1099 vs W-2 Income Calculator

How it works

W-2 net = salary − employee FICA (7.65%) − federal tax · 1099 net = (income − expenses) − SE tax (15.3% × 92.35%) − federal tax (after half-SE deduction)

A W-2 employee pays only the 7.65% employee share of payroll tax; the employer quietly pays the other 7.65%. A 1099 contractor pays both halves as the 15.3% self-employment tax, so a contractor generally needs a higher gross rate to match a salary. Contractors can offset this by deducting business expenses and half of the SE tax, and often by using retirement plans with higher limits. This comparison covers federal income tax, FICA/SE tax and business expenses, but not health insurance, paid time off or state tax — real trade-offs that vary by situation.

Worked example

An $80,000 W-2 salary (single) pays about $6,120 FICA and $9,214 federal tax, netting roughly $64,666. A $90,000 1099 income with $6,000 expenses has $84,000 net, about $11,869 SE tax and $8,788 federal tax, netting roughly $63,343 — so despite higher gross, the contractor keeps about $1,323 less here once self-employment tax is counted.

Frequently asked questions