Compare True Take-Home Pay.
Accounts for self-employment tax, benefits value, state taxes, and business deductions. Get your break-even contractor rate in under a minute.
Why the Numbers Look This Way.
The Self-Employment Tax Trap
W2 employees only see 7.65% FICA on their pay stub — the employer silently pays the other 7.65%. When you become a 1099 contractor, you pay both halves: 15.3%. On $150,000 of income, this is over $22,000 — a tax that didn't exist on your W2.
Benefits Are Not Free
The average US employer contributes $7,000–$12,000 per year toward employee health insurance premiums. On top of that, employer 401k matches average $3,000–5,000/year. Combined, a generous benefits package is worth $15,000–$22,000/year that a 1099 contractor must fund entirely themselves.
The Power of Business Deductions
1099 contractors get something W2 employees lost: the ability to deduct business expenses. Home office, equipment, software, internet, and professional development all reduce net self-employment income before tax is applied.