1099 vs W-2 Calculator
Compare a self-employed 1099 contract rate to a W-2 salaried job. The 1099 needs to be ~25-30% higher to match a W-2 once you account for taxes and benefits.
Inputs
About 1099 vs W-2 Calculator
Rule of thumb
A 1099 rate generally needs to be 25-35% higher than the equivalent W-2 hourly to match — to cover the employer half of FICA (7.65% extra, until profit passes the Social Security wage base), health insurance, retirement, PTO, and no employer 401k match.
How the tax is calculated
Both sides use the current federal brackets and the standard deduction for your filing status, not a flat guess. On the 1099 side, self-employment tax stops charging the 12.4% Social Security portion once net earnings reach the Social Security wage base — only the 2.9% Medicare portion continues — and half the SE tax is deducted before income tax is figured. On the W-2 side, employee Social Security is capped at the same wage base. The break-even rate is solved against those real brackets, so it shifts as your income moves between them. State and local income tax is not included.
Why 1099 can still win
Home office deduction, SEP-IRA / Solo 401(k) limits (up to $69k/year), business expense write-offs, ability to negotiate rate annually, multiple clients. Strategic for high earners.
Risks of 1099
No paid time off, no employer health/retirement, no unemployment insurance, irregular income, more record-keeping, must pay quarterly estimated taxes.