Contractor Rate Converter

A recruiter offers you $60 an hour on a 1099 contract. Quick mental math: 2,080 working hours in a year times $60 equals $124,800. That sounds like a big jump from your $95,000 salaried job. Then you actually run the numbers, and the picture changes fast. As a contractor, that $60 has to absorb costs your old employer quietly covered, and the real comparison is far closer than it first appears.

Start with the hours. The 2,080-hour figure assumes you bill every working hour of the year. No contractor does. You take time off, you have gaps between contracts, and not every hour on the clock is billable. A realistic contractor bills closer to 1,700 to 1,900 hours a year after vacation, holidays, sick days, and bench time. At 1,800 billable hours, that $60 rate produces $108,000, not $124,800 — and you haven't paid a single expense yet.

Then come the costs an employer used to handle. As a 1099 contractor you owe the full self-employment tax of 15.3% on net earnings, covering both halves of Social Security and Medicare that a W-2 employer normally splits with you. On top of that, you fund your own:

• Health insurance — easily $6,000 to $12,000 a year for an individual plan with no employer subsidy.
• Retirement contributions — no company 401(k) match, so every dollar comes from you.
• Paid time off — every vacation day and sick day is a day you simply don't get paid.
• Business overhead — equipment, software, accounting, liability insurance, and your home office.

This converter handles all of it. Enter a rate in any format — hourly, daily, or annual — and set your billable hours, overhead, and tax assumptions. It translates between formats and shows what a contract rate truly equals once the hidden costs are accounted for. The headline rate and the take-home reality are rarely the same number.