?

No. Self-employed people may be able to deduct up to 20% of qualified business income (QBI); wages earned as an employee are not QBI. Limits apply, so the 1099 result here may be a little low if you qualify. Ask a tax professional.

How do I convert a W-2 salary to a 1099 hourly rate?

Take the break-even contract pay and divide by the hours you'll bill. Using 2,080 hours assumes full-time with no unpaid time off, so divide by fewer hours if you expect gaps.

Does this include state taxes?

Only through the effective rate you enter. It's an estimate and isn't tax advice.

Sources: IRS: Independent contractor or employee? · IRS: Topic 751, Social Security and Medicare withholding rates · IRS: Self-employment tax · SSA: Contribution and benefit base · IRS: Publication 15 (2026), Employer's Tax Guide · IRS: Qualified business income deduction

Related calculators

1099 Tax CalculatorHow much self-employment and income tax your 1099 income owes, and how much of each payment to set aside, using an effective income tax rate you enter.Self-Employment Tax CalculatorSocial Security and Medicare tax on self-employment profit, figured the way Schedule SE does, plus the half you deduct.Freelance Hourly Rate CalculatorThe hourly rate that covers the pay you want, your business costs and self-employment tax, based on the hours you can bill.Consulting Day Rate CalculatorThe consulting day rate and hourly rate that cover your target pay, expenses and self-employment tax at a realistic utilization.Hourly to Salary CalculatorTurn an hourly wage into an annual salary, and see the monthly, biweekly and weekly pay before tax.Employee Cost CalculatorWhat an employee costs per year and per hour worked once payroll taxes, benefits and overhead are added to the salary.S Corp Tax Savings CalculatorSee what an S corp election saves on 2026 self-employment and payroll taxes: self-employment tax on all your profit as an LLC or sole proprietor, against payroll tax on a reasonable salary as an S corp, minus the extra costs of running one.Babysitting Rate CalculatorHow much to charge for babysitting: start from your rate for one child, add an amount for each extra child, then late-night hours, a minimum booking and extras.