W-2 vs 1099 Calculator (Pro) United States

What the W-2 vs 1099 calculator does

The calculator compares your net take-home pay as a salaried W-2 employee with the same work done as a 1099 independent contractor. It shows both net figures, the dollar advantage of one over the other, and a side-by-side schedule of where the money goes in each case.

A contract rate that looks generous can leave you worse off once the full self-employment tax is counted, while a modest salary can deliver more spendable income than it first appears. This is a Pro tool, and the comparison is calculated on our server.

How the two arrangements are taxed

The difference is who pays payroll tax. Social Security and Medicare together make up FICA, which the law splits between employer and employee.

As a W-2 employee you pay only your half: the employee Social Security rate up to the annual wage base, plus the employee Medicare rate on your whole salary. Your employer pays a matching half that never appears on your payslip. As a 1099 contractor you are both employer and employee, so you owe the full self-employment tax, roughly double the employee rate. In return, the tax applies to 92.35 percent of your net earnings, and you can deduct half of it before income tax.

How the calculation works

For the W-2 scenario, the tool applies the employee Social Security rate up to the wage base and the Medicare rate to the full salary, then subtracts income tax at your marginal rate.

For the 1099 scenario, it subtracts any deductible business expenses from the contract gross to get net earnings and applies self-employment tax to 92.35 percent of that net. It deducts half the self-employment tax to find taxable income, applies your marginal rate, and subtracts both taxes from net earnings. The difference between the two nets is the 1099 advantage, which is negative when the salary wins.

What decides which wins

Because a contractor carries the full payroll tax, a contract usually has to pay noticeably more than a salary just to match its take-home pay, so the gap between the salary and the contract gross matters most. Your marginal rate applies to both sides, but on the 1099 side the deduction for half the self-employment tax shrinks the income taxed, so a higher rate makes that deduction worth more. Genuine business expenses favor contracting, since they reduce both the self-employment tax and the income tax base.

A worked example

Suppose you are weighing a $100,000 W-2 salary against a $120,000 1099 contract, both at a 22 percent marginal income tax rate and with no business expenses.

On the W-2 side, employee FICA is $7,650 and income tax $22,000, leaving $70,350. On the 1099 side, self-employment tax applies to $110,820 of net earnings and comes to about $16,955; after deducting half of it, income tax is roughly $24,535, leaving $78,509.64. The contract wins by $8,159.64 on take-home pay alone.

Assumptions and limits

This compares cash take-home pay only. It does not price in employer benefits such as health insurance, a retirement match or paid time off, which usually favor the W-2 side and can outweigh a modest 1099 premium. It uses a single flat marginal rate instead of the full bracket system, and it does not model state taxes, the additional Medicare surtax on high earners, or the qualified business income deduction. Add benefits and your own bracket details before making a final decision.

About This W2 vs 1099 Calculator

Use this w2 vs 1099 calculator to get an instant, accurate estimate. The figures follow official IRS guidance and every rate and threshold is kept up to date for 2026. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.