W-2 vs 1099 Calculator

What the W-2 vs 1099 Calculator does

A contractor rate that looks higher than a salary may not be. Contractors pay the employer’s half of Social Security and Medicare, fund their own benefits and are not paid for holidays. This calculator converts both offers into comparable annual values and finds the hourly rate that matches the salary.

Formula

• W-2 value = salary + benefits + retirement match + employer payroll tax (7.65%)
• 1099 value = hourly rate × billable hours − business costs
• Matching rate = (W-2 value + business costs) ÷ billable hours

Worked example

Using the starting values in the calculator above:

How to read the result

Billable hours are usually well below 2,080. Holidays, sickness, admin and finding work typically leave 1,400 to 1,800 billable hours a year.

Employer payroll tax is counted as part of the W-2 value because a contractor pays that half themselves through self-employment tax.

Estimates only, not tax advice. Rates and thresholds change; confirm current figures with your tax authority or adviser.

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