{
  "id": "1099-vs-w2",
  "version": "5417d71f3fa7",
  "status": "published",
  "name": "1099 vs W-2 Calculator",
  "question": "1099 vs W-2: which pays more?",
  "summary": "Compares 2026 take-home pay from a W-2 salary and from 1099 contract income: employee Social Security and Medicare against self-employment tax, federal income tax both ways, and the employer’s share.",
  "category": "finance",
  "subcategory": "tax-and-pay",
  "url": "https://www.acalculator.org/finance/1099-vs-w2-calculator",
  "markdown": "https://www.acalculator.org/finance/1099-vs-w2-calculator.md",
  "kind": "function",
  "method": "W-2 take-home = salary − (6.2% × min(salary, $184,500) + 1.45% × salary) − federal tax on the wages (Additional Medicare Tax included). 1099 take-home = profit − federal tax on the profit as self-employment income, where profit = 1099 income − expenses (self-employment tax on 92.35% of profit, half of it deducted, QBI deduction). Difference = 1099 take-home − W-2 take-home.",
  "assumptions": [
    "Tax year 2026, federal taxes only (no state or local tax). The only income is the job or the contract, with the standard deduction and no credits other than any earned income credit.",
    "Benefits are not counted: an employee’s health insurance, retirement match and paid leave, and a contractor’s own health insurance and retirement plan deductions.",
    "Above the Form 8995 income threshold the QBI deduction is taken as the $400 minimum only (Form 8995-A is not included). Amounts up to $1 trillion; 1 to 8,784 hours a year. An estimate, not tax advice."
  ],
  "inputs": {
    "$schema": "https://json-schema.org/draft/2020-12/schema",
    "type": "object",
    "properties": {
      "status": {
        "title": "Filing status",
        "description": "Your 2026 federal filing status.",
        "type": "string",
        "enum": [
          "single",
          "mfj",
          "mfs",
          "hoh",
          "qss"
        ]
      },
      "salary": {
        "title": "W-2 salary",
        "description": "Yearly wages the employee job pays (W-2 box 1).",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000
      },
      "contract": {
        "title": "1099 income",
        "description": "Yearly amount the contract pays you before expenses (Form 1099-NEC).",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000
      },
      "expenses": {
        "title": "Business expenses (optional)",
        "description": "Business costs you pay as a contractor, such as equipment, software and travel (not your own health insurance).",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000
      },
      "hours": {
        "title": "Hours worked a year (optional)",
        "description": "Hours a year in either job, to show hourly rates; 2,080 is 40 hours for 52 weeks.",
        "type": "number",
        "minimum": 1,
        "maximum": 8784
      }
    }
  },
  "outputs": {
    "difference": {
      "label": "1099 take-home minus W-2 take-home",
      "description": "Above $0 the contract leaves you more after tax; below $0 the W-2 job does.",
      "format": "money"
    },
    "better": {
      "label": "More take-home pay",
      "description": "Which option leaves more after federal taxes.",
      "format": "text"
    },
    "w2TakeHome": {
      "label": "W-2 take-home pay",
      "description": "Salary − Social Security and Medicare − federal income tax.",
      "format": "money"
    },
    "contractTakeHome": {
      "label": "1099 take-home pay",
      "description": "1099 income − business expenses − self-employment tax − federal income tax.",
      "format": "money"
    },
    "w2Payroll": {
      "label": "W-2 Social Security and Medicare",
      "description": "Your share: 6.2% of wages up to $184,500 + 1.45% + the 0.9% Additional Medicare Tax.",
      "format": "money"
    },
    "contractPayroll": {
      "label": "Self-employment tax",
      "description": "15.3% (12.4% up to $184,500 + 2.9%) of 92.35% of net profit + the 0.9% Additional Medicare Tax.",
      "format": "money"
    },
    "w2IncomeTax": {
      "label": "Federal income tax (W-2)",
      "description": "Federal income tax after credits on the salary.",
      "format": "money"
    },
    "contractIncomeTax": {
      "label": "Federal income tax (1099)",
      "description": "Federal income tax after credits on the profit, after half of the self-employment tax and the QBI deduction.",
      "format": "money"
    },
    "qbi": {
      "label": "QBI deduction (1099)",
      "description": "The qualified business income deduction the contractor gets (Form 8995).",
      "format": "money"
    },
    "employerCost": {
      "label": "Employer’s cost of the W-2 pay",
      "description": "Salary + the employer’s 6.2% Social Security (up to $184,500) and 1.45% Medicare.",
      "format": "money"
    },
    "w2Hourly": {
      "label": "W-2 pay an hour",
      "description": "Salary ÷ hours.",
      "format": "money"
    },
    "contractHourly": {
      "label": "1099 rate an hour",
      "description": "1099 income ÷ hours.",
      "format": "money"
    },
    "employerHourly": {
      "label": "Employer’s cost an hour",
      "description": "The employer’s cost of the W-2 pay ÷ hours.",
      "format": "money"
    }
  },
  "defaultAnswer": {
    "inputs": {
      "status": "single",
      "salary": 80000,
      "contract": 95000,
      "expenses": 3000,
      "hours": 2080
    },
    "outputs": {
      "difference": 6968.8139999999985,
      "better": "1099 contract",
      "w2TakeHome": 65104,
      "contractTakeHome": 72072.814,
      "w2Payroll": 6120,
      "contractPayroll": 12999.186000000002,
      "w2IncomeTax": 8776,
      "contractIncomeTax": 6928,
      "qbi": 13880.081400000003,
      "employerCost": 86120,
      "w2Hourly": 38.46153846153846,
      "contractHourly": 45.67307692307692,
      "employerHourly": 41.40384615384615
    },
    "text": "With a W-2 salary of $80,000.00 and $95,000.00 of 1099 income, 1099 take-home minus W-2 take-home is $6,968.81."
