1099 vs W-2 Calculator2025 — Side-by-Side Comparison
A $130K contract isn't the same as a $130K salary. Enter both offers — see the real after-tax, after-benefits comparison in seconds.
Federal tax data: IRS Rev. Proc. 2024-40 · IRS Topic 554 (SE Tax)
Your Tax Situation
Full-Time Employee Offer
What your employer pays toward your health insurance each month
Freelance / Contract Offer
Individual market / COBRA cost you pay out-of-pocket
SEP-IRA or Solo 401(k) contribution
Enter both offers above
Fill in your W-2 salary and 1099 contract details, then click Compare to see which one puts more money in your pocket.
How the comparison works
Tax burden difference
W-2 employees pay 7.65% FICA (employer pays the other 7.65%). 1099 contractors pay the full 15.3% self-employment tax — but can deduct 50% of it from their AGI. We apply 2025 IRS brackets to both scenarios.
Benefits valuation
Employer health insurance, 401(k) match, and paid vacation have real dollar value. We calculate exactly what your employer contributes — and what you'd need to pay yourself as a contractor.
Break-even rate
We solve for the exact 1099 gross income needed for your net pay to match the W-2 offer. This is the number to take into your rate negotiation.
Why a $100K contract is worth less than a $100K salary
| Cost | W-2 ($100K) | 1099 ($100K) |
|---|---|---|
| Gross income | $100,000 | $100,000 |
| FICA / SE tax | −$7,650 (7.65%) | −$14,130 (15.3% on 92.35%) |
| Federal income tax | ~−$12,600 | ~−$11,800 (SE deduction helps) |
| Health insurance | $0 (employer pays ~$6,000/yr) | ~−$6,000 (you pay) |
| Retirement match | +$3,000 (3% employer match) | $0 |
| PTO (15 days) | +$5,769 in paid leave | $0 (unpaid time off) |
| Net spendable | ~$79,750 | ~$68,070 |
| Difference | — | −$11,680 vs W-2 |
* Illustrative figures. State taxes not included. Use the calculator above for your exact scenario.
Frequently Asked Questions
Why does a 1099 contractor need to earn more than a W-2 employee at the same salary?
A W-2 employee pays only the employee share of FICA taxes (7.65% — 6.2% Social Security + 1.45% Medicare). Their employer pays the other 7.65%. A 1099 contractor pays both shares (15.3% self-employment tax) because they are simultaneously the employer and the employee. On top of that, 1099 contractors must fund their own health insurance, retirement savings, and receive no paid time off. These costs can add up to $20,000–$40,000 per year that a W-2 employee receives 'free' as employer benefits.
What is the break-even rate — and why does it matter?
The break-even rate is the minimum 1099 gross income you need to earn to match the actual take-home pay of a W-2 job — after accounting for extra SE taxes and self-funded benefits. It typically runs 25–40% higher than your W-2 salary. For example, a $100,000 W-2 job often requires a $130,000–$140,000 contract to truly break even.
Can I deduct health insurance as a 1099 contractor?
Yes. Self-employed individuals can generally deduct 100% of health insurance premiums paid for themselves (and family) as an above-the-line deduction on Schedule 1, Form 1040 — reducing your adjusted gross income. This calculator does not include this deduction for simplicity; your actual tax bill may be lower if you qualify. Consult IRS Publication 535 or a tax professional.
Does a higher 1099 rate always mean more money?
Not necessarily. The jump from, say, $100K W-2 to $110K 1099 is almost never a raise — because you're paying an extra ~7.65% in SE tax, plus health insurance ($6,000–$20,000/year on the open market), plus no employer retirement match, plus no paid vacation. Our calculator shows you the real net number so you can negotiate from an informed position.
What isn't included in this comparison?
This calculator includes SE tax, federal income tax, state income tax (all 50 states + DC), health insurance, and retirement. It does not account for local city/county taxes, business expense deductions (home office, equipment), pre-tax 401(k) contribution effects, non-billable contractor hours, gaps between contracts, or professional liability insurance. These can all affect the real-world comparison — use this as a starting point, not a final answer.