TaxWrench

W-2 vs 1099 Take-Home Pay Comparison

Compare your real after-tax pay as an employee vs contractor. Includes self-employment tax, benefits gap, and business deductions.

Compare Two Offers (or Your Current Situation)
$
Pre-tax W-2 salary offered
$
Total gross contractor income (before all taxes/expenses)
W-2 Benefits Package (Annual Value)
$
Employer-paid premium (~$700/mo avg)
$
Typically 3-6% of salary
$
1099 Business Expenses (Annual)
$
Self-paid premiums (fully deductible)
$
$
SEP-IRA, Solo 401(k) (reduces taxable income)
W-2 Employee Take-Home
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—
1099 Contractor Take-Home
—
—

🏢 W-2 Employee Breakdown

Gross Salary—
Federal Income Tax (est.)—
FICA (SS + Medicare)—
Health Insurance (employee)—
401(k) Contribution (est.)—
After-Tax Take-Home—
Benefits included:
—

💼 1099 Contractor Breakdown

Gross Contract Income—
Business Expenses—
Health Insurance Deduction—
Retirement Deduction—
Net Taxable Income—
Self-Employment Tax—
SE Tax Deduction (50%)—
Federal Income Tax (est.)—
After-Tax Take-Home—
—
📐 How This Is Calculated

W-2 Employee Taxes

FICA Employee Share = Salary × 7.65% (up to SS wage base $168,600) (6.2% Social Security + 1.45% Medicare)
Federal Tax = Salary × marginal rate (simplified estimate — actual uses brackets)

Note: This is a simplified estimate. Actual federal tax depends on all deductions, credits, and graduated bracket application.

1099 Contractor Taxes

SE Tax = Net Earnings × 0.9235 × 15.3%
SE Deduction = SE Tax × 50%
Taxable Income = Gross - Business Expenses - Health Ins - Retirement - SE Deduction
Federal Tax = Taxable Income × marginal rate

The Benefits Gap

The most often overlooked factor: the value of W-2 employer benefits. Employer-paid health insurance ($700–$1,200/month), 401(k) match, PTO, and payroll tax contributions together can add $15,000–$25,000/year in value that a 1099 contractor must fund themselves.

Rule of Thumb

To match a $100K W-2 salary with full benefits, a 1099 contractor typically needs to earn $130K–$145K gross — the "1.3x rule".

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