W-2 employee payroll tax is compared with the 1099 self-employment tax calculation.
Employee vs contractor | 2025 and 2026
1099 vs W-2 calculator
Compare cash take-home, employer benefits, business expenses, unpaid weeks, payroll tax, and self-employment tax. The break-even result estimates the 1099 hourly rate needed to match the W-2 offer.
Compare the offers
Use annual values unless a field says hourly.
Break-even 1099 hourly rate2026 estimate
$0.00
The estimated hourly contractor rate that matches W-2 cash take-home plus the benefits value you entered.
W-2 comes out ahead
At these assumptions, W-2 is ahead.
W-2 cash take-home$0Before adding entered benefits
W-2 benefits value$0Your estimated employer-paid value
1099 annual gross$0Rate x hours x working weeks
Annual value difference$0Absolute difference at current inputs
| W-2 estimated federal, payroll, and state tax | $0 |
|---|---|
| 1099 estimated federal, SE, and state tax | $0 |
| W-2 cash plus benefits | $0 |
| 1099 take-home after expenses and tax | $0 |
The comparison does not price job security, unemployment insurance, workers' compensation, legal classification, credit eligibility, or the personal value of schedule flexibility.
What changes the result
A salary-to-hourly conversion misses most contractor costs.
A W-2 employee pays half of Social Security and Medicare tax through payroll while the employer pays the other half. A 1099 worker also funds business expenses, unbilled time, health coverage, retirement benefits, and time off from the contract rate.
Contractor gross uses the hours and working weeks you expect to invoice.
Entered 1099 expenses reduce both net profit and take-home pay.
Employer health, retirement, and paid-leave value is added to W-2 cash take-home.
Questions
1099 vs W-2 FAQ
The break-even rate is a planning threshold, not a market quote. Your negotiating rate may need an additional risk, profit, or utilization margin.
Is 1099 pay always higher than W-2 pay?
No. A higher contractor gross can still produce lower total value after self-employment tax, business expenses, unpaid weeks, health coverage, retirement contributions, and the loss of paid leave.
What should I enter for employer benefits?
Use the annual amount the employer pays for health insurance, retirement match, paid leave, life or disability coverage, and other benefits you would otherwise fund yourself. Do not use a generic percentage when offer documents provide actual values.
Does the break-even rate include profit?
No. It estimates the hourly rate that matches the modeled W-2 value. A sustainable independent business may charge more for downtime, collection risk, sales work, equipment replacement, and profit.