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1099 vs W-2 Pay Calculator
Convert a W-2 salary into the equivalent 1099 contractor rate — or back — accounting for the employer half of payroll tax and self-funded benefits. Figures in USD.
The formula
Equivalent 1099 = W-2 salary × (1 + 7.65% employer FICA + benefits load).
Equivalent W-2 = 1099 rate ÷ (1 + 7.65% + benefits load).
Example. An $80,000 W-2 salary with a 20% benefits & PTO load needs about a $102,120 1099 rate to break even — roughly $22,120 extra, a 27.7% uplift, to cover the employer’s payroll tax and self-funded benefits.
Assumptions: 1099 contractors pay the full 15.3% self-employment tax vs 7.65% for W-2 employees; the employer normally pays the other 7.65%. The benefits load approximates health insurance, retirement match, and paid time off you must now fund yourself. Adjust it to your situation. Educational estimate, not tax advice.
1099 vs W-2: what actually changes
Moving from a salaried W-2 job to 1099 contracting is not a like-for-like pay comparison. As an employee, your employer quietly pays half of your Social Security and Medicare taxes (7.65%) and usually funds health insurance, a retirement match, and paid time off. As a contractor you take all of that on yourself: you owe the full 15.3% self-employment tax and buy your own benefits. That is why a contractor rate has to sit meaningfully above the equivalent salary just to break even.
This tool makes the gap explicit. Use W-2 → 1099 to see the annual rate a contract needs to match your old package, and 1099 → W-2 to translate a contract offer back into salary terms. Tune the benefits load to reflect what you actually replace — someone on a spouse’s health plan needs a smaller uplift than someone buying full coverage. Half of the self-employment tax is income-tax deductible, which softens the real cost a little, so treat the result as a floor for negotiation.
Frequently asked questions
How much more should a contractor charge?
Enough to cover the employer’s 7.65% payroll tax plus self-funded benefits and PTO — commonly a 25–40% uplift over the equivalent W-2 salary.
Why do 1099 workers pay more tax?
They pay the full 15.3% self-employment tax (both halves of FICA). W-2 employees pay 7.65% and the employer covers the rest.
Is any of the self-employment tax deductible?
Yes — you can deduct half of your self-employment tax when calculating your federal income tax, which slightly lowers the true cost.
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