1099 vs W-2 Calculator
A 1099 contract’s higher rate isn’t all yours. Compare it to a W-2 salary after self-employment tax and lost benefits to see the real winner.
Tools for tracking contractor income & taxes
Learn moreThe contractor premium you actually need
As a 1099 contractor you pay both halves of Social Security and Medicare (an extra ~7.65% versus a W-2 employee) and you fund your own benefits — health insurance, retirement match, paid time off. To truly come out ahead, a contract rate usually needs to be 25–30% higher than the equivalent salary.
How it’s calculated & sources
We tax 92.35% of your net 1099 earnings at the extra 7.65% employer-share FICA, subtract business expenses and the value of lost benefits, and compare the result to the W-2 salary. State and income tax (similar across both) are excluded.
Benchmark: contractors owe both halves of FICA (~7.65% extra) and replace benefits — a fair contract gross is roughly the salary plus benefits, grossed up ~7%.
Results update as you type and are general estimates, not personalized financial, tax, medical or legal advice. Verify with a professional.
Worked example
A $110,000 contract minus $3k expenses, ~$7.6k extra SE tax and $12k of benefits nets about $87,400 — just under a $90,000 W-2 once you account for everything.
Frequently asked questions
Does the QBI deduction change this?
It can — many contractors qualify for the 20% qualified business income deduction, improving the 1099 side. This tool focuses on FICA and benefits; add QBI separately.
What about flexibility and risk?
Not in the numbers — contracting offers freedom but less stability and no unemployment insurance. Weigh those alongside the dollars.