W-2 vs 1099 Calculator
Rule of thumb: a 1099 rate needs to be roughly 20-30% higher than a W-2 salary to break even, because you pay both halves of FICA and buy your own benefits. Not tax advice.
Use our interactive calculator to compare your specific W-2 vs 1099 scenarios. Because 1099 contractors pay higher taxes and don’t receive employer benefits, comparing the two requires more than just looking at the gross pay.
Consider this scenario: You are offered a $75,000 W-2 salary or a $90,000 1099 contract. Which one actually puts more money in your pocket? Use this calculator to compare the tax burdens and net pay of both options side-by-side.
W-2 Employee
Estimated Net Pay
1099 Contractor
The Verdict
Want to understand the differences in detail?
Read our complete educational guide on W-2 vs 1099 to compare benefits, taxes, pros, and cons.
W-2 vs 1099: The Hidden Costs
When comparing a W-2 salary to a 1099 contract rate, you cannot compare them dollar-for-dollar. A $60,000 W-2 salary is worth significantly more than a $60,000 1099 contract due to taxes and benefits. For more information on tax rates, visit the IRS Self-Employment Tax Guide.
The Tax Burden Difference
W-2 Employees: Pay 7.65% in FICA taxes. The employer pays the other 7.65%.
1099 Contractors: Pay the full 15.3% Self-Employment tax. You are responsible for both the employee and employer portions.
The Value of Benefits
W-2 employees typically receive benefits that have real monetary value. Health insurance premiums, 401(k) matching, paid vacation, and paid sick leave can add 20% to 30% to the value of your base salary. As a 1099 contractor, you must purchase your own health insurance and fund your own retirement, which comes directly out of your net pay.
Flexibility vs Stability
Financials are only part of the equation. 1099 contractors enjoy greater flexibility, the ability to take on multiple clients, and the power to deduct business expenses (like home office costs and equipment) to lower their taxable income. W-2 employees enjoy job stability, unemployment insurance eligibility, and predictable paychecks.
Important Disclaimer
This calculator provides a simplified comparison. It estimates a flat $5,000 value for W-2 benefits, which varies wildly by employer. It also does not account for 1099 business deductions, which can significantly lower a contractor’s tax burden. We recommend consulting a tax professional to run a detailed comparison based on your specific situation and state laws.