1099 vs W-2: which pays more?

How it works

Both sides use the 2026 federal rules, the standard deduction for your filing status, and no other income.

W-2 job

1. Your Social Security and Medicare = 6.2% × the smaller of the salary and $184,500 + 1.45% × the salary, plus the 0.9% Additional Medicare Tax on wages over $200,000 ($250,000 married filing jointly, $125,000 married filing separately, $200,000 qualifying surviving spouse) from Form 8959.
2. Federal income tax (W-2) = the 2026 Form 1040 income tax on the salary as wages, after credits (an earned income credit at low pay counts as a credit).
3. W-2 take-home pay = salary − step 1 − step 2.
4. Employer’s cost of the W-2 pay = salary + 6.2% × the smaller of the salary and $184,500 + 1.45% × the salary.

1099 contract

1. Profit = 1099 income − business expenses (an empty box counts as $0).
2. Self-employment tax (Schedule SE) = 12.4% × the smaller of 92.35% of profit and $184,500 + 2.9% × 92.35% of profit, or $0 when 92.35% of profit is under $400; plus the 0.9% Additional Medicare Tax on 92.35% of profit above the threshold above.
3. Federal income tax (1099): adjusted gross income = profit − half of the Schedule SE tax; taxable income before the QBI deduction = that − the standard deduction (not below $0); QBI = profit − half of the Schedule SE tax; QBI deduction = the smaller of 20% × QBI and 20% × the taxable income before it (each not below $0), and at least $400 when QBI is $1,000 or more. When the taxable income before it is above the Form 8995 threshold ($201,750 single, head of household and qualifying surviving spouse; $403,500 married filing jointly; $201,775 married filing separately), the QBI deduction is only the $400 minimum (or $0 when QBI is under $1,000). Taxable income = taxable income before the QBI deduction − the QBI deduction, not below $0; income tax on it, after credits.
4. 1099 take-home pay = profit − step 2 − step 3.

Earned income credit (both sides). The only credit that can apply. No qualifying children, ages 25 to 64, not married filing separately. Earned income is the salary (W-2) or the profit − half of the Schedule SE tax (1099); it also equals the AGI on each side. The 2026 EIC Table amount for it: take the $50 row that holds it (lo = earned income rounded down to a multiple of $50; the middle is lo + 25; under $1 gives no credit). Phase-in: when lo + 50 is above $8,680, $664; otherwise the lesser of 7.65% × the middle and $664. Phase-out: when lo is at or above $10,860 ($18,140 married filing jointly), subtract 7.65% × (middle − that start). Round to whole dollars (half up), not below $0, and no credit at or above $19,540 ($26,820 married filing jointly). It comes off the tax, and below $0 it adds to take-home pay (Rev. Proc. 2025-32 section 4.06).

Result

• 1099 take-home minus W-2 take-home: above $0 the contract pays more.
• More take-home pay reads "1099 contract", "W-2 job" or "The same", from that difference as shown to the cent (rounded half up).
• Hourly figures (when you type hours) = salary ÷ hours, 1099 income ÷ hours, and the employer’s cost ÷ hours.

The 2026 income tax follows the site tax engine: the Tax Table for taxable income under $100,000 (the tax at the middle of the income's row: rows of $0 to $5, $5 to $15 and $15 to $25, then $25 rows up to $3,000 and $50 rows from $3,000, rounded to whole dollars, half up) and the exact 2026 rate schedule from $100,000. The employee's Social Security and Medicare, salary minus them, the profit, the employer's cost and the hourly figures are exact decimals of what you typed; the self-employment tax and the income tax come from the site's tax engine, which works in floating point. If one of those exact amounts is not $0 but too small to show as a number, there is no answer: 'A result is too small to show as a number: check the amounts.'

Figures that change each year

When the data is out of date

After December 31, 2026 the page keeps using the 2026 wage base and rates and says so above the result.

Assumptions

• Tax year 2026, federal taxes only. The job or the contract is your only income; standard deduction, no children or other credits besides the earned income credit.
• Benefits are left out on both sides. The contractor has no self-employed health insurance or retirement plan deduction.
• 1 to 8,784 hours a year; amounts up to $1 trillion. An estimate, not tax advice.

Worked examples by hand

Single: an $80,000 salary against $95,000 of 1099 pay with $3,000 of expenses, 2,080 hours.

• W-2: Social Security and Medicare = 6.2% × 80,000 + 1.45% × 80,000 = 4,960 + 1,160 = $6,120. Taxable income = 80,000 − 16,100 = 63,900; Tax Table row middle 63,925: 10% × 12,400 + 12% × 38,000 + 22% × 13,525 = 1,240 + 4,560 + 2,975.50 = 8,775.50, so $8,776. Take-home = 80,000 − 6,120 − 8,776 = $65,104.
• 1099: profit = $92,000; 92.35% = 84,962; self-employment tax = 15.3% × 84,962 = $12,999.19; half = 6,499.59. Taxable before QBI = 92,000 − 6,499.59 − 16,100 = 69,400.41; QBI deduction = the smaller of 20% × 85,500.41 = 17,100.08 and 20% × 69,400.41 = $13,880.08; taxable income = 55,520.33; Tax Table row middle 55,525: 1,240 + 4,560 + 22% × 5,125 = $6,928. Take-home = 92,000 − 12,999.19 − 6,928 = $72,072.81.
• The contract leaves $6,968.81 more. Employer’s cost = 80,000 + 6,120 = $86,120; per hour: W-2 $38.46, 1099 $45.67, employer $41.40.

Single: $200,000 both ways. W-2 Social Security stops at $184,500: 6.2% × 184,500 + 1.45% × 200,000 = 11,439 + 2,900 = $14,339; income tax on 183,900 of taxable income = $36,734. 1099: 92.35% × 200,000 = 184,700; self-employment tax = 12.4% × 184,500 + 2.9% × 184,700 = 22,878 + 5,356.30 = $28,234.30; income tax = $25,196.31. The W-2 job leaves $2,357.61 more.

Married filing jointly: $60,000 both ways, 2,000 hours. W-2: Social Security and Medicare = $4,590; take-home $52,567. 1099: self-employment tax = 15.3% × 55,410 = $8,477.73; take-home $49,639.27. The W-2 job leaves $2,927.73 more; both pay $30 an hour, and the employer spends $32.30 an hour on the W-2 job.