1099 vs W2 Calculator. Your $75/hr rate isn't $75/hr.
Self-employment tax, federal and state income tax, and the benefits a W2 job quietly covers for you all come out of that number first. This free 1099 vs W2 calculator shows your real take-home pay on both sides — contract rate against salary offer, in any of the 50 states — before you sign anything.
1099 contractor vs W2 employee: annual take-home pay
—All figures are simplified educational estimates. Real tax liability depends on your complete financial picture — deductions, credits, local taxes, and more. Always confirm with a licensed CPA before filing or making decisions.
State rates here are effective approximations. For bracket-level detail, open the 1099 tax calculator for your state, or read which write-offs actually move the number.
S-Corp calculator: the one move that can cut your self-employment tax.
Inactive — income below $80kElecting S-Corp status means only your salary portion is subject to self-employment tax — distributions are not. At higher incomes, that split can save thousands per year. The catch: it only makes sense once your net 1099 income clears roughly $80,000/year. Below that, payroll administration and accounting costs outweigh what you save.
Simplified estimate using a flat 60/40 salary-to-distribution split. IRS "reasonable compensation" requirements are enforced and fact-specific — consult a CPA before making the election. Numbers shown do not account for state-level S-Corp taxes, which vary.
1099 vs W2 taxes: what actually eats into a contractor paycheck
A W2 paycheck already has taxes withheld. A 1099 payment doesn't — the full amount lands in your account, and the IRS expects you to set aside and remit your own taxes.
The full 15.3% is on you. Your employer isn't splitting it anymore.
Self-employment tax is Social Security and Medicare — the same FICA taxes a W2 employee pays, except the employer normally covers exactly half. As a 1099 contractor, you cover both halves. That's 12.4% Social Security plus 2.9% Medicare, applied to 92.35% of your gross income. For most contractors, it's the single largest tax they weren't fully expecting.
Clients pay your full rate with nothing deducted. The IRS expects you to calculate and remit your own taxes quarterly — and the gap between gross pay and real take-home is often a shock the first year.
A W2 employer picks up half of Social Security and Medicare. On 1099, that full 15.3% is yours. The calculator above already accounts for the half-SE deduction you're allowed to take on your federal return.
Every legitimate business expense reduces your taxable income before any tax is calculated. Home office, health insurance, retirement contributions, equipment — a W2 employee has none of these levers.
Write-offs most 1099 contractors miss
Quarterly estimated tax deadlines
Deadlines shift when they fall on a weekend or federal holiday. Always verify the exact dates for the current year at IRS.gov.
1099 vs W2: common questions
Plain answers to what new contractors ask most.
A W2 employer withholds income tax and splits FICA with you, reporting your pay on a W-2. A 1099 contractor receives the full invoice amount with nothing withheld, covers the full 15.3% self-employment tax, and reports income on a 1099-NEC. In exchange, contractors can deduct legitimate business expenses that W2 employees generally cannot.
A common starting point is 25–30% of gross income, but the right number depends on your total income, state, filing status, and what you're able to deduct. Use the calculator above with your real inputs — it'll give you a far more accurate picture than any rule of thumb.
Self-employment tax is Social Security and Medicare — the same FICA taxes W2 employees pay — except you pay both the employee and employer halves. That's 12.4% Social Security (up to the annual wage base) plus 2.9% Medicare, for a combined 15.3%. You do get to deduct half of it from your gross income before calculating federal tax.
Generally yes — self-employed individuals can deduct premiums for themselves, a spouse, and dependents as an above-the-line deduction, which means it reduces your AGI before you even get to itemizing. The key exception: you cannot take the deduction for any month you were eligible for employer-subsidized coverage through a spouse's plan. A CPA can confirm your specific situation.
Roughly April 15, June 15, September 15, and January 15 of the following year — each shifting a day or two when they fall on a weekend or federal holiday. Missing a payment can trigger an underpayment penalty even if you settle the full balance by the annual filing deadline, so the quarterly schedule matters.
An LLC is primarily about legal liability protection — it doesn't change how you're taxed by default. An S-Corp election is a tax status you layer on top, and it only makes financial sense once your net self-employment income is high enough that the SE tax savings outweigh the added payroll and accounting costs. Commonly cited around $80,000/year, but it varies. See the S-Corp section above for an estimate based on your numbers.
No. This is an educational estimate built on simplified federal brackets and flat-rate state approximations. It's designed to help you understand roughly what to expect and ask better questions of your CPA — not to replace one. Your actual tax liability depends on your full financial picture. Always confirm with a licensed professional before making decisions.