1099 vs W-2 Calculator 2026
By Elena Rodriguez and Axis Intelligence Research · Last updated October 7, 2026 · Tax year 2026
| Per year | W-2 | 1099 |
|---|---|---|
| Gross pay / billings | ||
| Business expenses | ||
| FICA / self-employment tax | ||
| Federal income tax | ||
| State income tax | ||
| Health insurance | ||
| 401(k) match + benefits | ||
| What you really keep | ||
| Effective tax rate |
Quick answer:
A 1099 contractor pays both halves of Social Security and Medicare (15.3% on 92.35% of net earnings) and replaces the health plan and 401(k) match a W-2 job includes. With the calculator’s default inputs — a $100,000 salary against a $65/hour contract — the W-2 job keeps about $8,600 more per year, and the contract only breaks even near $71.75/hour.
What This Tool Does
This 1099 vs W-2 calculator puts a salaried offer and a contract offer side by side for tax year 2026. It shows what you really keep under each, the hourly rate a contract must pay to match the job, how much of each invoice to set aside for taxes, and your four quarterly estimated payments. Inputs stay in your browser, and the link updates as you type so you can share your exact scenario.
How Does the 1099 vs W-2 Calculator Work?
Axis Intelligence Research built the model in four steps, using the 2026 federal figures.
W-2 side. Salary minus employee FICA (6.2% Social Security up to the $184,500 wage base, 1.45% Medicare, plus 0.9% Additional Medicare above $200,000 single or $250,000 joint), minus federal tax on salary less the standard deduction ($16,100 single, $32,200 joint, $24,150 head of household), minus state tax. The 401(k) match and benefit value you enter are added back, because they are pay you would otherwise buy.
1099 side. Billings = rate × billable hours × billable weeks. Net profit = billings − expenses. Self-employment tax = 15.3% of net profit × 92.35% (Social Security share capped at $184,500), plus 0.9% Additional Medicare above the threshold. Half of the 15.3% portion and the health premium you buy are deducted before income tax. The 20% qualified business income deduction applies, phased down above $201,775 single or $403,500 joint.
Income tax. Both sides use the 2026 brackets: 10%, 12%, 22%, 24%, 32%, 35% and 37%.
Break-even. The calculator solves for the hourly rate at which 1099 take-home equals W-2 take-home plus match plus benefits.
What is the Contractor Break-Even Multiple (CBEM)?
The Contractor Break-Even Multiple (CBEM) is an Axis Intelligence Research metric: break-even annual 1099 billings divided by the W-2 salary. A CBEM of 1.32× means a contract must bill 32% more than the salary to leave you equally well off. It turns “how much more should a contractor charge?” into one number specific to your offer, instead of the 25–40% rule of thumb most rate guides repeat without showing the math.
Default scenario, worked through
| Per year | W-2 ($100,000 salary) | 1099 ($65/hr × 40 h × 46 wk) |
|---|---|---|
| Gross pay / billings | $100,000 | $119,600 |
| Business expenses | — | −$4,000 |
| FICA / SE tax | −$7,650 | −$16,334 |
| Federal income tax | −$13,170 | −$9,519 |
| Health insurance | employer plan | −$7,200 |
| 401(k) match + benefits | +$12,000 | — |
| What you really keep | $91,180 | $82,547 |
Source: Axis Intelligence Research 1099 vs W-2 model, 2026 federal parameters, state tax set to 0%.
The contract bills almost $20,000 more and still loses. The SE tax costs about $8,700 more than the employee FICA, and the health plan and match the job carries are worth $12,000 the contractor has to fund out of after-tax money. The break-even rate is about $71.75/hour, a CBEM of 1.32×.
Is 1099 or W-2 Better for You?
The vendor’s number — the hourly rate on the contract — is the wrong one to compare. The deck assumes every week is billable. Drop billable weeks from 46 to 42 and the same $65/hour contract loses about $7,200 more a year; the tool shows exactly how much each extra billable week is worth.
A 1099 role tends to win when the rate clears your break-even, when bench time between contracts is short, and when your expenses are low. A W-2 role tends to win when the employer plan is generous, when the match is large, or when the contract leaves long unpaid gaps. Where the 1099 does pull ahead is the 20% QBI deduction and the deduction of business costs — the default case pays about $3,650 less federal income tax than the W-2 side despite earning more.
How much more should a 1099 contractor charge?
Enough to reach your CBEM. On the default inputs that is 1.32× the salary, or about $71.75/hour at 1,840 billable hours. Raise the benefits value or cut billable weeks and the multiple climbs; the calculator recomputes it instantly.
How much should I set aside for taxes as a 1099 contractor?
The “Set aside” figure shows federal, SE and state tax as a share of billings — about 22% of every invoice in the default case. The tool also splits federal and SE tax into four equal quarterly payments due April 15, June 15 and September 15, 2026, and January 15, 2027.
Why It Matters
A salary offer and a contract offer are not quoted in the same currency. One includes half your payroll tax, a health plan and a match; the other includes none of them but taxes you more lightly on what is left. Comparing headline numbers is how contractors end up underpricing by a fifth. The tool also shows employers the full cost of a W-2 hire — salary, employer FICA, match and benefits — for a fairer conversion when moving someone between roles.
Limitations
- Federal figures are for tax year 2026; state tax is a single rate you enter, applied after the standard deduction, not each state’s brackets or local taxes.
- QBI above the threshold is phased down as if the work were a specified service business; non-service businesses may keep more of it.
- The model does not include S-corp elections, solo 401(k) or SEP contributions, itemized deductions, credits, spousal income, or other income on the return.
- Worker classification is decided by the facts of the relationship, not by the form you receive. This tool estimates pay; it is not tax or legal advice.
Data Freshness
Constants last updated October 5, 2026 for tax year 2026.
Related Resources
Frequently Asked Questions
Do 1099 contractors pay more tax than W-2 employees?
They pay more payroll tax — the full 15.3% self-employment tax on 92.35% of net earnings, against 7.65% FICA for an employee — but often less income tax, thanks to business deductions, the deductible half of SE tax and the 20% QBI deduction.
What is the self-employment tax rate in 2026?
15.3%: 12.4% Social Security on net earnings up to $184,500 and 2.9% Medicare with no cap, plus 0.9% Additional Medicare above $200,000 single or $250,000 joint.
How do I convert a W-2 salary to a 1099 hourly rate?
Enter the salary, benefits and match on the W-2 side, then your realistic billable hours and weeks. The break-even rate is the 1099 hourly equivalent of that salary.
What is the W-2 hourly equivalent of a salary?
Salary divided by 2,080 hours. The tool shows it next to the break-even rate so you can see the gap.
Can I deduct health insurance as a 1099 contractor?
Self-employed people can generally deduct premiums they pay, up to their net self-employment profit. The tool deducts the premium from income tax, not from self-employment tax.