How to compare a 1099 rate with a W-2 salary
A W-2 salary comes with extras that a contract rate doesn't: the employer pays half of your Social Security and Medicare taxes (7.65%), often contributes to health insurance and your 401(k), and pays you for holidays and vacation. A 1099 contractor pays all of those costs themselves.
This calculator adds up the value of the W-2 package, then compares it with the 1099 contract's revenue after business expenses and the extra half of self-employment tax that an employer would otherwise pay.
1099 comparable value = (Rate × Hours × Weeks − Expenses) × (1 − 0.9235 × 7.65%)
Paid time off is already reflected because the W-2 salary is paid for 52 weeks, while the contractor only earns in the weeks they work.
Rule of thumb
To match a salaried job, a contract rate usually needs to be 1.25 to 1.5 times the salary's hourly equivalent (salary ÷ 2,080). For a $100,000 salary ($48/hour), that means roughly $60 to $72 an hour.
Beyond the math
- Contractor upside: more flexibility, multiple clients, business deductions and access to a solo 401(k) with high contribution limits.
- Contractor risk: no unemployment insurance, gaps between contracts, and no employer-subsidized benefits.
- Classification: if a company controls when, where and how you work like an employee, you may be misclassified. The IRS and Department of Labor have tests for this.
Frequently asked questions
Is $50 an hour on a 1099 good?
Do 1099 contractors pay more taxes?
Last reviewed: 2026-10-09