What this estimate includes
This calculator is designed for a quick planning comparison, with every important assumption visible. It includes:
- W-2 salary plus the benefits value you enter
- Contract revenue based on billable hours and working weeks
- Simplified federal payroll/self-employment tax and contractor expenses
How the calculation works
1099 comparable value = revenue − expenses − (92.35% of net business earnings × 15.3%); W-2 comparable value = salary − 7.65% payroll tax + benefits
Results update as you type. Rounding happens for display; calculations use the full values entered. A real statement, pay stub, contract, or account agreement may use different timing and rules.
A worked example
A $38 contractor rate at 35 billable hours for 48 weeks creates $63,840 in revenue before expenses and simplified self-employment tax.
Important limitations
This is an educational estimate, not financial, tax, legal, or employment advice. It cannot account for every local rule, fee, benefit, deduction, compounding convention, or personal circumstance. Use it to understand direction and scale, then verify an important decision with the relevant employer, lender, account provider, or qualified professional.
Frequently asked questions
Why exclude income tax?
Income tax depends on your full household situation and generally applies to both arrangements. Leaving it out keeps the employment structure comparison focused.
How do I value benefits?
Use employer contributions for health coverage and retirement, paid leave you would otherwise forgo, and other benefits you would need to replace.
Reviewed August 17, 2026. We review formulas and explanations for clarity. If you spot a problem, please tell us.