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1099 vs W-2 calculator
A $140K contract is not a $140K salary.
Contract pay looks bigger because nothing is withheld — but you owe both halves of payroll tax and buy your own benefits. Enter both offers to see which actually leaves you ahead per year.
Results
Enter both offers to compare.
W-2 net (after tax + benefits)$0.00
W-2 salary$0.00
W-2 benefits value$0.00
W-2 tax + FICA$0.00
W-2 all-in rate$0.00
1099 net (after tax + benefits)$0.00
1099 net earnings$0.00
Self-employment tax$0.00
Income tax$0.00
Benefits you buy$0.00
Business expenses$0.00
Rule of thumb: 1099 pay needs to be roughly 25–30% higher than a W-2 salary to break even after SE tax and benefits.
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Where the contract premium goes
A 1099 contractor owes about 14.13% in effective self-employment tax (both halves of Social Security and Medicare on 92.35% of net earnings) versus 7.65% FICA as an employee — roughly a 6.5-point gap before income tax even starts. Then add health insurance, retirement contributions with no match, unpaid time off, and business expenses. A $140K contract against a $95K salary with $18K in benefits is often close to a tie, not a raise.
What the math misses
Stability, unemployment insurance, workers' comp, paid leave, and career growth don't fit in a calculator. Neither does flexibility, rate growth, or the ability to deduct business expenses. Use the number as a starting point, then price the intangibles yourself.
Quarterly taxes are the trap
Nothing is withheld from 1099 pay. If the contract wins, set up quarterly estimated payments immediately — the calculator's tax buffer is what you'd owe, and the IRS charges penalties for underpayment.
Frequently asked questions
How much more should 1099 pay vs W-2?
Roughly 25–30% more to break even after self-employment tax and self-funded benefits. Run your exact offers above — the gap varies with benefit values.
What is self-employment tax?
Social Security and Medicare on 92.35% of net earnings — effectively about 14.13%, versus 7.65% FICA for employees. It's the biggest structural cost of 1099 work.
Do 1099 contractors get benefits?
Not from the client — you buy health insurance, fund your own retirement, and take unpaid time off. Price all of it in the benefits row.
Is 1099 or W-2 better for taxes?
1099 unlocks business deductions (home office, mileage, equipment, half of SE tax) that can narrow the gap. W-2 is simpler and includes employer-paid benefits. The calculator compares after-tax outcomes.
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