1099 Contractor vs W-2 Employee Calculator
Compare a 1099 contractor rate with a W-2 salary: what hourly rate matches a salary once self-employment tax, benefits and unpaid time off are counted.
How to use
- 1Enter the W-2 salary offer and the value of its benefits.
- 2Enter the 1099 hourly rate, the hours you'd bill and your business expenses.
How it's calculated
Contractor net ≈ rate × billable hours − expenses − the employer half of FICA (7.65% × 92.35% of net earnings) − benefits you'd buy yourself. W-2 total = salary + benefits + employer FICA the company pays.
Frequently asked questions
Why do contractors need a higher rate?
They pay both halves of Social Security and Medicare (15.3% self-employment tax up to the wage base), buy their own benefits and aren't paid for holidays or downtime.
What's a quick rule of thumb?
Many people estimate the break-even contract rate at 1.25–1.5× the W-2 hourly rate (salary ÷ 2,080).
Does this include income tax?
No — income tax applies to both. This compares the extra costs of being self-employed.