1099 vs W2 Calculator
A salary is not what your job costs. Your employer also pays half your payroll tax, buys your benefits, and pays you on days you do not work. Take the same number as a contractor and it is a pay cut. This works out the rate that really matches.
You need to charge
-
- Or as a day rate
- $0
- What the job is really worth
- $0
- Employer payroll tax you take on
- $0
- Value of your paid time off
- $0
- Just dividing the salary would say
- $0
Where the money goes
The green block is the job is really worth and it stays yours. The orange is employer payroll tax you take on and it does not come back.
Move it and watch
-
at {v} for salary
And what you can change
Why your own figure may differ
What your salary is hiding
Every line here is something your employer pays that you would pay yourself.
| What it is | Amount | Who pays it now |
|---|
Matching rate = (salary + employer benefits + employer payroll tax + the value of paid time off + your business costs), divided by the hours you will actually bill. Employer payroll tax is 6.2% Social Security up to 184,500 plus 1.45% Medicare on everything.
How the rate moves with billable weeks
This is the number people are most optimistic about, and it moves the answer more than anything else on the page.
| Weeks you bill | Hourly rate needed | Day rate |
|---|
Contractor vs employee pay: real examples
Three ways the numbers surprise people. Click any card to load it.
- The straight comparison
A $100,000 salary
Typical benefits, 20 days off, 48 billable weeks.
You need $70.49 an hour to match it - not the $48.08 that dividing the salary suggests.
Load this scenario in the calculator → - Fewer billable weeks
Gaps between contracts
The same job, but only 42 weeks of work.
The rate has to rise sharply, because the whole year still has to come out of fewer billed hours.
Load this scenario in the calculator → - Rich benefits
A generous package
A $25,000 benefits package and 30 days off.
The gap widens further. Good benefits are worth far more than people credit when they compare offers.
Load this scenario in the calculator →
Common questions about contractor vs employee pay
Why is a matching contract rate so much higher than my salary?
Because a salary is not what a job costs. Your employer also pays half your payroll tax, buys your health cover, pays into your retirement, and pays you on days you do not work. As a contractor all of that is yours. The same headline number is a serious pay cut.
What is the quick rule of thumb?
Many people say take your hourly salary rate and add half again. It is a decent starting guess, but it is only a guess. Put your actual benefits and time off in and you get a real number instead, which is usually different from the rule of thumb in one direction or the other.
What counts as a benefit I should include?
Anything your employer pays for that you would have to buy yourself. Health, dental and vision cover, retirement contributions or matching, life and disability cover, and any training or equipment budget. Look at what the employer contributes, not what comes out of your pay.
Why do billable weeks matter so much?
Because a contractor with no work earns nothing. If you expect four weeks off and a few weeks between contracts, you are billing maybe 46 weeks, not 52. Your rate has to cover the whole year out of fewer weeks, and that alone raises it noticeably.
What about the extra taxes?
You pay both halves of Social Security and Medicare instead of one. On the other hand you can deduct genuine business expenses, and half the self-employment tax comes back as a deduction. The tool counts the extra tax; work the deductions out separately.
Is contracting worth it at the same money?
At the same money it is a pay cut, so the question is what else you are getting. More control, more variety, and often more work available. Less security, no paid time off, and you handle your own tax. Those are real trade-offs, but they should be a choice, not an accident.
The guide behind this calculator
Payroll tax rates and the 184,500 Social Security wage base are for the 2026 tax year, read from the IRS and checked 2026-08-18.