W2 vs 1099 Calculator
Weighing a salaried job against a contract offer? Put a W-2 salary and a 1099 rate side by side and see which leaves more after 2025 federal income tax, FICA and self-employment tax — before benefits enter the picture.
Reviewed by the CalcCafe editorial team · Last updated 18 July 2026 · How we test our tools
Example
A single worker compares a $100,000 W-2 salary against a $120,000 1099 contract with $8,000 of business expenses. On the W-2 side, FICA is $7,650 and federal income tax about $13,614, leaving a take-home of $78,736. On the 1099 side, net profit is $112,000; self-employment tax is $15,825 and federal income tax about $14,513, leaving $81,662. The 1099 offer comes out ahead by about $2,926 — before counting the health insurance, 401(k) match and paid time off the W-2 job includes.
How it works
W-2 side: FICA = 6.2% Social Security on salary up to the 2025 wage cap of $176,100 plus 1.45% Medicare on all of it; taxable income = salary − the 2025 standard deduction ($15,000 single, $30,000 married filing jointly); federal income tax comes from the 2025 brackets (10% to 37%, married thresholds double); take-home = salary − FICA − income tax. 1099 side: net profit = gross − expenses; self-employment tax = 15.3% on 92.35% of net profit (Social Security portion capped at $176,100); taxable income = net profit − half the SE tax − the standard deduction; take-home = net profit − SE tax − income tax. The headline figure is the 1099 take-home minus the W-2 take-home — positive means the contract nets more. Federal only, 2025 tax year, educational estimate.
Good to know
The classic rule of thumb: a 1099 rate should run about 1.3 to 1.5 times the equivalent W-2 salary to break even. The gap covers the employer half of FICA you now pay yourself (an extra 7.65% up to the wage cap), the benefits you must buy on your own, unpaid holidays and downtime between contracts, and the administrative overhead of running a business. A $100,000 salary is therefore roughly comparable to a $130,000–$150,000 contract — if an offer converts at 1:1, the W-2 job almost always wins economically.
This calculator deliberately does not model W-2 benefits, and they are worth real money: employer-subsidized health insurance commonly runs $6,000–$18,000 a year in employer contributions, a 401(k) match adds 3–6% of salary, and paid vacation, sick leave, disability cover, unemployment insurance and workers' compensation all vanish when you go 1099. When comparing offers, price each of these and add them to the W-2 column mentally — a modest cash difference in favor of 1099 can evaporate once benefits are counted.
The 1099 column has its own upside not modeled here. Contractors deduct ordinary and necessary business expenses — home office, equipment, software, business mileage, professional fees — which this tool captures through the expenses field, but they may also claim the Qualified Business Income (QBI) deduction of up to 20% of qualifying profit, deduct self-employed health insurance premiums, and shelter far more in a solo 401(k) or SEP-IRA than an employee can. Well-advised contractors often narrow or reverse an apparent tax disadvantage.
Worker classification is not a choice you and the client make freely: the IRS looks at behavioral control, financial control and the relationship of the parties. If the company controls how, when and where you work, you are likely an employee regardless of what the contract says, and misclassification exposes the payer to back employment taxes. Remember this page is a federal-only 2025 educational estimate using the standard deduction — state income tax, the 0.9% additional Medicare surtax, credits and benefits are all excluded, so verify important decisions with a tax professional.
Frequently asked questions
How much more should a 1099 rate be than a W-2 salary?
A common rule of thumb is 1.3 to 1.5 times the W-2 salary. The premium covers the employer half of FICA that contractors pay themselves, self-purchased health insurance, no paid time off, no 401(k) match, gaps between contracts, and business overhead. A $100,000 salary is roughly equivalent to a $130,000–$150,000 contract.
Does this calculator account for W-2 benefits like health insurance?
No — it compares federal taxes only. Employer health insurance, 401(k) matching, paid time off, unemployment insurance and workers' compensation are not modeled, and they typically add thousands of dollars of value to the W-2 side. Price your actual benefits separately and add them to the comparison.
Why does the 1099 side pay self-employment tax?
Employees split Social Security and Medicare with their employer at 7.65% each; contractors pay both halves — 15.3% — as self-employment tax, applied to 92.35% of net profit with the 12.4% Social Security portion capped at $176,100 of 2025 earnings. Half the SE tax is deductible before income tax is figured, which softens the hit.
Is this calculator free, and is my data uploaded anywhere?
Yes, it is completely free with no sign-up, and no — everything runs in your browser. The salary and contract figures you enter never leave your device. Results are federal-only 2025 educational estimates, not tax or career advice.
People also ask
Do 1099 contractors pay more tax than W-2 employees?
On identical gross pay, usually yes — the contractor pays both halves of Social Security and Medicare instead of one. But contractors can deduct business expenses, may claim the QBI deduction of up to 20% of qualifying profit, and can shelter more in a solo 401(k) or SEP-IRA, so the effective gap is often smaller than the headline 7.65% suggests.
Can my employer just switch me from W-2 to 1099?
Only if the working relationship genuinely changes. The IRS classifies workers by behavioral control, financial control and the relationship of the parties — not by the label on the contract. If the company still controls how, when and where you work, you remain an employee, and misclassification can cost the payer back employment taxes and penalties.
What taxes does a 1099 contractor have to pay during the year?
Federal self-employment tax plus federal income tax, normally paid through quarterly Form 1040-ES estimated payments due April, June, September and January, plus any state income tax. Nothing is withheld from contractor checks, so if you expect to owe $1,000 or more you must pay as you go to avoid an underpayment penalty.
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Sources & references
These tools follow our methodology and provide educational estimates only — verify important figures with a qualified professional.