1099 vs. W-2 Calculator 2026

2026 tax year

Enter a W-2 salary and see how much more you would need to bill as a 1099 contractor to take home the same pay in 2026, after federal and state tax, your own health insurance and a retirement match. Add your billable hours to get the hourly rate.

Try an example

The W-2 offer

W-2 salary

Yearly gross pay, before tax.

Health insurance the employer covers

Optional. The yearly premium you would have to start paying as a contractor. If you pay part of it from your paycheck today, enter only the part the employer pays.

Retirement match or employer contribution

Optional. What the employer adds to your 401(k) in a year. The calculator assumes you would put the same into a Solo 401(k) or SEP IRA.

As a 1099 contractor

Business expenses

Optional. Software, equipment, insurance, fees. Deductible, but still cash out of your pocket.

Hours a week

Weeks not billed

Billable share

Hours a week also sets the W-2 hourly figure. Weeks not billed covers vacation, holidays, sick days and gaps between clients. Billable share is the part of your working hours you can charge for; the rest is finding work and paperwork.

Tax situation

Filing status

Spouse's wages

Joint returns only. Optional.

State

Type of work

Only matters above about $201,750 of taxable income ($403,500 joint), where the QBI deduction phases out. Service businesses lose it faster. Not sure? Keep the first choice, which gives the higher tax.

What you would need to bill

1099 income that matches the W-2 pay

W-2 hourly equivalent: $0
Hours you can bill: 0
1099 hourly rate that matches: $0

Side by side

	W-2	1099

This calculator gives a general estimate for educational purposes only. It isn't personalized financial or tax advice, and it isn't a substitute for a tax professional. It assumes the standard deduction, a single job and no other income besides a spouse's wages, and it leaves out credits, itemized deductions, local income taxes and your contributions to an employer plan. It treats your business as having no employees or business property, which is the case for most freelancers. It doesn't model the health insurance premium tax credit, or the rule that stops the self-employed health insurance deduction in months when you could join an employer plan, including a spouse's. Whether you can be a contractor at all depends on the facts of the work, not on a choice. Read the fullFinancial Disclaimer.

What this calculator estimates

It finds the lowest whole-dollar amount a 1099 contractor has to bill to keep the same pay as a W-2 employee, after tax and after paying for the things an employer would have covered. "Pay" means what is left after federal income tax, state income tax (if you pick a state), and Social Security and Medicare tax.

W-2 side: salary minus federal income tax with the 2026 standard deduction, state tax, and the employee's share of payroll tax (6.2% Social Security up to $184,500, 1.45% Medicare, and 0.9% Additional Medicare Tax above the threshold).
1099 side: self-employment tax on 92.35% of net profit at 15.3%, half of it deducted, the QBI deduction, which phases out between $201,750 and $276,750 of taxable income ($403,500 to $553,500 joint) for a business with no employees or property, and the same income tax rates.
Health insurance and a retirement contribution are paid by the contractor and deducted, limited to profit after half of self-employment tax. Business expenses lower the profit that is taxed.
The hourly figures use the hours you enter. The W-2 side divides the salary by hours a week times 52, because an employee is paid for time off.

It isn't a ruling on whether you should take the contract. Stability, a shorter commute or a client who can end the work on a few days' notice don't have a dollar value here. The 1099 vs. W-2 guidewalks through the tax-only gap and what the numbers leave out.

Worked example

Each row was run through this calculator: a single filer, federal tax only, no other income, no business expenses. The $6,000 health insurance premium is a hypothetical figure for the example, not an average. Use your own premium in the form.

W-2 salary	W-2 pay after federal tax and FICA	1099 income needed	Extra	With $6,000 premium	Extra
$50,000	$42,355	$52,712	5.4%	$59,760	19.5%
$75,000	$61,592	$77,712	3.6%	$84,761	13.0%
$100,000	$79,180	$102,222	2.2%	$109,334	9.3%
$150,000	$113,791	$152,011	1.3%	$159,125	6.1%
$200,000	$148,927	$203,008	1.5%	$209,194	4.6%

From income to hourly rate: the $75,000 salary

The employee's equivalent is $75,000 ÷ 2,080 hours = $36.06 an hour. The 1099 rate depends on how many hours you can bill. The 1,800 and 1,600 hour rows are scenarios, not averages.

Billable hours a year	Tax only	With $6,000 premium
2,080	$37.36	$40.75
1,800	$43.17	$47.09
1,600	$48.57	$52.98

Frequently asked questions

How much more do I need to earn as a 1099 contractor than as a W-2 employee?

On federal tax alone, the gap is small in our runs. For a single filer with no other income and no expenses, a $75,000 salary and $77,712 of 1099 income leave the same pay after federal income tax and Social Security and Medicare tax, 3.6% more. Health insurance, a retirement match and business costs come on top, and in the example below one $6,000 premium adds more than the tax does. The calculator shows how much each one moves the answer. Unpaid time doesn't change the income you need, only the hourly rate.

Does the 15.3% self-employment tax mean I need 15% more?

No. The 15.3% applies to 92.35% of net profit, half of the tax is deductible for income tax, and the QBI deduction takes up to 20% off the business income before the rates apply. An employee pays 7.65% and the employer pays the other half, so the contractor carries both halves and gets some of it back through the deductions.

Why does the calculator ask about health insurance and a retirement match?

An employer usually pays for those without a line on your paycheck. As a contractor you pay the premium yourself, and you would need to fund your own Solo 401(k) or SEP IRA to replace a match. The calculator treats both as money you pay out of what you bill, and deducts them where the tax rules allow it.

How is the hourly rate figured?

The W-2 hourly figure is the salary divided by your hours a year (hours a week times 52), because an employee is paid for holidays and time off. The 1099 hourly rate is the income you need to bill divided by the hours you can bill: weeks worked, times hours a week, times the share of that time you can bill to clients. Fewer billable hours means a higher rate.

Does state tax change the answer?

It can. Pick your state in the form and the calculator adds a simplified state income tax estimate to both sides. It skips local income taxes, state credits and most phase-outs, so treat it as a planning number.

Can I choose to be a 1099 contractor instead of an employee?

Not by agreement alone. The IRS says a worker's status depends on the facts, grouped into behavioral control, financial control and the type of relationship, and no single factor decides it. If it's unclear, the business or the worker can file Form SS-8 to ask the IRS for a determination.

1099 vs. W-2: How Much More Do You Need to Earn?: the tax-only table from $50,000 to $200,000, explained
Self-Employment Tax Explained: how the 92.35% and the wage base work
QBI Deduction 2026: the 20% deduction employees can't take
Self-Employed Health Insurance Deduction: how the premium you pay yourself is deducted
Solo 401(k) vs. SEP IRA: ways to replace an employer match
How Much to Set Aside for Taxes as a Freelancer: what to keep from each payment

More tools

Freelance hourly rate calculator: start from the take-home pay you want
Freelance tax calculator: the full tax estimate and what to set aside
Self-employment tax calculator: Schedule SE line by line

Sources

The official, primary sources behind the figures and rules on this page.