Free tool
1099 vs W-2 calculator
What that contract rate really equals.
Your result is an estimate based on the answers you enter. It is not filed or stored anywhere.
Method
How this calculator works
A $60/hour contract is not a $120,000 job. As a contractor you pay both halves of Social Security and Medicare (the employer normally pays 7.65%), you buy your own health insurance, you fund your own retirement match, and you get zero paid days off.
This calculator starts from contract gross, subtracts the extra employer-side payroll tax, your health-insurance estimate, a retirement-match equivalent, and the value of unpaid time off, to produce a comparable W-2 salary. A common shorthand says a contract rate should be roughly 1.3–1.5× the W-2 hourly equivalent; the tool shows your actual multiple.
Estimates, not advice
Every figure this tool produces is a planning estimate built from the numbers you enter and simplified assumptions documented above. It is educational content, not individualized financial, legal, or tax advice. Rates, limits, and thresholds change — annual constants are reviewed each January, and you should confirm anything decision-critical against primary sources or a professional.
Questions
FAQ
Why subtract "unpaid time off"?
Salaried roles typically include 15–25 paid days off plus holidays. Every day you don't work as a contractor is unpaid, so an honest comparison prices that in.
Are there 1099 advantages this ignores?
Yes — deductions, the QBI deduction, solo-401(k) headroom, and schedule freedom. The tool compares cash economics; the lifestyle premium is yours to value.
Is this exact?
No — health costs and benefits vary widely. It's a planning comparison, not a tax computation.