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Español1099 vs W-2 calculator (contractor vs employee pay)
Enter the W-2 salary and benefits and the 1099 rate. The calculator puts both on the same footing before income tax.
Is the 1099 rate really higher?
Everything happens on your device: nothing is uploaded to the internet.
W-2 job
1099 contract
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1099 vs W-2 calculator (contractor vs employee pay): what it is for
Enter the W-2 salary with the value of the benefits (health insurance paid by the employer, 401(k) match, paid days off and other perks) and the 1099 hourly rate with your expected billable hours and business expenses. The calculator compares the two after payroll taxes: the employee's 7.65% FICA against the contractor's 15.3% self-employment tax, with the deductible half.
You see the total value of each option and the 1099 hourly rate you need to break even with the W-2 job. Income tax is left out because it depends on your whole return; the comparison is before income tax for both.
How to use
- Enter the W-2 salary and benefits.
- Enter the 1099 rate, hours and expenses.
- Compare the totals and the break-even rate.
When to use it
- Choosing between two job offers.
- Setting a freelance rate.
- Converting from employee to contractor.
Frequently asked questions
Why do 1099 contractors need a higher rate?
As a contractor you pay both halves of Social Security and Medicare (15.3% self-employment tax instead of the employee's 7.65%), you buy your own health insurance, you get no employer 401(k) match, and you aren't paid for vacation, holidays or sick days. A common rule of thumb is that a 1099 rate needs to be 25% to 40% higher than the W-2 equivalent.
How is self-employment tax calculated?
It is 15.3% on 92.35% of net self-employment earnings: 12.4% for Social Security up to the wage base ($184,500 in 2026) and 2.9% for Medicare with no limit. You can deduct half of it when figuring your income tax.
What else should I count?
Business expenses you would pay as a contractor (equipment, software, insurance, accounting), unpaid time between contracts, and state rules. Contractors can also deduct business expenses and may qualify for the qualified business income deduction, which can narrow the gap.
Is it really free?
Yes, 100% free. No sign-up, no subscription and no usage limits. All Tools123 tools are free and run right in your browser.