United States · Federal tax year 2026 · Salary versus contract rate
1099 vs W-2 take-home calculator.
Enter a W-2 salary and see what the same money keeps as a contractor, and the 1099 gross that would match it.
At the same $100,000 a single filer keeps $79,180 as a W-2 employee and $74,255 as a 1099 contractor, before benefits. The contract has to pay about $107,528 (7.5% more) just to break even on federal tax.
Your numbers
Result
How the two paths are taxed
W-2 side. Your employer withholds 6.2% Social Security on wages up to the 2026 base of $184,500, 1.45% Medicare on all wages, and 0.9% Additional Medicare tax above $200,000 (single), $250,000 (joint) or $125,000 (separate). Federal income tax then applies to salary less the standard deduction ($16,100 single, $32,200 joint, $24,150 head of household for 2026). The employer separately pays 7.65% on top of your salary, which never appears in your take-home.
1099 side. You pay self-employment tax of 15.3% (12.4% to the wage base plus 2.9%) on 92.35% of net profit, and 0.9% extra above the same Additional Medicare thresholds. Half of the self-employment tax is deducted before income tax. Net profit is gross pay minus business expenses. The benefits you enter are not deductible here; they simply reduce take-home.
QBI option. When ticked, the page deducts 20% of profit after half of the self-employment tax, limited to taxable income, and only when taxable income before the deduction is at or under the 2026 threshold ($201,750 single, $201,775 married filing separately, $403,500 joint). Above that, the options for specified service businesses and wage limits are not modelled and the deduction is set to zero.
Break-even. The tool raises the 1099 gross until 1099 take-home equals W-2 take-home, then reports that gross, the percentage over salary and the hourly rate.
Worked example, single filer, $100,000 (hypothetical)
The figures below come from the same formulas the calculator runs, with no state tax and no expenses. They show how much the answer depends on benefits and the QBI deduction.
| Scenario | W-2 take-home | 1099 take-home at $100,000 | Break-even 1099 gross | Premium |
|---|---|---|---|---|
| No benefits, no QBI | $79,180 | $74,255 | $107,528 | 7.5% |
| With QBI deduction | $79,180 | $78,344 | $101,203 | 1.2% |
| $8,000 of benefits to replace | $79,180 | $66,255 | $119,756 | 19.8% |
| $8,000 benefits and QBI | $79,180 | $70,344 | $112,711 | 12.7% |
In the first row, self-employment tax is $14,130 against $7,650 of employee FICA, a gap of $6,480. The contractor recovers some of it through the half-SE-tax deduction (income tax falls from $13,170 to $11,616), which leaves $4,925 between the two paths.
What moves the answer
Income level matters because the 12.4% Social Security tax stops at $184,500. A single filer at $60,000 needs 7.5% more as a contractor and at $250,000 needs 5.9% more. Filing status moves it little: a married-filing-jointly household at $100,000 needs 7.5% more, since the standard deduction and brackets scale together. The two big levers are benefits (the $8,000 case above adds about twelve points) and the QBI deduction, which can erase most of the federal gap for income under the threshold. Business expenses also matter: they reduce both SE tax and income tax on the 1099 side, but they are real money out of your pocket, so enter only what you would actually spend.
Common mistakes
- Comparing an hourly contract rate to a salary divided by 2,080 without adjusting for unpaid holidays, sick days and downtime. Change the hours box to reflect billable hours.
- Treating gross billings as profit. Self-employment tax is charged on profit, so a contractor with $20,000 of expenses is taxed on $20,000 less.
- Forgetting that salary already excludes the employer's 7.65%. The fair comparison is employer cost against contract rate.
- Leaving out health insurance. In many cases it is the largest single benefit a contractor replaces.
- Assuming the QBI deduction always applies. Specified service businesses lose it as income rises, and this page stops at the threshold.
Who this is for, and what it does not cover
It is for someone weighing a salary offer against a contract rate, or a freelancer wondering what a full-time job would be worth. It is a federal estimate for 2026 with an optional flat state percentage; it is not a classification test. The IRS decides worker status from the facts. Use the 1099 tax set-aside calculator for how much of each payment to save, the self-employment tax calculator for the Social Security and Medicare piece alone, and the QBI deduction calculator for a fuller QBI estimate.
Frequently asked questions
How much more should a 1099 contractor charge than a W-2 salary?
At the same income, federal tax alone makes the break-even about 7.5% higher for a single filer at $100,000: $107,528 instead of $100,000. Each dollar of benefits you must replace pushes it higher. With $8,000 of benefits to buy yourself, the figure here is $119,756, or 19.8% more.
Is 1099 or W-2 better for taxes?
Neither wins automatically. A W-2 employee pays 7.65% in FICA tax and the employer pays another 7.65%. A 1099 contractor pays both halves as self-employment tax, but can deduct half of it, deduct business expenses, and may qualify for the 20% qualified business income deduction. The right answer depends on expenses, benefits and income level.
What is the self-employment tax rate for 2026?
15.3%: 12.4% Social Security and 2.9% Medicare, charged on 92.35% of net earnings. Social Security applies only up to the 2026 wage base of $184,500, and an extra 0.9% Medicare tax applies above $200,000 for a single filer.
Why is the break-even premium smaller at high incomes?
The 12.4% Social Security part stops at $184,500. At $250,000 the same single filer needs only 5.9% more as a contractor, versus 7.5% at $100,000, because the extra pay above the base is not hit by the Social Security tax.
Does the QBI deduction apply to 1099 income?
Often yes. Eligible self-employed income can qualify for a deduction of up to 20% of qualified business income. For 2026 the full deduction is available at taxable income up to $201,750 (single) or $403,500 (married filing jointly) under Rev. Proc. 2025-32; above that, other limits apply that this page does not model. Turning the QBI option on shrinks the gap a lot.
Does a W-2 employer really pay half of my FICA tax?
Yes. The employer pays 6.2% Social Security and 1.45% Medicare on your wages in addition to what is withheld from you. That employer share is not in your take-home, which is why a 1099 rate that looks equal to a salary is actually a pay cut.
Can I choose to be 1099 instead of W-2?
Not freely. The IRS looks at behavioral control, financial control and the type of relationship, not what the contract says. If you are treated as an employee in practice, the payer should be using a W-2.
What does this comparison leave out?
State and local tax beyond the flat percentage you enter, paid time off, retirement match, unemployment insurance, workers compensation, the self-employed health insurance deduction, a solo 401(k), credits and the alternative minimum tax. Use the benefits box for anything you would have to pay for yourself.
Sources
Retrieved October 20, 2026. Each link returned HTTP 200 and the figures on this page were read from it.
- IRS Topic no. 751, Social Security and Medicare withholding rates (6.2%, 1.45%, 2026 base $184,500)
- IRS Topic no. 554, Self-employment tax (92.35%, $400 minimum, half deductible)
- IRS Rev. Proc. 2025-32, sections 4.01 (brackets), 4.14 (standard deduction) and 4.26 (QBI thresholds)
- IRS, About Schedule SE (Form 1040)
- IRS, About Form 8959 (Additional Medicare Tax thresholds)
- IRS, Independent contractor (self-employed) or employee?
- IRS Publication 15, Employer's Tax Guide
Reference, not tax advice
This is a federal estimate for illustration. It uses the standard deduction, a flat state percentage you choose and a simplified QBI deduction. It does not decide whether you are an employee or a contractor. Confirm with the IRS or a tax professional.