Free Tool · 2025 Tax Constants
1099 vs W-2 Take-Home Calculator
Weighing a contract offer against an employee package? Compare them side by side: self-employment tax, employer benefit value, and the hourly rate a 1099 contract must pay to break even.
Self-Employment Tax
As a 1099 contractor you pay both halves of Social Security and Medicare: 15.3% on 92.35% of net earnings. A W-2 employee pays only the 7.65% employee share; the employer covers the rest.
Employer Benefits
A W-2 package quietly includes money that never appears on the pay stub: the 401(k) match, employer-paid health premiums, and paid time off. A 1099 contractor funds all of these alone.
What Actually Cancels Out
Federal and state income tax apply to both sides, so brackets mostly wash out of the decision. This tool deliberately excludes them and isolates what truly differs: payroll tax and benefits.
Methodology & Disclaimer
- • Educational estimate, not tax advice. Talk to a CPA before restructuring your compensation; everyone's deductions, filing status, and state rules differ.
- • Income tax brackets are excluded on purpose. Both W-2 employees and 1099 contractors owe federal and state income tax, so brackets largely cancel out of the comparison. What differs is payroll tax and benefits, and that's what this tool isolates.
- • 2025 tax constants. Self-employment tax is 15.3% (12.4% Social Security + 2.9% Medicare) applied to 92.35% of net self-employment earnings, with the Social Security portion capped at the $176,100 wage base. The 0.9% Additional Medicare surtax is not modeled; it applies equally to high W-2 and 1099 earnings.
- • W-2 side. Effective value = salary + 401(k) match + employer-paid health premiums + PTO (valued at salary ÷ 260 workdays per day) − the employee's 7.65% FICA share.
- • 1099 side. Effective value = gross income − full self-employment tax. Half of the SE tax is deductible against income tax; the calculator reports the amount but not its dollar value, which depends on your bracket. Business deductions (home office, malpractice, health premiums) are also not modeled and typically improve the 1099 picture.
Read the Full 1099 vs W-2 Guide
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