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1099 or W-2: what hourly rate matches a salary, 2026

United States · federal taxes only · tax year 2026 · estimate

Type the job offer and the contract offer. The page shows what each leaves you after federal taxes, and the smallest 1099 hourly rate that matches the job, benefits and paid time off included.

The two offers

The W-2 job

Gross pay for the year, before any tax.
What the employer pays on top of the salary: its share of health insurance, its retirement match. Use what they would cost you to buy yourself.
Paid vacation, holidays and sick days. On a 1099 you take the same days off, unpaid.

The 1099 contract

What the client pays you an hour, before any tax.
Laptop, software, insurance, a home office: costs the employer would pay in the job.

You

The same for both. Empty means 40.
Filing status
Married filing jointly uses the joint brackets but counts only the income entered here. Your spouse’s income is not included.

Your estimate

Hourly 1099 rate that matches the job
$49.97
The salary as an hourly rate
$38.46
How much more than the salary’s hourly rate
+29.9%
What each offer leaves you for the year, after federal taxes
W-2 job1099 contract
Pay for the year$80,000$107,800
Business expenses–−$3,000
Social Security and Medicare−$6,120−$14,808
Federal income tax−$8,770−$9,020
Take-home pay$65,110$80,972
Benefits paid by the employer+$9,000–
Total for you$74,110$80,972

With these numbers the 1099 contract leaves you $6,862 more a year.

  • The employer also pays $6,120 of its own Social Security and Medicare on this salary. It is not taken from your pay. On a 1099 you pay both halves yourself: that is the self-employment tax.
  • The contract counts 1,960 paid hours: 49 weeks of 40 hours. The 15 paid days off in the job are days you are not paid on a 1099.
  • Benefits count at the value you typed, as if they were money in your pocket. The page does not tax them. Check what the same health cover would cost you on your own.
  • Whether you are an employee or a contractor is not a label either side picks. It depends on how the work is controlled. See the section “Who decides 1099 or W-2” below.

An estimate for the United States, federal taxes only, tax year 2026.

General information, not tax, legal or accounting advice.

Your numbers stay on this page. Nothing is sent or saved.

What this page leaves out

United States, federal taxes only, tax year 2026. An estimate: state and local taxes, credits, retirement plans and special cases are left out (the full list is below).

  • State and local taxes. Some states also take payroll taxes for disability or paid leave.
  • Tax credits, such as the child tax credit, and itemized deductions.
  • Pre-tax money taken from a salary (401(k), health premiums paid through payroll) and, on the contract, retirement plans for the self-employed and the self-employed health insurance deduction.
  • Tax on benefits: they count at the value you type.
  • Protections that come with a job and not with a contract, such as unemployment insurance and workers’ compensation.
  • Unpaid time on a contract: finding clients, invoicing, gaps between contracts, late payers. Lower the hours a week to allow for it.
  • Limits on the 20% business income deduction above its threshold, which the page leaves out entirely.
  • Other income, your spouse’s income, married filing separately, alternative minimum tax, penalties and interest.
  • Whether the work is really a contract: the page cannot check that.

The working

  1. Job, Social Security (your share): 6.2% × $80,000 = $4,960.
  2. Job, Medicare (your share): 1.45% × $80,000 = $1,160.
  3. Job, federal income tax: $80,000 − standard deduction $16,100 = $63,900 taxable, and the single brackets give $8,770.
  4. Job take-home: $80,000 − $6,120 − $8,770 = $65,110. With $9,000 of benefits: $74,110.
  5. Contract hours: 40 hours × 49 weeks (15 paid days off in the job are unpaid here) = 1,960 hours.
  6. Contract pay: 1,960 hours × $55.00 = $107,800.
  7. Contract taxes on the profit of $104,800 (pay minus $3,000 of expenses), as in the self-employment tax calculator: self-employment tax $14,808 + federal income tax $9,020 = $23,828.
  8. Contract take-home: $107,800 − $3,000 − $23,828 = $80,972.
  9. Difference: $80,972 − $74,110 = +$6,862.
  10. Break-even: at $49.97 an hour the contract pays $97,941.20 and leaves at least $74,110; a cent less leaves less.

