1099 vs W-2 Calculator

Compare what each leaves after tax. An employee pays 7.65% Social Security and Medicare; a contractor pays 15.3% self-employment tax on 92.35% of profit, buys their own insurance and is paid only for the weeks billed. $60,000 a year on W-2 leaves $50,390; $40 an hour for 40 hours over 48 weeks, less $2,000 of expenses, leaves $59,351 before health insurance (single filer, no state tax).

The rate that leaves the same take-home. A $60,000 salary with no benefits matches $33.93 an hour billed 40 hours a week for 48 weeks with $2,000 of expenses. Health insurance you buy and a retirement match you give up raise it.

It depends on the rate. A contractor deducts business expenses, half of self-employment tax, health insurance and up to 20% of qualified business income, but pays both halves of Social Security and Medicare and is paid only for the weeks billed.

The facts of the work, not the contract. The IRS weighs behavioral control, financial control and the type of relationship. California, Massachusetts and New Jersey apply the ABC test, and the Department of Labor notes that a worker who receives a 1099 is not necessarily an independent contractor. This 1099 vs W2 calculator compares the money on each side; it does not decide the classification.

The employer's 7.65% Social Security and Medicare, federal and state unemployment tax, workers' comp and benefits. A $60,000 employee in Texas costs $65,475 a year at $1 per $100 for workers' comp before benefits, or $33.41 for each of 1,960 hours worked.

Form 1099-NEC is required for $2,000 or more paid to a nonemployee in 2026, up from $600 through 2025. For 2026 payments it goes to the worker and the IRS by February 1, 2027, because January 31 falls on a Sunday.