1099 vs W-2 offer comparison
A contract rate and a salary are not comparable numbers. This works out what each package is really worth, and the hourly rate you would need to break even.
Difference
Not enough detail yet
Enter both offers to compare what each is actually worth once tax and benefits are counted.
- W-2 net value
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- 1099 net value
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- Breakeven rate
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- Breakeven gross
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How this is worked out
The calculator values each offer as the money that actually reaches you in a year.
For the salary, it takes off the employee's share of Social Security and Medicare (7.65%) and federal income tax after the standard deduction. It then adds back the value of what the employer pays for: its health insurance contribution and any 401(k) match.
For the contract, gross pay is your hourly rate times the hours you will actually bill. Business expenses come off to give profit. Tax is worked out the self-employed way: self-employment tax at 15.3% on 92.35% of profit, then income tax after the standard deduction, the QBI deduction and your health insurance premiums, which self-employed people can usually deduct. The premiums are also subtracted as a cost, since you now pay them yourself.
Example: a $90,000 salary with $7,000 of employer health cover and a 4% match is worth about $82,700 a year. A $60-an-hour contract for 1,500 billable hours is also $90,000 gross. After $3,000 of expenses, $6,000 of health insurance and $17,700 of tax, it is worth about $63,300. To match the salary you would need about $117,500 gross, or $78 an hour.
The comparison covers money only. It leaves out paid leave beyond what is priced into your billable hours, unemployment insurance, employer disability cover and the gaps between contracts. State tax is not included for either side.
Sources
Common questions
How much more should a 1099 rate be than a W-2 salary?
Commonly 25 to 50% more, but the honest answer depends on the benefits attached to the salary. Employer-paid health cover and a 401(k) match are worth real money, and as a contractor you pay both halves of payroll tax.
What does a W-2 offer include that a rate does not?
Half of Social Security and Medicare, usually health insurance, often a retirement match, paid holiday and sick leave, unemployment cover, and a notice period. Only the first four show up in this calculation.
How do I convert a salary into an hourly rate?
Not by dividing by 2,080. Use the hours you would actually invoice, which is lower once unpaid time off and non-billable work are removed — this calculator asks for that number directly.
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Estimates based on published federal rules for tax year 2026. State and local tax is not included. This is general information, not advice about your situation.