1099 vs W‑2 Calculator
Weighing a contract against a job offer? Line up real take-home pay, including the taxes and benefits an employer quietly covers, and see the break-even rate.
| 1099 | W-2 | |
| Gross pay | $112,500 | $100,000 |
| Social Security + Medicare | $15,048 | $7,650 |
| Federal income tax | $8,066 | $13,170 |
| Expenses & insurance you pay | $13,000 | $0 |
| Benefits receivedHealth + match | $0 | $11,000 |
| Real value | $76,386 | $83,180 |
W-2 COMES OUT AHEAD
The hidden paycheck an employer pays
Toggle the benefits in the form and watch the break-even rate move. The biggest surprise for most people is not tax but hours: 1,500 billable hours is 72% of a 2,080-hour work year. Admin, sales and gaps between clients are unpaid.
True cost = salary + employer FICA ($7,650) + the benefits you ticked. That full amount is the pie you are replacing as a contractor.
Questions freelancers ask
How do I compare a 1099 rate to a W-2 salary?
Compare take-home pay after everything an employer would have covered: the employer half of FICA (7.65%), health insurance, retirement matching, paid time off and unbilled hours. A common rule of thumb is that a 1099 rate needs to be 25–40% higher than the equivalent W-2 hourly wage to break even.
Is it better to be 1099 or W-2?
Neither is automatically better. W-2 work comes with employer-paid benefits and withheld taxes; 1099 work lets you deduct business expenses, take the QBI deduction and open larger retirement plans. The calculator shows which one leaves you with more money for your situation.
How much more should I charge as a 1099 contractor?
At minimum enough to cover the extra 7.65% of FICA, your own health insurance and retirement contributions, and the weeks you are not billing. For a $100,000 salary with typical benefits, the break-even 1099 income is often $125,000–$140,000.
Do 1099 contractors pay more taxes than W-2 employees?
On the same gross, yes, because they pay both halves of Social Security and Medicare. Deductions for business expenses, half of SE tax and the 20% QBI deduction offset part of that.