1099 vs W-2 Calculator 2026
The 1099 hourly rate that equals a W-2 salary and benefits after both halves of FICA, costs, the QBI deduction and 2026 taxes — or a side-by-side of a specific contractor offer against an employee offer.
| W-2: total compensation | — |
|---|---|
| W-2: taxes (federal, FICA employee half, state) | — |
| W-2: net plus benefits | — |
| 1099: gross revenue | — |
| 1099: self-employment tax + income tax + state | — |
| 1099: net after taxes and costs | — |
| Difference | — |
| Rule of thumb | — |
In short
A 1099 contractor must earn more than a W-2 employee's hourly pay because they pay both halves of Social Security and Medicare (15.3%), buy their own benefits, are unpaid for time off and carry business costs — typically 1.3–1.6× the W-2 hourly rate. Matching a $90,000 salary with $12,000 of benefits at 1,800 billable hours and $15,000 of costs needs about $70 an hour in 2026, partly offset by the 20% QBI deduction.
Who this is for: US workers comparing a contractor offer with employment, and employers pricing either.
Why a contractor needs a higher rate
| Cost | W-2 employee | 1099 contractor |
|---|---|---|
| Social Security + Medicare | 7.65% (employer pays the other 7.65%) | 15.3% on 92.35% of profit |
| Health insurance | Employer pays most of the premium | Buys own — deductible above the line |
| Retirement match | Typically 3–6% of salary | None — but can contribute far more to a SEP/solo 401(k) |
| Paid time off, holidays, sick days | Paid | Unpaid — 1,800 billable hours is a full year |
| Equipment, software, training, accountant | Employer | Own cost — deductible |
| QBI deduction | No | 20% of qualified business income |
The calculator solves for the 1099 revenue that leaves you with the same net as the W-2 package after all of this, and converts it to an hourly rate for the hours you can actually bill.
See also: Freelance Hourly Rate Calculator.
Assumptions
- W-2 net = salary − federal tax (standard deduction) − employee FICA − state; target = net + benefits value.
- 1099 net = profit (revenue − costs) − SE tax − income tax after half-SE and QBI deductions − state; the equal-rate mode solves revenue numerically and divides by billable hours.
- Unemployment insurance, workers' compensation and benefit tax treatment are excluded.
Worked example
W-2 net $67,645 + benefits = $79,645 to match. The contractor needs about $125,300 of revenue — $69.59 an hour — 1.61× the W-2 hourly rate of $43.27. At that revenue the contractor pays about $30,600 in SE tax, income tax and state tax on $110,300 of profit. A 1099 offer of $65 an hour ($117,000) would leave you about $5,400 a year behind the W-2 package.
Frequently asked questions
How much more should I charge as a 1099 vs W-2?
Usually 1.3–1.6× the W-2 hourly rate once employer FICA, benefits, unpaid time and costs are counted; the calculator solves the exact figure for your situation.
Does a 1099 contractor pay more tax?
More payroll tax (both halves of FICA) but often less income tax, thanks to deductible expenses and the 20% QBI deduction; the net effect depends on costs and benefits.
What are the advantages of 1099?
Deductible expenses, higher retirement contribution limits, flexibility and multiple clients; the disadvantages are no benefits, no paid leave, quarterly tax payments and income risk.
Can my employer switch me to 1099?
Only if the work genuinely meets the independent-contractor tests (control, tools, opportunity for profit or loss); misclassification carries penalties for the hirer.
What is 1099 income?
Payments to an independent contractor reported on Form 1099-NEC; no tax is withheld and the contractor pays self-employment tax and estimates.
Is $50 an hour 1099 good?
Equivalent to a W-2 salary of roughly $60,000–$65,000 with benefits once FICA, benefits and unpaid time are counted; enter your own benefits and costs to see.
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