Contractor Rate Calculator

What 1099 hourly rate matches a W2 salary? Full math on self employment tax, lost benefits, and unpaid time off, with every assumption you can edit.

W2 → 1099 I'm offered a W2 salary. What 1099 rate is equivalent? 1099 → W2 I quote a 1099 rate. What W2 salary is equivalent?

W2 annual salary (USD)

Filing status

State tax rate (%)

e.g. CA ~9.3, NY ~6.5, TX/FL 0

Hours per week

Working weeks per year

Drop below 52 for unpaid time off.

Benefits gap (what you'd lose by leaving W2) - click to edit

Health insurance / yr

ACA Silver solo plan ~$9k. Family ~$24k.

401k match lost (%)

Of W2 base salary. Median match is 4 to 5 percent.

Other benefits / yr

Dental, vision, life, disability, equipment, etc.

Apply 20% QBI deduction (Section 199A)

Most non-SSTB self employed get this below the income phaseout.

Equivalent 1099 hourly rate

W2 side

1099 side

Estimates only. Based on 2025 federal tax brackets, 2025 standard deduction, FICA / SE tax rates, and the inputs you provide. State tax is modelled as a flat marginal rate. Doesn't include credits (CTC, EITC, etc.), itemized deductions above the standard, multi-state filing, or quarterly estimated tax penalties. Consult a CPA before signing a contract.

Why a 1099 hourly is higher than the same salary divided by 2,080

A common mistake when going from W2 to 1099 is dividing your old W2 salary by 2,080 hours and quoting that. That underprices the role by 30 to 50 percent. Four things change when you become a contractor:

You pay both halves of FICA. W2 employee pays 7.65 percent. 1099 contractor pays the full 15.3 percent (called self employment tax). Half is deductible from federal taxable income, but you still write a bigger check to the IRS.
You buy your own benefits. Health insurance, 401k match, paid leave, holidays, life insurance, disability, equipment - all of this is bundled into a W2 offer. As a 1099 you pay for it yourself out of your gross. Typical replacement cost is 15 to 25 percent of base salary.
Time off is unpaid. A W2 salary covers two to four weeks of paid time off plus holidays. A 1099 only earns the hours billed. If you take three weeks off and ten holidays, you're billing about 47 weeks - 10 percent less than 52.
You front your own taxes. No employer withholding. You pay quarterly estimated taxes and carry the cash flow risk yourself.

On the other side, self employed contractors get the 20 percent QBI deduction (Section 199A) which gives back some of the tax, and can deduct legitimate business expenses (home office, equipment, software, internet) that W2 employees can't. The calculator above includes the QBI but leaves business expenses up to you.

Frequently asked questions

What does this calculator do?

It finds the 1099 contractor hourly rate that gives you the same after tax cash in hand as a W2 salary. It accounts for self employment tax (the contractor pays both halves of FICA), federal income tax, state income tax, the 20 percent QBI deduction for qualified self employed income, the cost of replacing employer benefits, and unpaid time off.

What tax year is this based on?

2025 federal tax brackets, 2025 standard deduction, and 2025 Social Security wage base ($176,100). FICA / self employment tax rates haven't changed since 1990. State tax rates are up to you to enter.

Why is the equivalent 1099 rate higher than just adding 7.65 percent for the employer FICA half?

Because three other things hit the contractor at the same time: lost employer benefits (health insurance, 401k match, paid time off, holidays, dental, vision, life), more total tax on the same gross (full 15.3 percent SE tax instead of 7.65 percent FICA), and unpaid time off if you take any. The employer FICA half is usually the smallest of the four.

Does this account for the QBI (Section 199A) deduction?

Yes, by default. Most non-SSTB self employed contractors get a 20 percent deduction on qualified business income up to the income phaseout ($197,300 single / $394,600 married filing jointly for 2025). Above the phaseout, specified service trade or business rules can phase the deduction out. The toggle lets you turn it off if you don't qualify.

How accurate is this?

The math is correct within the assumptions you set. The biggest sources of imprecision are state tax (modelled as a flat marginal rate; real state tax is progressive), benefits cost (highly variable), and federal credits not modelled here (child tax credit, foreign earned income exclusion, etc.). Treat the result as a negotiation starting point, not a tax filing.

I'm an EOR contractor (Deel / Remote.com / Oyster). Does this apply?

If you're a US-resident contractor invoicing through an EOR, you're filing 1099 (or its EOR equivalent) and paying SE tax. The math applies. If the EOR is paying you as a W2 employee in your country, you're not really 'going contractor' for this purpose - just compare the gross salaries.

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