W-2 vs 1099 Calculator 2026: Employee vs Contractor Take-Home Pay
The same headline salary means very different take-home pay depending on whether you're a W-2 employee or a 1099 contractor. This 2026 guide explains the tax gap, the value of benefits, and the rate you'd need to truly break even as a contractor.
Use the calculator above to run your numbers. For a full-page experience, open the standalone calculator.
W-2 vs 1099 — The Core Difference
A W-2 employee pays 7.65% FICA while the employer matches it and provides benefits. A 1099 contractor pays the full 15.3% self-employment tax, buys their own benefits, and makes quarterly tax payments.
The Real Tax Math ($80,000 Example)
On $80,000, a W-2 employee pays about $6,120 FICA plus income tax, then gets benefits on top. A 1099 contractor pays roughly $11,300 in self-employment tax, but offsets it with the half-SE-tax deduction and the 20% QBI deduction, plus any business expenses. After everything, the contractor's net is usually lower than the employee's total compensation — unless they charge a premium.
Your Break-Even 1099 Rate
The break-even rate is the gross contractor income that matches your total W-2 compensation (take-home + benefits). It usually lands 25–30% above the W-2 salary, covering the employer's half of FICA, lost benefits, and unpaid time off.
Hidden Costs of Being 1099
No employer health insurance, no 401(k) match, no paid leave, no unemployment insurance, and the admin burden of invoicing, bookkeeping, and quarterly taxes. These rarely show up in a simple rate comparison but matter a lot.
When 1099 Wins
High earners who fully use the QBI deduction and a Solo 401(k), or contractors with real business expenses, can come out ahead — especially if they command a rate well above the break-even premium.
Frequently Asked Questions
How much more should a 1099 contractor charge?
Typically 25–30% more than the equivalent W-2 salary just to break even.
What is the SE tax rate for 2026?
15.3% on 92.35% of net self-employment income, half of which is deductible.
Compare your scenario with the W-2 vs 1099 Calculator, then drill into the details with the Self Employment Tax Calculator and California 1099 Tax Calculator.