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1099 vs W-2 Equivalence Calculator

Enter a W-2 salary or 1099 rate to see the true break-even — accounting for SE tax, health insurance, retirement match, and unpaid vacation.

Where this fits

🧾 TaxTax StackGoing 1099FreelancersEmployees

This tool lives inside Tax Stack + Going 1099 and is most useful for freelancers and employees.

401(k) Limit 2024$23,000
Roth IRA Limit$7,000
S&P 500 Avg Return~10%/yr

The hidden gap: A $80k W-2 salary costs the employer over $95k when you add payroll taxes, health insurance, and retirement match. A 1099 contractor must charge enough to cover all those extras themselves — plus self-employment tax.

What do you want to calculate?

Your Numbers

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W-2 Salary

$80,000

Required 1099 Rate

$124,764

annual gross

SE Tax Burden

$16,781

13.5% of gross

Premium Required

+56.0%

above W-2 to break even

1099 Rate Benchmarks

$124,764

Annual 1099 gross needed

$531

Daily rate (235 billing days)

$66.36

Hourly rate (÷ 8 hrs/day)

W-2 Benefits You Must Self-Fund as 1099

Employer payroll tax (SS + Medicare)

7.65% of W-2 salary the employer pays on top — you pay all 15.3% as 1099

$6,120

Health insurance

Employer-sponsored coverage you must buy independently

$7,200

Retirement match

4.0% employer match you forgo

$3,200

PTO (15 days)

Unpaid days off are lost revenue as a contractor

$4,615

Total W-2 compensation package

$96,520

1

SE tax base

(1099 gross − business expenses) × 0.9235

= $109,679

IRS rule: SE tax applies to 92.35% of net self-employment income (IRC §1402)

IRC §1402

2

Self-employment tax

SE base × 15.3% (SS 12.4% + Medicare 2.9%)

= $16,781

$124,764 gross → $118,764 net → $109,679 SE base × 15.3% = $16,781

IRC §1401

3

Half SE deduction (reduces AGI)

SE tax × 50%

= $8,390

Self-employed can deduct half the SE tax from gross income before federal brackets (IRC §164(f))

IRC §164(f)

4

Net 1099 after SE tax

Gross 1099 − business expenses − SE tax

= $101,983

$124,764 − $6,000 expenses − $16,781 SE tax = $101,983

5

Employer payroll tax (hidden W-2 cost)

W-2 salary × 7.65%

= $6,120

Employers pay 7.65% on top of your W-2 salary — Social Security (6.2%) + Medicare (1.45%) — that you never see on your paycheck

6

Employer health insurance value

Annual employer health contribution

= $7,200

Employer-paid benefits you must self-fund as 1099. $7,200/yr is the 2024 single-coverage average.

KFF Employer Health Benefits Survey 2024

7

Employer retirement match

W-2 salary × 4.0%

= $3,200

4.0% match on $80,000 = $3,200/yr in free money

8

PTO dollar value

(W-2 salary ÷ 260 work days) × 15 vacation days

= $4,615

As a 1099 contractor, 15 unpaid vacation days cost you $4,615 in lost billing

9

Total W-2 compensation package

Salary + payroll tax + health + retirement match

= $96,520

$80,000 salary + $6,120 payroll + $7,200 health + $3,200 match = $96,520

10

Required 1099 rate

W-2 total comp ÷ (1 − effective SE rate)

= $124,764/yr ($66.36/hr)

A 1099 contractor must earn 56.0% more than the comparable W-2 salary to break even after taxes and benefits

#ShowYourWork

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