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“We can do $65/hr on 1099 or $90k W-2.” Which is more money?

The contract rate always looks bigger than it is — you're covering both halves of payroll tax and buying your own benefits. This puts the two offers on the same scale.

2026 IRS numbers
Stays on your device
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Tax data last updated: July 2026. Sources & methodology

The two offers

$
$

Employer health premiums, 401(k) match, PTO you'd actually use. $10–20k is typical.

$/hr
hrs

Full-time with a few weeks off is roughly 1,800–1,900.

$

Your own health insurance, software, gear.

After tax and benefits
+$1,137

The 1099 offer comes out ahead at $65/hr.

W-2 take-home (incl. benefits)
$84,145
1099 gross revenue
$117,000
1099 take-home
$85,282
Break-even contract rate
$64/hr

Both sides use real 2026federal brackets for a single filer with the standard deduction. Job security, unemployment insurance, and the freedom to fire bad clients don't fit in a spreadsheet — weigh those yourself. Not tax advice.

How this is calculated

Both offers get run through the same 2026 federal brackets. The W-2 side pays half of FICA (7.65%) and gets the benefits package added back as value. The 1099 side pays full self-employment tax on net earnings, deducts business expenses, and takes the QBI deduction. Then we compare what actually lands in your account.

The break-even rate is the headline number: the contract rate at which the two offers pay the same. A crude old rule says W-2 salary ÷ 1,000 ≈ minimum contract rate (so $90k → $90/hr with benefits factored in) — our version is computed from your actual numbers rather than a heuristic.

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Common questions

Employer-paid health premiums (often $6–15k), 401(k) match, and paid time off you'd actually take. Add employer HSA contributions and equity if they're real. For a typical package, $10–20k a year is a fair range — check your benefits summary rather than guessing.
Three drains: you pay the employer half of Social Security and Medicare (an extra 7.65% on most earnings), you buy everything the company used to provide, and unpaid gaps between contracts still cost you rent. The gross rate has to cover all three.
Some real ones: business deductions come off the top, the QBI deduction takes 20% off taxable business income, and a Solo 401(k) has far higher limits than any employee plan. This calculator includes the first two; the retirement advantage is gravy on top.
A W-2 job can end just as abruptly as a contract — but it comes with unemployment insurance and usually severance, which contracts don't. On the other side, a contractor with three clients has three income streams; an employee has one. Neither answer fits in a formula.