1099 vs W-2 Calculator

Compare a W-2 salary with benefits against 1099 freelancing — and find the break-even hourly rate where the contract stops being a pay cut.

The W-2 offer

$
days
days
days
$

Employer's share, per year

$
$

Bonus, tuition, equipment stipend

h

The 1099 contract

$
h
$
$

Tax math uses 2026 U.S. federal rules (self-employment tax, QBI, standard deduction). Filing status: single.

Break-even hourly rate
$85.78
the 1099 rate that matches your W-2
W-2 true hourly pay
$54.35
$100,000 total comp ÷ 1,840 actual hours
W-2 take-home (cash + benefits)
$79,180
after FICA & federal tax
1099 take-home at your rate
$78,504
after tax, insurance & expenses
1099 gross revenue
$106,250
1,250 billable hours × $85.00
Difference (1099 − W-2)
-$676
you would take home less as a 1099

How this 1099 vs W-2 calculator works

Comparing a salary to a contract rate is not apples to apples. This calculator does three things most comparisons miss:

1. It monetizes your benefits

Your real W-2 compensation is salary plus employer-paid health insurance, 401(k) match, bonuses and stipends. It then divides that total by your actual hours worked — 261 weekdays minus PTO, holidays and sick days — to reveal your true hourly pay. A $100,000 salary with 31 paid days off is really about $50/hour of work.

2. It runs real 2026 tax math on both sides

The W-2 side pays 7.65% FICA plus federal income tax on salary minus the standard deduction. The 1099 side pays 15.3% self-employment tax on 92.35% of net earnings plus income tax, minus business expenses, the half-SE-tax deduction and the 20% QBI deduction. No flat “25%” guesswork.

3. It solves for the break-even rate

The headline number is the break-even hourly rate: the exact 1099 rate where your take-home matches the W-2 offer. Quote above it and the contract is a raise; quote below and you are quietly paying to work. Before you sign, check what that income will owe with the 1099 tax calculator.

Frequently asked questions

Is 1099 or W-2 better for taxes?

W-2 employees pay 7.65% FICA with their employer matching it; 1099 freelancers pay the full 15.3% self-employment tax plus income tax. But 1099s can deduct business expenses, half their SE tax and 20% QBI, and often pay tax on a lower net income. Neither is strictly better — the break-even rate is what matters.

What is a 1099 employee?

Technically there is no such thing — you are either a W-2 employee or a 1099 independent contractor. Companies sometimes use the term loosely for contractors working regular hours. If you are a 1099, you invoice for your work, receive no benefits, and pay self-employment tax.

Do freelancers really pay more tax than employees?

Per dollar of profit, usually yes — the 15.3% SE tax is roughly double the employee FICA of 7.65%. But freelancers often pay less total tax than an employee earning the same gross, because business expenses and the QBI deduction shrink taxable income first.

How much more should a 1099 rate be than a salary?

A common rule of thumb is a 30–40% premium. A $100,000 salary with 15 PTO days, 11 holidays, 5 sick days and no other benefits works out to about $54/hour of actual work — and a freelancer at 1,250 billable hours with $5,000 of expenses needs roughly $86/hour to match it after taxes, insurance and expenses.

What benefits should I value when comparing a W-2 offer?

Value everything the employer pays on top of salary: health insurance premiums (often $5,000–$12,000/year), 401(k) match, paid time off, holidays, sick leave, bonuses and stipends. A “good salary” can lose to a lower-paying offer with strong benefits — this calculator monetizes all of them.

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Estimates for planning only — not tax, legal, or financial advice. Figures reflect tax year 2026 (IRS Rev. Proc. 2025-32) and apply to U.S. federal taxes; your situation may differ. Consult a qualified tax professional before making decisions.