Quick answer
A $100,000 salary with $15,000 of benefits is worth $87,350 after tax, while the same work at $75 an hour as a 1099 contractor nets $95,141 — about $7,791 more. The contractor pays $18,934 of self-employment tax but gains the 20% QBI deduction and deducts $10,000 of business expenses.
How the W2 vs 1099 Paycheck Calculator works, step by step
Enter your W-2 salary and the value of its benefits, then the contractor side: hourly rate, hours per week, weeks per year and business expenses. One effective tax rate applies to both sides, so the comparison isolates the structure — employment versus contracting — rather than mixing in different tax assumptions. The weeks-per-year input defaults to 48, leaving four weeks for holidays, sick time and gaps between contracts — time a W-2 employee is paid for and a contractor is not.
The W-2 side subtracts the 7.65% employee share of FICA and income tax at your effective rate, then adds benefits back as value: employer health cover, the 401(k) match, paid leave and the rest. Benefits are the part people forget when they compare a salary with a contractor rate — $15,000 of benefits is worth $15,000 of take-home you would otherwise have to buy yourself.
The 1099 side starts from gross contract income — rate × hours × weeks — minus business expenses. Self-employment tax is 15.3% of 92.35% of the net figure, and half of it is deductible. The 20% QBI deduction then applies; it is permanent from 2026 and the full 20% is available below $201,750 of taxable income for single filers. Income tax applies to what remains.
The premium line shows how much more the contractor gross is than the salary: $144,000 against $100,000 is a 44% premium at the defaults. The common rule of thumb is 20–30%, but the right premium depends on your benefits, your expenses and your tax rate — this calculator shows the actual gap for your numbers instead of the rule.
The break-even line estimates the hourly rate at which contracting matches the W-2 package's total value — about $67 an hour at the defaults. It is a rough gross-up rather than a precise inversion of the tax math, so treat it as a guide. Below that rate, the W-2 job pays more for the same hours; above it, contracting wins.
The formula
1099 take-home = (gross − expenses) − self-employment tax − income tax on (net business income − half the SE tax − QBI deduction). W-2 value = salary − 7.65% FICA − income tax + benefits.
Worked example — try it on the calculator above
Worked example: $100,000 salary vs $75 an hour contracting
The W-2 side: a $100,000 salary loses $7,650 of FICA and $20,000 of income tax at a 20% effective rate, leaving $72,350; adding $15,000 of benefits gives a total value of $87,350. The 1099 side: $75 × 40 hours × 48 weeks is $144,000 gross, minus $10,000 of expenses is $134,000 of net business income. Self-employment tax is $18,933.60, the QBI deduction is $24,906.64, taxable income is $99,626.56 and income tax is $19,925.31 — leaving take-home pay of $95,141.09. The contractor comes out $7,791.09 ahead, and the break-even hourly rate is about $66.63.
Frequently Asked Questions
How much more should I charge as a 1099 contractor vs W-2?
The common rule of thumb is 20–30% more than the equivalent salary, to cover the employer's half of FICA (7.65%), self-funded health insurance, unpaid time off and business expenses. At the defaults here the actual premium is 44% — $144,000 of contract gross against a $100,000 salary — because the benefits package alone is worth $15,000.
Do 1099 contractors pay more in taxes than W-2 employees?
Contractors pay the full 15.3% self-employment tax, where employees pay only the 7.65% employee share of FICA. But contractors deduct business expenses from income and can claim the 20% QBI deduction, which employees cannot. At the defaults the contractor still comes out $7,791 ahead despite paying $18,934 of self-employment tax.
How do you calculate 1099 tax?
Deduct business expenses from gross income to find net business profit, multiply by 92.35% and apply the 15.3% self-employment tax. Subtract half that tax, apply the 20% QBI deduction if eligible, and apply income tax to the remainder. On $134,000 of net profit at a 20% effective rate, that is $18,934 of SE tax plus $19,925 of income tax.
What benefits do I lose going from W-2 to 1099?
You lose employer-subsidized health insurance, the 401(k) employer match, paid vacation and sick leave, unemployment insurance eligibility and workers' compensation coverage. You must fund all of them yourself, which is why the calculator adds the value of your W-2 benefits — $15,000 at the defaults — to the employee side of the comparison.
Estimates, not advice. This calculator provides educational estimates based on the inputs you enter and the assumptions shown on this page. It is not financial, tax or investment advice, and it cannot see your full situation. Verify important figures against official sources, and consider a qualified professional for decisions about your own money. See our Disclaimer and Methodology.