1099 vs W-2 Calculator
Last updated:
1099 vs W-2 take-home comparison
Compare estimated take-home pay as a W-2 employee versus a 1099 self-employed contractor. Enter a salary and a contract amount, and the calculator estimates federal income tax, FICA or self-employment tax, and the employer-benefits gap. Results update as you type.
At the same income, a 1099 contractor keeps less than a W-2 employee, mainly because they pay the full 15.3% self-employment tax instead of the 7.65% FICA an employee pays. The contractor covers both the employee and employer halves of Social Security and Medicare, and self-funds benefits an employer would otherwise provide.
Estimate — federal taxes only. Uses 2026 federal brackets, the standard deduction, FICA (7.65%), and self-employment tax (15.3% on 92.35% of net earnings, with the employer-half deduction). No state or local tax, no QBI deduction, no additional Medicare tax. Not tax advice.
How to use the 1099 vs W-2 calculator
Enter a W-2 annual salary and the 1099 contract amount you're weighing it against. For the 1099 side, use your net earnings — contract income after business expenses. Pick a filing status so the federal income tax estimate is in the right ballpark. The take-home figures update instantly; nothing is sent anywhere.
The two cards show each side's take-home pay after federal income tax and payroll/self-employment tax. The big number at the top is the difference between them — before counting the value of employer benefits, which the gap note explains.
Worked example. Put $100,000 in both fields as a single filer. The W-2 side pays 7.65% FICA ($7,650) because the employer covers the matching half. The 1099 side pays self-employment tax of 15.3% on 92.35% of earnings — roughly $14,130 — and then deducts about half of that before federal income tax. At the same headline pay, the contractor takes home several thousand dollars less, which is why contractors typically need a higher rate to break even.
Taking the W-2 role? Compare how its salary lands on each payday with the biweekly vs semimonthly paycheck calculator.
This is a federal estimate only for tax year 2026. It does not include state or local income tax, the QBI deduction, additional Medicare tax, or the cash value of health insurance, retirement matching, and paid leave. It is not tax advice — confirm with a tax professional before making a decision.
What self-employment tax actually covers
Self-employment tax is not an extra penalty for working for yourself — it is the Social Security and Medicare tax that everyone pays, just collected differently. For a W-2 employee, this is FICA: 6.2% Social Security plus 1.45% Medicare, for 7.65%, withheld from each paycheck. The employer quietly pays a matching 7.65% on top. A self-employed person has no employer to match, so they pay both halves themselves — 12.4% Social Security plus 2.9% Medicare, 15.3% in total.
Two rules soften the blow. First, self-employment tax is charged on 92.35% of net earnings, not the full amount, which approximates the fact that an employer's half wouldn't have been taxable wages. Second, you can deduct half of the self-employment tax from your income before federal income tax — the calculator applies both automatically. The 12.4% Social Security portion only applies up to the annual wage base; earnings above it are subject to the 2.9% Medicare portion only.
W-2 vs 1099 at a glance
| W-2 employee | 1099 self-employed | |
|---|---|---|
| Payroll tax you pay | 7.65% FICA | 15.3% self-employment tax |
| Who pays the other half | Your employer | You |
| Health insurance, retirement, PTO | Often employer-funded | You fund it yourself |
| Business expense deductions | Very limited | Deduct legitimate costs |
| Tax withholding | Automatic each paycheck | Quarterly estimated payments |
The headline tax gap is only part of the story. A W-2 job usually bundles in health insurance, a retirement match, paid time off, and unemployment coverage — real money you'd otherwise buy yourself. That's why a 1099 rate has to clear both the higher tax and the cost of self-funded benefits before it's truly equivalent. On the other side, contractors can deduct legitimate business expenses and may qualify for the Qualified Business Income (QBI) deduction, which this federal estimate does not include.
Common 1099 vs W-2 questions
Why does a 1099 contractor keep less at the same income? A W-2 employee pays 7.65% FICA while the employer pays the other half. A 1099 contractor pays both halves as self-employment tax — 15.3% on 92.35% of net earnings — so at the same headline income they keep less, even after deducting the employer-equivalent half.
How much more should I charge as a 1099 contractor? Enough to cover the extra self-employment tax plus the benefits you now self-fund. Many contractors aim for 25–40% above an equivalent salary. Use the calculator to find the contract amount where take-home pay matches.
What is the self-employment tax deduction? You can deduct half of your self-employment tax from income before federal income tax, which this calculator applies automatically. It does not reduce the self-employment tax itself, only your income tax.
Does it include state tax? No. It is federal only. State income tax, where it applies, would reduce both take-home figures further.
Is this tax advice? No — it's a simplified estimate to help you compare offers. Your actual taxes depend on deductions, credits, the QBI deduction, and your state. Check with a tax professional.
Sources: 26 U.S.C. §1401 (self-employment tax, 12.4% + 2.9%) and §1402(a) (92.35% net-earnings base); §3101 (employee FICA, 6.2% + 1.45%) and §164(f) (deduction for half of SE tax); IRS Self-Employment Tax and Publication 334; SSA 2026 Social Security wage base ($184,500). Estimate only, not tax advice.