Each tax is rounded to the dollar and the totals add the rounded parts. The break-even rate is the smallest rate, to the cent, whose take-home is at least the job’s.

Figures checked on the IRS and Social Security websites on October 29, 2026.

To see what to set aside for tax from each contract payment, with every step, use the self-employment tax calculator.

Why use this one

1099 or W-2: how to compare the two offers in 2026

A job offer says “$80,000 a year”. A contract offer says “$55 an hour”. The contract looks bigger, but the two numbers are not the same kind of money. This page puts them side by side after federal taxes, for the United States, tax year 2026.

What changes when you are paid on a 1099

Worked example

Sam is single and has two offers: a job at $80,000 with $9,000 of benefits and 15 paid days off, or a contract at $55 an hour, 40 hours a week, with $3,000 of business expenses.

  1. The job: Social Security $4,960 and Medicare $1,160, so $6,120. Taxable income is $80,000 − $16,100 = $63,900, which gives $8,770 of federal income tax. Take-home is $65,110; with the benefits, $74,110. The employer also pays its own $6,120 on top.
  2. The contract: 40 hours × 49 weeks = 1,960 hours, so $107,800. The profit after expenses is $104,800. Self-employment tax is $14,808 and federal income tax $9,020. Take-home is $80,972.

Here the contract leaves Sam $6,862 more a year. The break-even is $49.97 an hour: the smallest rate that leaves at least $74,110. The salary works out at $38.46 an hour, so the contract has to pay 29.9% more an hour just to match the job.

The rule of thumb, and why the page does better

You will often read one fixed percentage that a contract should pay above a salary. The real figure depends on your days off, your benefits, your expenses and your tax bracket. The page works it out for your numbers, to the cent, instead of guessing.

Who decides 1099 or W-2

Not the label on the offer. The IRS looks at the facts of the work in three groups: behavioral control (does the business direct how the work is done?), financial control (who pays the expenses, who can make a profit or a loss?) and the relationship (a written contract, benefits, whether the work is ongoing and a key part of the business). An independent contractor is someone whose client controls only the result of the work, not how it is done. If you are not sure, the IRS can decide with Form SS-8. This page compares the money; it cannot tell you which one you are.

What the page leaves out

It counts federal taxes only. State income tax, state payroll taxes, credits, retirement contributions and the self-employed health insurance deduction are not included; the full list is with the result. It also counts every contract hour as paid. Real contract work has unpaid hours: finding clients, invoicing, gaps between projects. Lower the hours a week to allow for them.

Frequently asked questions

How much more should a 1099 contract pay than a W-2 salary?

Enough to cover the employer’s half of Social Security and Medicare, your unpaid days off, the benefits you lose and your business costs. In the example on this page it is 29.9% more an hour. Type your own offers to get your figure.

Is the self-employment tax the only extra cost?

No. It is the 15.3% for Social Security and Medicare on 92.35% of your profit, against 7.65% taken from an employee’s pay. On top of that you lose paid time off and benefits, and you pay your own business costs. The 20% business income deduction gives some of it back.

Do I pay Social Security on my whole salary?

Only up to $184,500 in 2026, the Social Security wage base. Medicare has no limit, and an extra 0.9% Additional Medicare Tax applies above $200,000 for a single filer; the employer does not match it.

Why does the page count fewer weeks for the contract?

Because a job pays you for your vacation and holidays and a contract does not. Five paid days off are one week you are not paid on a 1099. Leave the box empty if you would work every week.

Can I choose to be a 1099 contractor or a W-2 employee?

Not by label alone. It depends on how much control the business has over the work. The IRS explains the rules (links below), and Form SS-8 asks the IRS to decide.

Is this what I will really take home?

It is an estimate of federal taxes only. State taxes, credits, retirement plans and the special cases in the list on the page are not included. General information, not tax, legal or accounting advice.

Sources and official links