  },
  "examples": [
    {
      "given": {
        "status": "single",
        "salary": 80000,
        "contract": 95000,
        "expenses": 3000,
        "hours": 2080
      },
      "expect": {
        "w2Payroll": 6120,
        "w2IncomeTax": 8776,
        "w2TakeHome": 65104,
        "contractPayroll": 12999.186,
        "contractIncomeTax": 6928,
        "contractTakeHome": 72072.814,
        "qbi": 13880.0814,
        "difference": 6968.814,
        "better": "1099 contract",
        "employerCost": 86120,
        "w2Hourly": 38.46153846153846,
        "contractHourly": 45.67307692307692,
        "employerHourly": 41.40384615384615
      },
      "source": "IRS Topic 751 (6.2% Social Security and 1.45% Medicare each for employer and employee; $184,500 wage base for 2026; 0.9% Additional Medicare Tax withheld over $200,000), https://www.irs.gov/taxtopics/tc751; IRS Topic 554 (self-employment tax: 12.4% Social Security and 2.9% Medicare on 92.35% of net earnings; half deductible), https://www.irs.gov/taxtopics/tc554; 2026 Form 1040 by the site tax engine (IRS Rev. Proc. 2025-32 rates and standard deduction; Schedule SE; Form 8959; Form 8995 QBI deduction); hand calculation in content.mdx; Python 3 check in docs/progress/WP-142/xcheck.py"
    },
    {
      "given": {
        "status": "single",
        "salary": 200000,
        "contract": 200000
      },
      "expect": {
        "w2Payroll": 14339,
        "w2IncomeTax": 36734,
        "contractPayroll": 28234.3,
        "contractIncomeTax": 25196.3072,
        "difference": -2357.6072,
        "better": "W-2 job",
        "employerCost": 214339
      },
      "source": "IRS Topic 751 (6.2% Social Security and 1.45% Medicare each for employer and employee; $184,500 wage base for 2026; 0.9% Additional Medicare Tax withheld over $200,000), https://www.irs.gov/taxtopics/tc751 (6.2% × 184,500 = 11,439; 1.45% × 200,000 = 2,900); Python 3 check in docs/progress/WP-142/xcheck.py"
    },
    {
      "given": {
        "status": "mfj",
        "salary": 60000,
        "contract": 60000,
        "hours": 2000
      },
      "expect": {
        "w2Payroll": 4590,
        "w2TakeHome": 52567,
        "contractPayroll": 8477.73,
        "contractTakeHome": 49639.27,
        "difference": -2927.73,
        "w2Hourly": 30,
        "contractHourly": 30,
        "employerHourly": 32.295
      },
      "source": "IRS Topic 751 (6.2% Social Security and 1.45% Medicare each for employer and employee; $184,500 wage base for 2026; 0.9% Additional Medicare Tax withheld over $200,000), https://www.irs.gov/taxtopics/tc751; IRS Topic 554 (self-employment tax: 12.4% Social Security and 2.9% Medicare on 92.35% of net earnings; half deductible), https://www.irs.gov/taxtopics/tc554; 2026 Form 1040 by the site tax engine (IRS Rev. Proc. 2025-32 rates and standard deduction; Schedule SE; Form 8959; Form 8995 QBI deduction); Python 3 check in docs/progress/WP-142/xcheck.py"
    }
  ],
  "sources": [
    "IRS, Topic no. 751, Social Security and Medicare withholding rates (reviewed 24-Sep-2026): 6.2% Social Security each for employer and employee, 1.45% Medicare each, the $184,500 wage base for 2026, and the 0.9% Additional Medicare Tax withheld on wages over $200,000 with no employer match. https://www.irs.gov/taxtopics/tc751 (retrieved 2026-10-19)",
    "IRS, Topic no. 554, Self-employment tax (reviewed 24-Sep-2026): 12.4% Social Security and 2.9% Medicare on 92.35% of net earnings, $400 or more of net earnings, half deductible, Additional Medicare Tax thresholds $250,000 joint, $125,000 married filing separately and $200,000 others. https://www.irs.gov/taxtopics/tc554 (retrieved 2026-10-19)",
    "IRS, Rev. Proc. 2025-32 (Internal Revenue Bulletin 2025-45): 2026 tax rate tables (section 4.01), standard deduction (section 4.14), Form 8995 thresholds (section 4.26) and the $400 minimum QBI deduction (section 2.12). https://www.irs.gov/irb/2025-45_IRB (retrieved 2026-10-19)",
    "IRS, 2025 Tax Table (Instructions for Form 1040): taxable income under $100,000 is taxed at the middle of its 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), in whole dollars. https://www.irs.gov/instructions/i1040tt (retrieved 2026-10-19)"
  ],
  "related": [
    "self-employment-tax",
    "payroll-tax",
    "qbi-deduction",
    "hourly-to-salary"
  ],
  "changelog": []
}