W-2 vs 1099 calculator
A $75/hour contract and a $130,000 salary are not the same kind of money. Find the contract rate that truly equals a salaried offer, once self-employment tax, benefits, time off and unbilled hours are counted.
The W-2 job
The 1099 contract
Rule of thumb, tested
Contractors often hear "charge 1.5 to 2 times the salaried hourly rate". With your inputs the honest multiplier is 1.57×, driven mostly by the 1584 billable hours against 2,080 paid hours. Untick costs on the left to see which ones matter.
What changes when you go 1099
- Self-employment tax. Employees pay 7.65% for Social Security and Medicare; the employer pays another 7.65%. A contractor pays both halves, 15.3% on 92.35% of net earnings (Social Security portion up to the $184,500 wage base for 2026), and can deduct half of it.
- No paid time off. Holidays, vacation and sick days are unpaid, and so are the gaps between contracts.
- No benefits. Health insurance, retirement match, disability and life cover come out of your own pocket.
- Business costs. Liability insurance, equipment, software, bookkeeping. These are deductible, but still spent.
The calculator values the W-2 job as salary + match + employer health + the employer's 7.65% payroll tax. It then asks what hourly rate, over your billable hours, covers that and your chosen costs. It is a like-for-like pre-tax comparison; the salary to hourly calculator handles plain conversions, and you can put a contract next to salaried jobs in the offer comparison using this break-even value.
Questions people ask
How much more should a 1099 contractor charge than a W-2 employee?
Commonly 25–100% more than the equivalent salaried hourly rate (salary ÷ 2,080). The exact number depends on how many hours you can bill, what benefits the salaried job includes and your business costs.
How do I convert a W-2 salary to a 1099 rate?
Add up the W-2 package: salary, employer retirement match, employer health contribution and the employer's 7.65% payroll tax. Add your own business costs, then divide by the hours you realistically expect to bill in a year.
Is 1099 or W-2 better?
W-2 employment is simpler and includes benefits and job protections. 1099 work can pay more per hour and allows business deductions, but income is less predictable. Compare the break-even rate to real contract offers before deciding.
What is self-employment tax?
The self-employed version of Social Security and Medicare tax: 15.3% on 92.35% of net self-employment earnings, with the 12.4% Social Security part capped at the annual wage base. Half is deductible from income.
How many billable hours are realistic?
Full-time freelancers often bill 1,200–1,600 hours a year once admin, sales, vacation and gaps between projects are counted, well below the 2,080 hours of a salaried year.