W-2 vs 1099 Take-Home Calculator

You have two offers on the table. One is a W-2 salary of $90,000 with health insurance and a 401(k) match. The other is a 1099 contract paying $110,000. The contract is clearly better — it's $20,000 more, right? Not necessarily. Once you account for the taxes and benefits that vanish when you go independent, that $110,000 contract can leave you with less actual take-home pay than the $90,000 salary. The bigger number can quietly be the smaller paycheck.

The biggest reason is a tax line most people never see directly. As a W-2 employee, you and your employer split the 15.3% Social Security and Medicare tax — you pay 7.65%, and your employer covers the other 7.65% on your behalf. As a 1099 contractor, you owe the entire 15.3% self-employment tax yourself. On $110,000 of net earnings, that extra employer share you now shoulder works out to thousands of dollars that simply weren't your responsibility before.

Then there are the benefits an employer stops providing:

• Health insurance. A W-2 employer often pays the bulk of your premium. As a 1099 contractor you buy your own, frequently $6,000 to $12,000 a year for individual coverage with no subsidy.
• The 401(k) match. A 3% to 5% employer match on a $90,000 salary is $2,700 to $4,500 of free retirement money you forfeit as a contractor.
• Paid time off. Vacation, holidays, and sick days are paid for an employee. For a contractor, every day off is a day with no income.
• Payroll-tax withholding. Employees have taxes withheld automatically; contractors must make quarterly estimated payments or face penalties.

This calculator puts both paths side by side. Enter the salary, the contract rate, and your benefit assumptions, and it estimates your real net pay each way — after self-employment tax, lost benefits, and the costs you'd now carry yourself. Only then can you see which offer actually pays more.