1099 vs W-2 Take-Home Calculator
Compare after-tax take-home for the same pay as a 1099 contractor vs. a W-2 employee — and see how much more you must charge as a 1099 to break even.
Your details
Rough figures are fine — you can refine later.
How we calculate this
We compute after-tax cash for the same gross both ways. All rates and caps come from our versioned tax-constants.json.
1099 (contractor). Net profit = gross − business expenses. Federal tax = freelancerFederalTax (SE tax + income tax on net − half-SE − standard deduction − QBI). Take-home = gross − expenses − federal − (net × state rate).
W-2 (employee). Employee FICA = 6.2% of wages up to the Social Security wage base + 1.45% of all wages (the employer pays the other half — not counted here). Income tax = federal tax on (gross − standard deduction). Take-home = gross − FICA − income tax − (gross × state rate).
Match figure. The 1099 gross needed to equal the W-2 take-home = gross × (W-2 take-home ÷ 1099 take-home).
Assumptions: single business on Schedule C, standard deduction, no S-corp election. Cash only — benefits, PTO, and retirement match are excluded and must be valued separately.
Primary sources
- IRS Schedule SE (Form 1040), Self-Employment Tax
- IRS Publication 15 (Circular E), FICA rates and Social Security wage base
- IRS Publication 334, Tax Guide for Small Business
Same pay, different take-home
A $100,000 salary and a $100,000 contract are not the same money. The headline number matches, but what lands in your account after tax does not — and the gap surprises people who jump from employment to freelancing without running the math.
The culprit is payroll tax. On a W-2, you and your employer split Social Security and Medicare: you pay 7.65%, they pay the other 7.65%, and you never see their half. As a 1099 contractor there is no employer to split with, so you pay both halves yourself through self-employment tax — 15.3% of your net earnings. That extra 7.65% is the single biggest reason the same gross nets you less as a contractor.
What this calculator does
It computes after-tax cash both ways from one gross figure:
- 1099 side: gross minus business expenses gives your net profit, which drives self-employment tax plus federal income tax (with the standard deduction and QBI factored in), plus an optional state estimate.
- W-2 side: employee FICA (6.2% Social Security up to the wage base + 1.45% Medicare) plus federal income tax on gross minus the standard deduction, plus the same optional state estimate.
Then it shows the difference and, most usefully, the 1099 gross you'd need to charge to match the W-2 take-home.
The number that matters: how much more to charge
If an employer offers you a salary and a client offers you the same as a contract, you're not comparing like with like. To end up with the same money in your pocket, your contract rate has to be higher. This tool turns that into a concrete figure — often 25–50% more — that becomes your negotiating floor when you quote a client or weigh an offer.
Don't stop at the cash
The comparison here is cash take-home only, and that's deliberately incomplete. A W-2 job often bundles health insurance, paid time off, an employer 401(k) match, and payroll-tax coverage — real value a contractor must now self-fund. Before you decide 1099 pays more, price those benefits with the Benefits Replacement Cost calculator and add them to the W-2 side.
On the other hand, contractors have levers employees don't: legitimate business deductions shrink taxable profit, and at higher incomes an S-corp election can cut payroll tax. With meaningful expenses the 1099 side can genuinely pull ahead.
What this assumes
A single business on Schedule C, the standard deduction, and no S-corp election. State tax is a flat estimate applied to both sides. It ignores credits, other household income, and — again — the value of benefits.
Estimates only, not tax advice. Run your real numbers with a professional before signing anything.
Common questions
Why do I take home less as a 1099 at the same pay? + −
As a W-2 employee your employer pays half of Social Security and Medicare (7.65%) for you. As a 1099 contractor you pay both halves yourself through self-employment tax — 15.3% of net earnings. That extra employer share is the main reason the same headline number nets you less.
How much more should I charge as a 1099? + −
This tool shows the 1099 gross needed to match a given W-2 take-home. A common rule of thumb is 25–50% more, but the exact number depends on your expenses, tax bracket, and the benefits you’re replacing. Use the figure here as your negotiating floor, not the ceiling.
Does this include benefits and PTO? + −
No — this compares cash take-home only. Health insurance, paid time off, and an employer 401(k) match have real value that a contractor must self-fund. Add those with the Benefits Replacement Cost calculator before deciding.
Can 1099 ever beat W-2? + −
Yes. Legitimate business deductions lower your taxable profit, and at higher incomes an S-corp election can reduce payroll tax. With meaningful expenses the contractor side can pull ahead even before you price in rate flexibility.
Keep going
Prepared for tax year 2026. Every rate and cap on this page cites a primary IRS or SSA source. Estimates only — not tax or financial advice. — for planning purposes only, not tax, legal, or financial advice.