Paycheck calculator › W-2 vs 1099
W-2 vs 1099 calculator 2026: what contractor rate equals a salary?
A $90,000 salary is not a $90,000 contract. The employer also pays 7.65% Social Security and Medicare, health benefits, a 401(k) match and 25 paid days off — and a contractor funds all of that plus insurance and unpaid admin time. This calculator converts a W-2 offer into the 1099 rate that leaves you no worse off, and shows the take-home both ways.
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2026 tablesSource: IRS · SSA · state revenue departmentsChecked every Monday · change log · how it's calculated
Why the 1099 rate must be higher
- Employer payroll tax: the employer's 6.2% + 1.45% becomes your self-employment tax.
- Benefits: health insurance, life/disability, the 401(k) match — you now buy them.
- Paid time off: 25 paid days on 260 means a contractor works 235 days to earn the same year.
- Overhead and risk: liability insurance, software, invoicing, gaps between contracts. 10–20% is normal.
Rule of thumb from the numbers: a 1099 rate of about 1.3–1.5× the W-2 hourly equivalent (salary ÷ 2,080) is break-even; below 1.25× the employee is better off.
Frequently asked
Is it better to be W-2 or 1099?
At the same gross pay, W-2 — the employer covers half your FICA, benefits and PTO. 1099 wins only when the rate is high enough to fund those (typically 30–50% more) or when expenses and flexibility matter more than security.
Can an employer decide to pay me as a 1099?
Not freely: worker classification follows control and independence tests (IRS common-law, state ABC tests). Misclassification is the employer's liability, but the worker pays the immediate cost.
Does the calculator include state tax?
Yes for both sides, using your state's rules; state payroll premiums (like CA SDI) apply to W-2 only.