1099 vs. W-2 Take-Home Comparison
Enter the same gross income for both scenarios to see the difference in estimated take-home pay and the 1099 premium needed to break even.
Compare at the Same Gross Income
Side-by-Side Breakdown
| Line Item | 1099 / Contract | W-2 Employee |
|---|
Key Differences
- SE tax: 1099 workers pay 15.3% on 92.35% of net income. W-2 employees pay 7.65% (employer covers the other half).
- Withholding: W-2 employers withhold taxes every paycheck. 1099 workers must budget and pay quarterly.
- Benefits: W-2 employees often receive employer-paid health insurance, 401(k) matching, PTO, and other benefits not reflected in gross salary. Factor these in when comparing offers.
- Deductions: 1099 workers can deduct legitimate business expenses. W-2 employees generally cannot deduct unreimbursed job expenses.
Frequently Asked Questions
As a 1099 worker, you pay the full 15.3% SE tax that would otherwise be split with an employer. On $100,000 gross, that is roughly $14,130 extra tax versus a W-2 position at the same gross salary. You would need a 1099 rate approximately 15–20% higher to match the same net take-home.
Many contractors command higher hourly or project rates precisely because the client is not paying for benefits, payroll taxes, or overhead. Contracting can also offer schedule flexibility, multiple income sources, and potential deductions for business expenses.
The employer's half of FICA (7.65%) reduces the gross compensation the employer can offer. In practice the comparison is more nuanced — employers factor it into total comp. The 1099 worker just sees the full amount hit their own tax return.
A rough conversion: divide the 1099 hourly rate by 1.15–1.25 to estimate equivalent W-2 hourly pay, accounting for SE tax and lack of benefits. The calculator on this page does the math precisely.
Related: 1099 Tax Calculator • How Much to Set Aside • Deductions Checklist