Salary vs 1099 Calculator
Compare your total tax burden as a W-2 employee versus a 1099 independent contractor at the same gross income. See the self-employment tax gap, the deductible half, and how it all adds up.
Income Comparison
Side-by-Side Tax Comparison
The True Cost Gap
What Should a 1099 Rate Be?
To match your W-2 take-home pay, a 1099 contract rate should account for the extra tax burden plus the value of employer benefits you’d lose.
W-2 vs 1099: The Tax Difference Explained
The biggest difference is payroll tax.As a W-2 employee, you pay 7.65% in FICA (6.2% Social Security + 1.45% Medicare) and your employer matches it. As a 1099 contractor, you pay both halves — 15.3% self-employment tax on 92.35% of your net earnings.
The deductible half offsets some of the pain.You can deduct half of your SE tax as an above-the-line adjustment, reducing your AGI. This means the extra SE tax isn’t quite as bad as 15.3% suggests — but it’s still significantly more than the employee share of FICA.
Income tax can differ too. The deductible half of SE tax reduces your AGI, which can lower your federal income tax bracket, affect credit phase-outs, and change your state tax. As a 1099 contractor, you may also qualify for the 20% QBI deduction (Section 199A) on qualified business income, which this simplified calculator does not include.
Benefits are not captured here.W-2 employees typically receive employer-sponsored health insurance (often $5,000–$15,000/year in employer contribution), 401(k) matching (3–6% of salary), paid time off, disability insurance, and other benefits. A 1099 rate should be 25–40% higher than the equivalent salary to account for these.
Business deductions matter for 1099.Independent contractors can deduct business expenses (home office, equipment, travel, software) from gross income before computing SE tax. This calculator uses gross income without deductions — your actual 1099 tax may be lower if you have significant business expenses.