Benefits Replacement Cost Calculator
What you now pay for yourself that an employer used to cover — health, retirement match, PTO, and the extra payroll tax. The real gap between a 1099 rate and a salary.
Your details
Rough figures are fine — you can refine later.
How we calculate this
We sum the four benefits an employer typically provides.
1. Health premiums you pay for yourself.
2. Retirement match a comparable job would have contributed.
3. PTO value — days off × day rate (from the PTO Banking tool).
4. Extra payroll tax — your net income × 7.65%, the employer half of FICA you now cover. That 7.65% is derived from the Social Security and Medicare rates in tax-constants.json, not hard-coded.
Total, per month, and as a share of income. This is a comparison estimate, not tax or financial advice.
Primary sources
- U.S. Bureau of Labor Statistics — Employer Costs for Employee Compensation
- IRS Publication 15, (Circular E) Employer’s Tax Guide (FICA split)
The real gap between a salary and a freelance rate
When people compare a $100,000 salary to $100,000 of freelance income and call them equal, they're missing a large, invisible number: the benefits an employer used to provide and now you buy yourself. This calculator adds that number up, so you can see what being 1099 actually costs — and why your rate has to beat a salary by more than it appears.
Enter what you pay for health premiums, the retirement match you no longer get, the value of your lost paid time off, and your net income. You get the annual total, the monthly figure, and what it represents as a share of your income.
The four pieces
Health premiums. At a job, an employer typically covers the majority of your premium. On your own, you pay the whole thing — often the single biggest line here.
Retirement match. A common employer 401(k) match is free money you simply don't receive as a freelancer. Whatever a comparable job would have contributed is a real loss to replace.
Paid time off. Vacation, holidays, and sick days that a salary keeps paying through — for you, unpaid unless you bank them. Pull this figure from our PTO / Sick Day Banking calculator (days off × day rate).
The employer's payroll tax. Employees and employers split Social Security and Medicare tax roughly in half, 7.65% each. As a freelancer you pay both halves through self-employment tax, so the employer's 7.65% is a genuine extra cost — applied here to your net income.
Why this changes how you price
Add it up and these benefits commonly run 20–30% on top of salary. That means a $100,000 job might really be worth $125,000 or more once benefits are counted — so to match it, you'd need roughly $125,000 of freelance income *before* even accounting for irregular cash flow and unpaid admin time. Freelancers who quote a rate just slightly above their old salary are, in real terms, taking a pay cut.
Knowing this number is the strongest argument you have for a higher rate. It's not greed; it's replacing compensation you used to receive automatically.
Where it connects
This tool feeds the 1099-vs-W-2 comparison directly, and it pairs with the Salary → Freelance Rate calculator, which builds these costs into a target rate. Together they answer the question every freelancer eventually faces: "what do I actually need to charge to come out ahead?"
What this is
A comparison estimate, not tax or financial advice. The payroll-tax portion uses the 7.65% employer half derived from current Social Security and Medicare rates; the other inputs are yours. Use it to price your work and to understand the true economics of going independent.
Common questions
What benefits do freelancers have to replace? + −
The big ones an employer typically provides: health insurance premiums (often heavily subsidized at a job), a retirement plan match, paid time off, and the employer’s half of Social Security and Medicare payroll tax. Add them up and they commonly run 20–30% on top of salary — money a freelance rate has to cover.
Why does the employer payroll tax count? + −
Employees and employers split Social Security and Medicare tax roughly in half (7.65% each). As a freelancer you pay both halves through self-employment tax, so the employer’s 7.65% is a real extra cost you now carry — included here on your net income.
How does this compare to a salary? + −
It shows why a freelance rate must exceed a salary by more than it appears. If a $100,000 job came with $25,000 of benefits, you’d need roughly $125,000 of freelance income to match it — before accounting for irregular income and unpaid admin time. Our 1099 vs W-2 tool takes this further.
Where do I get the PTO value? + −
From our PTO / Sick Day Banking calculator — desired days off × your day rate. Enter that figure here so your total reflects the paid time off you no longer receive.
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.