Pricing

1099 vs W-2 Take-Home Calculator

A contract figure and a salary are not the same money. This tool lines them up after the extra self-employment tax, the benefits you must now buy, and unpaid time off — so you can compare real take-home value.

W-2 employee offer

Annual salary

Employer benefits value (year)

Health insurance + retirement match.

1099 contract offer

Annual contract income

Business expenses (year)

W-2 net value

1099 net value

To match this W-2 offer, the contract would need gross income of about .

A before-income-tax comparison: the W-2 side counts salary (less the 7.65% employee payroll tax) plus free benefits; the 1099 side counts profit less full self-employment tax and the cost of buying the same benefits yourself. Income tax is similar on both, so it is excluded.

This calculator gives a simplified estimate for educational purposes and uses approximate figures. It is not tax or financial advice and does not account for every rule, credit, or your full situation. Confirm specifics with a qualified professional. See our full disclaimer.

How the 1099 vs W-2 Calculator works

When a recruiter offers a contract role, the headline rate often looks bigger than a salaried equivalent — but the two are rarely the same money. This calculator lines them up on equal footing by converting both into a comparable take-home value, so you can see which offer actually leaves you better off.

On the W-2 side, it takes the salary, subtracts the 7.65% employee payroll tax, and adds the value of employer-paid benefits like health insurance and a retirement match. On the 1099 side, it takes your contract income, subtracts business expenses to get your profit, removes the full 15.3% self-employment tax, and subtracts the cost of buying those same benefits yourself. Because income tax is broadly similar on both sides, it is left out so the comparison stays clean.

What a salaried job quietly provides

The reason a contract needs a higher number is everything an employer absorbs on your behalf: half of your payroll taxes, subsidized health insurance, a retirement match, paid time off, holidays, sick leave, and often equipment and software. As a 1099 contractor, every one of these becomes your expense or your loss. None of it shows up in the headline rate, which is exactly why comparing the two numbers directly is so misleading.

How big should the gap be?

A widely used rule of thumb is that a contract rate needs to be roughly 25–40% higher than a salary to deliver similar real value. The exact figure depends on how generous the employer's benefits are and how much unpaid time off you plan to take — a contractor who takes three weeks off simply earns three weeks less. The calculator estimates the gross contract income you would need to match a given salary, so you can negotiate from a real target instead of a guess.

What the numbers can't tell you

A fair financial comparison is only half the decision. Contracting brings flexibility, multiple clients, and a higher earning ceiling — but also income volatility, no employer safety net, and more administrative work. The calculator tells you the price of that freedom; whether it is worth paying is a personal call only you can make.

Frequently asked questions

Why isn't a $100k contract the same as a $100k salary?

A W-2 employer also pays half your payroll tax and provides benefits like health insurance, a retirement match, and paid time off. As a 1099 contractor, those all become your expense or your loss, so the same headline number is worth less.

How much higher should a contract rate be?

A common rule of thumb is 25–40% higher than an equivalent salary, but the exact gap depends on the benefits you would forgo and how much unpaid time off you take. The calculator estimates the gross contract income needed to match a given salary.

What does this calculator leave out?

It is a before-income-tax comparison, since income tax is similar on both sides. It also cannot price non-financial factors like flexibility, income volatility, or job security — those are personal judgment calls.

Should I ever take a contract at the same rate as a salary?

Rarely. At an equal rate, the contract is usually a pay cut once you account for self-employment tax and lost benefits. Run the comparison first, then negotiate from the real number.