Enter both offers below. This weighs real take-home pay after federal tax, payroll/self-employment tax, and health insurance — not just the sticker number.
nets more per year, after taxes and health insurance.
W-2 $01099 $0
Full breakdown
W-2
1099
Gross income
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—
Business expenses
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—
Federal income tax
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—
Payroll / SE tax
—
—
Health insurance
—
—
Take-home pay
—
—
Effective hourly rate
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⚠ Contract net income is high enough that the 20% QBI deduction may start phasing out — actual deduction could be lower than modeled here. Check with a tax pro.
1099 and W-2 pay look nothing alike on paper
A W-2 salary and a 1099 rate rarely compare cleanly, because they're taxed differently, insured differently, and paid out differently. A W-2 employer splits your Social Security and Medicare tax with you, picks up part of your health plan, and pays you for time off. A 1099 client pays you a rate and nothing else — you cover both halves of payroll tax yourself, buy your own insurance, and every unbilled hour goes unpaid.
That's why a $90,000 salary and a $75/hour contract can sound roughly equivalent and land $10,000 or more apart once taxes and benefits are factored in. The calculator above runs the actual math instead of assuming the bigger sticker number wins.
What actually moves the number
Self-employment tax. 1099 income pays both halves of Social Security and Medicare — 15.3% before any income tax, versus 7.65% for a W-2 employee.
Health insurance. Employers often cover part of a W-2 premium; contractors usually pay the full cost themselves.
Paid time off. A W-2 salary keeps paying you on vacation. A 1099 rate only pays for hours actually billed.
The QBI deduction. Most 1099 income qualifies for a 20% deduction on business profit, which meaningfully softens the tax gap.
Write-offs. Business expenses reduce a contractor's taxable income directly — a real advantage a W-2 salary doesn't have.
Frequently asked
Should a 1099 rate always be higher than an equivalent W-2 salary?
Yes, meaningfully higher. Many contractors target 25–35% above the equivalent salary to cover the extra tax and lost benefits — but that's a rule of thumb. Use the calculator above for your actual number.
Does this include state income tax?
No — this tool is federal-only, since state rates vary widely by location. If your state taxes income, your real take-home will be lower than what's shown here.
What if I don't know how many weeks I'll actually bill?
Use last year's invoices if you have them. If not, be conservative — most independent contractors bill 44–48 weeks a year once you factor in slow periods, unpaid time off, and gaps between projects.
Can I use these numbers to negotiate?
Yes. If you're comparing a W-2 offer to your current 1099 income, use the take-home gap — not the gross gap — as your anchor in the conversation.
Is the 20% QBI deduction guaranteed?
No. It phases out for certain service businesses above the federal income thresholds noted in the methodology below. If your contract income is high, treat the 1099 estimate as a starting point and confirm the details with a tax preparer.
How this is calculated
Uses 2026 federal tax brackets and standard deduction (IRS Rev. Proc. 2025-32) and the 2026 Social Security wage base ($184,500).
W-2 health premiums are treated as pre-tax, reducing both taxable wages and FICA wages — the common cafeteria-plan setup.
1099 self-employment tax is 15.3% on 92.35% of net business income, with the usual half-SE-tax deduction and a simplified 20% Qualified Business Income deduction (assumes you fully qualify, with no phase-out modeling beyond the warning flag above).
Self-employed health insurance premiums are deducted from taxable income, but not from the self-employment tax base — matching the real rule.
State and local income tax, retirement contributions beyond the 401(k) match note, and itemized deductions are not included.
W-2 effective hourly assumes a standard 2,080-hour work year (40 hrs × 52 wks); 1099 effective hourly uses your actual billable hours.
This is an estimate for comparison purposes, not tax advice.