Compare W-2 and 1099 offers side by side, or find the contract rate you need to match a salary. The calculator accounts for self-employment tax, health insurance, the 401(k) match, paid time off and business expenses, with 2026 federal and state taxes.
| Per year | W-2 | 1099 |
|---|
Know More: How the 1099 vs W-2 Calculator Works
Updated for 2026. W-2 pay uses the same 2026 federal, state and payroll tax rules as our paycheck calculators. 1099 pay uses 15.3% self-employment tax on 92.35% of profit, the deduction for half of it, the self-employed health insurance deduction and the 20% qualified business income deduction.
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Key differences between 1099 and W-2
| W-2 employee | 1099 contractor | |
|---|---|---|
| Taxes withheld | Yes, by the employer | No; you pay quarterly estimates |
| Social Security and Medicare | 7.65%; employer pays another 7.65% | 15.3% self-employment tax, both halves |
| Health insurance | Employer usually pays most of the premium | You buy your own (deductible) |
| Retirement | 401(k), often with a match | SEP-IRA or solo 401(k), no match |
| Paid time off and holidays | Usually paid | Unpaid; no work, no pay |
| Unemployment and workers' comp | Covered | Usually not covered |
| Business expenses | Not deductible | Deductible |
| Control over your work | Employer sets how and when | You decide how the work is done |
Whether you are an employee or a contractor depends on the actual relationship, such as who controls the work, not just on what the paperwork says. California and some other states use a stricter "ABC test".
Extra taxes contractors pay
The biggest difference is self-employment tax. An employee pays 7.65% for Social Security and Medicare, and the employer quietly pays another 7.65%. A contractor pays both halves, 15.3% on 92.35% of profit.
On a $100,000 salary, an employee has $7,650 of Social Security and Medicare withheld. A contractor billing $70 an hour for 40 hours a week and 48 weeks ($134,400) pays about $18,566 of self-employment tax. Half of it is deductible for income tax, and the 20% QBI deduction lowers income tax further, but the net cost is still higher.
Contractors also have no withholding, so they must pay quarterly estimated taxes. See the Self-Employment Tax Calculator for the details.
Benefits to price in
A W-2 salary comes with benefits a contractor has to buy or go without:
- Health insurance: employers pay most of the premium for workers with job-based coverage, often around 80% for single coverage. As a contractor, a marketplace or private plan can cost $500 to $1,000 a month for one person.
- 401(k) match: a 4% match on $100,000 is $4,000 a year of free money.
- Paid time off: 21 paid days off (vacation, sick days and holidays) are worth about 8% of a salary. A contractor who takes the same time off simply isn't paid.
- Other costs: equipment, software, liability insurance, an accountant, and gaps between contracts.
The calculator counts take-home pay plus the 401(k) match as the value of the W-2 job, and take-home pay after expenses and health insurance as the value of the contract. It also shows value per hour actually worked, since a salary pays for days off.
Rule of thumb for contract rates
A common rule is that a 1099 rate should be about 1.25 to 1.5 times the hourly equivalent of a salary (salary ÷ 2,080 hours) to come out even, higher if you expect gaps between contracts or expensive health insurance. The calculator finds the exact break-even rate for your situation.
| W-2 salary | Hourly equivalent | 1099 rate to match | Multiple |
|---|---|---|---|
| $60,000 | $28.85 | $39.51 | 1.37x |
| $100,000 | $48.08 | $61.30 | 1.28x |
| $150,000 | $72.12 | $88.76 | 1.23x |
Single filer in Texas, 2026: W-2 with a $150 monthly health premium, 4% 401(k) match and 21 paid days off; 1099 at 40 billable hours for 48 weeks with $3,000 of expenses and $600 a month for health insurance.
To answer "what 1099 rate equals a $100k salary": about $61 an hour on these assumptions, or roughly $117,700 a year in billings. With more weeks off, a lower health premium at the W-2 job or higher business costs, the break-even rate rises.
Examples
Single filer, 2026, the same assumptions as above:
| Comparison | W-2 value | 1099 value | Better |
|---|---|---|---|
| $100,000 salary vs $70/hr, Texas | $81,914 | $93,530 | 1099 by $11,616 |
| $100,000 salary vs $70/hr, California | $75,894 | $87,232 | 1099 by $11,338 |
| $60,000 salary vs $40/hr, Texas | $51,344 | $52,073 | 1099 by $729 |
| $150,000 salary vs $100/hr, Texas | $118,561 | $133,246 | 1099 by $14,686 |
$100,000 salary vs $70 an hour contract
Total value per year, single filer, Texas, 2026
Source: Digicalcy calculation using 2026 IRS, SSA and state rates.
Money is only part of the decision. W-2 jobs usually offer more stability, unemployment insurance and legal protections; contract work offers flexibility and business deductions. Results are estimates, not tax or legal advice. Last reviewed: November 1, 2026.
1099 vs W-2 Calculator FAQs
Is 1099 or W-2 better?
It depends on the rate. A 1099 contract pays more only if the rate covers the extra self-employment tax, health insurance, unpaid time off and business costs. As a rough guide, a contract rate needs to be about 1.25 to 1.5 times the salary's hourly equivalent to come out ahead.
How much more should I charge as a contractor?
Usually 25% to 50% more than the hourly equivalent of a comparable salary. For a $100,000 salary ($48.08 an hour), the break-even contract rate is about $61 an hour for a single filer in Texas working 48 weeks a year and paying $600 a month for health insurance.
What is C2C?
C2C, or corp-to-corp, means you contract through your own company, such as an LLC or S corporation, and the client pays your company instead of you personally. Your company then pays you and handles payroll taxes, which can save tax for some higher earners but adds paperwork and costs.
What 1099 rate equals a $100k salary?
About $61 an hour, or roughly $117,700 a year, for a single filer in Texas billing 40 hours a week for 48 weeks with $3,000 of expenses and $600 a month for health insurance, compared with a W-2 job that has a 4% 401(k) match and 21 paid days off.
More pay and tax calculators
- Self-Employment Tax Calculator: SE tax and how much to save
- Job Offer Comparison Calculator: compare two W-2 offers
- Salary to Hourly Calculator: convert any pay rate
- Salary & Paycheck Calculator: take-home pay in every state