W-2 Advantage
$12,877
W-2 Takes Home More
W-2 Net Pay
$71,380
1099 Net Pay
$58,503
Break-Even Rate
113%
Summary
At $100,000 gross pay, W-2 employment nets you $71,380 vs $58,503 as a 1099 contractor — a $12,877 advantage. A contractor would need to charge 113% of the W-2 salary to break even.
At the same gross of $100,000, W-2 employment gives you $12,877 more in take-home pay. As a 1099 contractor, you would need to charge at least 113% of the W-2 salary to match net pay.
As a 1099 contractor, you pay $13,423 in self-employment tax (both employer and employee portions of FICA), compared to $7,650 as a W-2 employee. Your employer would also pay $7,692 in payroll taxes on your behalf.
Your $5,000 in business expenses reduce your taxable SE income, saving you taxes on both SE tax and income tax. Common deductions include home office, equipment, software, and professional development.
As a 1099 contractor, you may qualify for the 20% Qualified Business Income (QBI) deduction on net business income, potentially reducing your federal income tax further. This calculator does not include the QBI deduction.
W-2 employees typically receive benefits not reflected here: employer health insurance contributions, paid time off, retirement matching, disability insurance, and unemployment insurance. Factor these into your decision.
W-2 Employee
1099 Contractor
Full Breakdown
8 rows
| Metric | W-2 Employee | 1099 Contractor | Difference |
|---|---|---|---|
| Gross Pay | $100,000 | $100,000 | $0 |
| Business Expenses | -- | $5,000 | $5,000 |
| FICA / SE Tax | $7,650 | $13,423 | $5,773 |
| Federal Income Tax | $10,970 | $7,073 | -$3,897 |
| Health Insurance | -- | $6,000 | $6,000 |
| Retirement Contribution | $10,000 | $10,000 | $0 |
| Total Tax | $18,620 | $20,497 | +$1,877 |
| Net Take-Home Pay | $71,380 | $58,503 | -$12,877 |
Estimate based on federal taxes only. W-2 scenario does not include employer-provided benefits (health insurance, PTO, retirement matching). 1099 scenario does not include QBI deduction, state taxes, quarterly payment requirements, or accounting costs. The break-even rate shows the minimum 1099 rate multiplier needed to match W-2 net pay. Not tax advice.