W-2 vs 1099 Take-Home Calculator
Same gross pay, very different paycheck. Compare what you actually keep as a W-2 employee versus a 1099 contractor — and see the contractor rate that would truly match.
📖 How it works & FAQW-2 vs 1099: same gross, different paycheck
When you're a W-2 employee, Social Security and Medicare taxes are split with your employer: you pay 7.65% and the company quietly pays a matching 7.65% on top. When you work the same job as a 1099 contractor, both halves land on you — the full 15.3% self-employment tax, applied to 92.35% of your earnings. On top of that, a contractor gets no employer-paid benefits like health insurance, retirement matching, or paid time off. That's why a $85,000 salary and an $85,000 contract are not the same money. This calculator shows the real take-home for each side, the annual gap between them, and the contract rate you'd actually need to break even. Everything runs in your browser — nothing you type is sent anywhere.
What the calculator assumes
It applies one flat, editable income-tax rate to both scenarios so you're comparing apples to apples, and computes SE tax as 15.3% of 92.35% of gross. It deliberately keeps things simple: it doesn't model the Social Security wage base cap, the deductible half of SE tax, QBI deductions, or state quirks — those usually narrow the gap somewhat, so treat the result as a ballpark. This tool provides estimates only and is not financial, tax, or legal advice — confirm your numbers with a tax professional.
How to use it
- Enter the gross annual amount being offered — the salary or the total contract value.
- Set your income tax rate. Use your effective (average) rate, not your top bracket; 15–25% is typical for many filers.
- Optionally add the yearly value of employer benefits (health premiums paid, 401(k) match, PTO) that only the W-2 job includes.
- Read the cards: take-home for each path, who comes out ahead, and the 1099 gross that would truly match the W-2 offer.
FAQ
- Why is 1099 take-home lower on the same gross?
- A contractor pays both halves of Social Security and Medicare — 15.3% instead of 7.65% — and gets no employer-funded benefits, so more of each dollar goes out before it reaches you.
- How much more should a contract pay than a salary?
- A common rule of thumb is 10–30% more, depending on benefits. The "1099 gross to match" card computes the exact break-even number for your inputs.
- Why is SE tax based on 92.35% of income?
- The IRS lets you exclude the equivalent of the employer's half before calculating, so the 15.3% rate applies to 92.35% of your net earnings rather than the full amount.
- Are contractor business expenses included?
- No. Deductible expenses (home office, equipment, software) reduce a contractor's taxable income and can shrink the gap — subtract them from gross before entering if you want a tighter estimate.