1099 vs W-2 Calculator
Compare a contract 1099 offer against a W-2 salary the honest way — self-employment tax, income taxes, self-bought health insurance and the lost 401(k) match all counted.
Provisional figures. The tax tables behind this comparison are not yet verified for the current year.
What the employer plan was covering.
To merely match the W-2 package, the 1099 offer needs to be about $119,048 — that is the number to negotiate against, not the salary.
The comparison everyone does wrong
The instinctive move is comparing the two headline numbers — $95,000 salary versus $115,000 contract, contract wins. That comparison is wrong in both directions at once, and this calculator exists to do it properly.
On the W-2 side, the salary understates the package — the 401(k) match is real money, and subsidized health insurance is worth hundreds of dollars a month. On the 1099 side, the rate overstates the income — self-employment tax takes both halves of FICA, income tax still applies, and the insurance now comes out of your pocket at retail.
The breakeven number is the negotiation
The single most useful output here is the breakeven 1099 income — the contract figure that merely matches the employee package after every adjustment. It routinely surprises people by landing 25–40% above the salary.
Walk into a contract negotiation knowing that number and the conversation changes. Anything below it is a pay cut with extra paperwork; anything above it is the genuine premium for carrying the risk yourself.
What the dollars cannot capture
The gap this calculator prices is necessary information, not a verdict. W-2 work carries unemployment insurance, workers comp, disability coverage, PTO and legal protections that never appear on a paycheck. Contract work carries schedule control, deduction opportunities and no ceiling on clients.
One thing that is not a matter of preference — classification itself. If a company controls your hours, tools and methods, the IRS’s own tests may make you an employee regardless of what the contract says.
How this is calculated
W-2 value = take-home pay + employer 401(k) match 1099 value = income − SE tax − income taxes − self-bought health insurance Breakeven = the 1099 income where the two are equal
Frequently asked questions
- How much more should a 1099 pay than a W-2 salary?
- A common rule says 20 to 40 percent more, and the math here shows why the range is wide — it depends on your state, your health insurance cost and the match you give up. The breakeven figure this calculator produces is your personal answer, and it is the number to negotiate against.
- Why does 1099 income shrink faster than salary?
- Three stacked costs. You owe both halves of Social Security and Medicare instead of one. You buy the health coverage an employer subsidized. And nothing is matched into retirement unless you fund it yourself. Each is invisible in the headline rate and very visible in April.
- What does this comparison leave out?
- Everything money cannot easily price — paid time off, unemployment insurance, workers comp, disability coverage and job security all quietly favor W-2, while schedule freedom and deduction opportunities favor 1099. Treat the dollar gap as necessary information, not the whole decision.
- Can my employer just decide I am a 1099 contractor?
- No. Worker classification follows the actual relationship — control, tools, permanence — not the label on the paperwork. Misclassification is common and costly to workers, and both the IRS and the Department of Labor take complaints about it.