1099 vs W-2 Take-Home Calculator
Compare your real take-home pay as a 1099 contractor against a W-2 employee side by side, including self-employment tax, benefits, and the break-even 1099 rate.
1099 vs W-2 Take-Home Calculator
Offers to compare
The contract rate you are weighing against the W-2 offer.
Tax details
Flat estimate applied to both scenarios. Set to 0 for no-income-tax states.
Hours and W-2 benefits
Unbilled vacation and holiday weeks lower a contractor's effective rate.
Health insurance and other benefits, plus the match, added back on the W-2 side.
1099 adjustments (optional)
Expenses cut the 1099 side only. Pre-tax retirement lowers taxable income in both.
Break-even is the 1099 income that matches the W-2 total value (take-home plus benefits and match). Above it, the contract pays more; below it, the W-2 job does.
1099 vs W-2: why take-home pay differs
The core split is who pays FICA. A W-2 employee and the employer each cover half of Social Security and Medicare, so the worker sees 7.65% come out and the company quietly pays the other 7.65%. A 1099 contractor is both employee and employer, so they owe the full 15.3% as self-employment tax. That is the number that makes contracting look expensive at first glance.
Two things soften it. Half of the base self-employment tax is deductible against income tax, and a contractor can write off ordinary business expenses that a W-2 employee generally cannot. On the other side of the ledger, the W-2 job carries hidden employer costs (the FICA match, FUTA and SUTA, health insurance, a 401(k) match, and paid time off) that a contractor has to fund out of the contract rate. A fair comparison has to put those back on the table, which is exactly what the calculator does.
How to read your side-by-side results
The two columns show take-home pay from the same starting income under each arrangement. The W-2 column runs gross wages through employee FICA, federal income tax, and your flat state estimate to land on take-home pay, then adds two lines: the value of employer benefits and the 401(k) match. That gives the W-2 total value, the honest apples-to-apples figure, because those benefits are real compensation you would otherwise buy yourself.
The 1099 column subtracts business expenses, self-employment tax, federal income tax, and state tax to reach contractor take-home. The verdict banner compares that take-home against the W-2 total value and reports which is higher and by how much. If the contract rate you entered does not clear the W-2 total value, the salaried offer is worth more than it looks. To see the paycheck side of a W-2 salary on its own, use the salary to paycheck calculator, or the hourly paycheck calculator for hourly work.
The break-even 1099 rate: how much more to charge
The break-even panel answers the question that matters most: what 1099 income leaves you exactly as well off as the W-2 offer? It solves for the gross contract income where your contractor take-home equals the W-2 total value, then converts that to an hourly rate using your hours per week and billable weeks, and shows the premium over the W-2 salary as a percentage.
The old rule of thumb is that a contractor should charge 25% to 40% more than the equivalent salary. Your exact number depends on how rich the benefits are, the size of the 401(k) match, and how many weeks you can actually bill. Unbilled vacation weeks are the quiet killer: if you only bill 46 weeks instead of 52, every billable hour has to carry more, so the break-even rate climbs. The 401(k) paycheck impact calculator can help you value the match you would be giving up.
1099 vs W-2 tax figures for 2026
All federal numbers here follow the 2026 IRS and SSA figures:
- Standard deduction: $16,100 single, $32,200 married filing jointly, $24,150 head of household, and $16,100 married filing separately.
- Social Security wage base: $184,500. Both the employee 6.2% and the self-employed 12.4% Social Security portions stop at this base, while Medicare keeps applying with no cap. See when Social Security tax stops for the detail.
- Additional Medicare Tax: an extra 0.9% on earnings above $200,000 single and head of household, $250,000 married filing jointly, and $125,000 married filing separately. This surtax is not part of the deductible half of self-employment tax.
- Self-employment tax: 15.3% on 92.35% of net earnings (12.4% Social Security capped at the wage base, plus 2.9% Medicare uncapped), with half the base portion deductible before income tax. Self-employment tax does not apply below $400 of net earnings.
These are estimates that skip credits, local taxes, and the full detail of state returns. For state-specific W-2 net pay, use the salary after tax by state tool, and for the employer's true cost of a W-2 hire, the employer cost of an employee calculator ties into the employer FICA match explained post. When you need to run take-home for a whole team at once, the Payroll Calculator app from WorkLogs44 handles full multi-employee payroll with year-to-date wage-base tracking.
Frequently Asked Questions
Common questions about 1099 vs w-2 take-home calculator
Do you pay more tax as a 1099 contractor or a W-2 employee?
A 1099 contractor pays self-employment tax, which is both halves of FICA (15.3% on 92.35% of net earnings), while a W-2 employee pays only the 7.65% employee half and the employer covers the rest. That makes the contractor look worse on payroll tax alone, but half of the self-employment tax is deductible and business expenses lower taxable income, so the real gap is usually smaller than the raw rates suggest. For the employer side of that same paycheck, see the employer cost of an employee calculator.
How much more should a 1099 contractor charge than a W-2 salary?
The common rule of thumb is 25% to 40% higher than the equivalent W-2 salary, to cover the extra employer FICA, lost benefits, unbilled weeks, and self-employed overhead. That range is only a starting point though. The calculator above solves your exact break-even 1099 income and hourly rate from your own benefits value, 401(k) match, and billable weeks.
What is the break-even 1099 rate?
It is the 1099 income that leaves you with the same take-home as the W-2 offer once you add back the value the employer provides: their FICA match, health benefits, and 401(k) match. Below the break-even rate the W-2 job pays more in real terms, above it the contract does. The calculator reports the break-even as both an annual figure and an hourly rate.
What benefits does a W-2 job include that a 1099 has to buy?
The big ones are the employer FICA match (7.65%), employer-subsidized health insurance, a 401(k) match, paid time off, unemployment insurance, and workers compensation. A 1099 contractor pays for the equivalent out of the contract rate, which is why the W-2 total value line adds benefits and the match before comparing. The true cost of an employee post breaks these down.
How is self-employment tax calculated?
Self-employment tax is 15.3% on 92.35% of your net earnings: 12.4% Social Security up to the 2026 wage base of $184,500, plus 2.9% Medicare with no cap. High earners add the 0.9% Additional Medicare surtax above the filing-status threshold. Half of the base 15.3% portion is deductible against income tax. See when Social Security tax stops for the wage-base detail.
Can I deduct business expenses as a 1099 contractor?
Yes. Ordinary and necessary business expenses reduce both your net self-employment earnings (so less self-employment tax) and your federal taxable income. W-2 employees generally cannot deduct unreimbursed job expenses on a federal return, so this is a real advantage on the 1099 side. Enter your expected annual expenses above to see the effect.
Do 1099 contractors get a bigger refund or owe more at tax time?
Contractors have no employer withholding, so they usually owe at filing unless they prepay through quarterly estimated taxes. A W-2 employee has tax withheld from every paycheck and often sees a refund. Same total tax, different timing, which is why setting aside money each quarter matters more as a 1099.
Is it better to be 1099 or W-2?
It depends on your rate premium, the value of the benefits you would give up, how much you can deduct in expenses, and how many weeks you can actually bill. When the contract rate clears the break-even the calculator shows, the 1099 comes out ahead. To model take-home for a whole team, the Payroll Calculator app runs full multi-employee payroll.