Taxes · 2026
1099 vs W-2 Calculator
A contract rate and a salary are not comparable numbers. This puts both through 2026 federal tax and adds back the benefits a salary carries.
Employer health premium, 401(k) match, and paid time off valued at your daily rate.
Your own health insurance, equipment, software, accounting, insurance.
- W-2 total value (take-home + benefits)
- $111,250
- W-2 take-home pay
- $93,250
- W-2 employee FICA
- $9,180.00
- 1099 take-home pay
- $101,965
- 1099 self-employment tax
- $19,075
- 1099 QBI deduction
- $21,873
- Contract revenue needed to match
- $163,357
- As a multiple of the salary
- 1.36×
- Verdict
- Salary wins narrowly
Transparent method
How this calculator works
- Estimate employee FICA and federal income tax on the salary offer, then add the entered value of employer benefits.
- Estimate business profit, self-employment tax, QBI deduction, and federal income tax on contract revenue.
- Use a numerical search to find contract revenue that produces the same after-tax value as the salary plus benefits.
What the result does not include
- State and local taxes, unemployment protection, income volatility, retirement contributions, and benefit tax treatment can change the comparison.
- Worker classification is a legal test based on the actual relationship; the parties cannot freely choose it for tax savings.
Common questions
What multiple of a salary should a contract rate be?
The often-quoted 1.3× is a starting point, not an answer — it depends heavily on the benefits you are giving up and your expense load. Run your own numbers above; the break-even figure is the one that matters.
What does this leave out?
State and local income tax, which can swing the comparison by several points. Unemployment insurance, which contractors do not get. Income volatility and the cost of unpaid gaps between contracts. And the QBI deduction, which contractors get and employees do not — that one favors the contract side and is included above.
How should I value paid time off?
Take your daily rate and multiply by the days of PTO plus holidays. As a contractor, a day not worked is a day not paid, so this is a real transfer of value that salary comparisons routinely ignore.
Can my employer just reclassify me as a contractor?
Not freely. Classification depends on the actual working relationship — behavioral control, financial control, and the nature of the relationship — not on what the contract says. Misclassification carries back taxes and penalties for the employer.